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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
________________________

FORM 8-K
________________________

CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
________________________

Date of Report (Date of earliest event reported):
October 19, 2023

Independent Bank Group, Inc.
(Exact Name of Registrant as Specified in Charter)
________________________
Texas
001-35854
13-4219346
(State or other jurisdiction of incorporation)
(Commission File Number)
(IRS Employer Identification No.)

7777 Henneman Way
McKinney, TX 75070-1711
(Address of principal executive offices) (Zip code)

Registrant’s telephone number, including area code:
(972) 562-9004

Not Applicable
(Former name or former address, if changed since last report)
________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Trading Symbol(s) Name of Exchange on Which Registered
Common Stock, par value, $0.01 per share IBTX NASDAQ Global Select Market
Indicate by checkmark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2):
Emerging growth company    ☐
If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐



Item 2.02.     Results of Operations and Financial Condition.
In accordance with Item 2.02 of Form 8-K of the Securities and Exchange Commission (the “SEC”), Independent Bank Group, Inc., a Texas corporation (the “Company”), is furnishing to the SEC a press release that the Company issued on October 23, 2023 (the “Press Release”). The Press Release disclosed certain information regarding the Company’s results of operations for the three and nine months ended September 30, 2023, and the Company’s financial condition as of September 30, 2023. A copy of the text of the Press Release is attached hereto as Exhibit 99.1.
Item 7.01.    Regulation FD Disclosure.
On October 23, 2023, the Company made available earnings release presentation materials regarding its operating and financial results for the quarter ended September 30, 2023. A copy of the earnings release presentation materials is attached hereto as Exhibit 99.2.
In accordance with the General Instruction B.2 of Form 8-K, the information in Item 2.02 and Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.1 and Exhibit 99.2 hereto, which are furnished herewith pursuant to and relate to Item 2.02 and Item 7.01, respectively, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise be subject to the liabilities of Section 18 of the Exchange Act. The information in Item 2.02 and Item 7.01 of this Current Report on Form 8-K and Exhibit 99.1 and Exhibit 99.2 hereto shall not be incorporated by reference into any filing or other document filed by the Company with the SEC pursuant to the Securities Act of 1933, as amended, the rules and regulations of the SEC thereunder, the Exchange Act, or the rules and regulations of the SEC thereunder, except as shall be expressly set forth by specific reference in such filing or document.
Item 8.01.    Other Events.
On October 23, 2023, the Company also announced in the Press Release that its Board of Directors declared a quarterly dividend on its common stock in the amount of $0.38 per share. The dividend will be payable on November 16, 2023, to shareholders of record as of the close of business on November 2, 2023.

Item 9.01.      Financial Statements and Exhibits.
(d)    Exhibits.
Exhibit No. Description of Exhibit
Exhibit 99.1
Exhibit 99.2
Exhibit 104 Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document)





SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated October 24, 2023
INDEPENDENT BANK GROUP, INC.

By: /s/ David R. Brooks
Name: David R. Brooks
Title: Chairman of the Board and Chief Executive Officer


EX-99.1 2 exhibit991q32023.htm EX-99.1 Document

                    
ifglogoa05.jpg
Exhibit 99.1

Press Release
For Immediate Release
    

INDEPENDENT BANK GROUP, INC. REPORTS THIRD QUARTER FINANCIAL RESULTS AND DECLARES QUARTERLY DIVIDEND

October 23, 2023


McKINNEY, Texas, October 23, 2023 -- Independent Bank Group, Inc. (NASDAQ: IBTX) today announced net income of $32.8 million, or $0.79 per diluted share, for the quarter ended September 30, 2023, compared to net income of $52.4 million, or $1.27 per diluted share for the quarter ended September 30, 2022 and $33.1 million, or $0.80 per diluted share for the quarter ended June 30, 2023. Adjusted net income for the quarter ended September 30, 2023 was $32.6 million, or $0.79 per diluted share, compared to $54.9 million, or $1.33 per diluted share for the quarter ended September 30, 2022 and $33.7 million, or $0.82 per diluted share for the quarter ended June 30, 2023.

The Company also announced that its Board of Directors declared a quarterly cash dividend of $0.38 per share of common stock. The dividend will be payable on November 16, 2023 to stockholders of record as of the close of business on November 2, 2023.
Highlights
•Organic loan growth of 4.5% annualized for the quarter (excluding warehouse)
•Resilient credit quality with nonperforming assets of 0.33% of total assets and net charge-offs of 0.01% annualized for the quarter
•Continued expense discipline with total noninterest expense of $81.3 million for the quarter
•Decreased loan to deposit ratio to 92.7% at quarter-end compared to 95.1% at the end of second quarter
•Capital remains strong, with ratios well above the standards to be considered well-capitalized under regulatory requirements, with an estimated total capital ratio of 11.89%, leverage ratio of 9.09%, and (non-GAAP) tangible common equity (TCE) ratio of 7.35%


“Our third quarter results illustrate our through-cycle growth story, strong balance sheet, and consistent performance on credit quality. We were pleased to report healthy core loan growth for the quarter as our teams of bankers capitalized on renewed activity from our longtime customers across the Texas and Colorado markets. In addition, we took tangible steps to further strengthen our balance sheet and reported just one basis point of annualized charge-offs for the quarter,” said Independent Bank Group Chairman & CEO David R. Brooks. “As we finish the year, we continue to be encouraged by the strength of our loan and deposit pipelines, the continued repricing of our fixed-rate assets, and the sustained economic tailwinds across our footprint. We remain disciplined and focused on executing our strategic plan, pursuing healthy growth, and delivering exceptional service to our customers across Texas and Colorado.”
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Third Quarter 2023 Balance Sheet Highlights
Loans

•Total loans held for investment, excluding mortgage warehouse purchase loans, were $13.8 billion at September 30, 2023 compared to $13.6 billion at June 30, 2023 and $13.3 billion at September 30, 2022. Loans held for investment, excluding mortgage warehouse loans, increased $154.7 million, or 4.5% on an annualized basis, during third quarter 2023.
•Average mortgage warehouse purchase loans were $425.9 million for the quarter ended September 30, 2023 compared to $413.2 million for the quarter ended June 30, 2023, and $402.2 million for the quarter ended September 30, 2022, an increase of $12.8 million, or 3.1% from the linked quarter and an increase of $23.7 million, or 5.9% year over year.
Asset Quality

•Nonperforming assets totaled $61.0 million, or 0.33% of total assets at September 30, 2023, compared to $60.5 million or 0.32% of total assets at June 30, 2023, and $81.1 million, or 0.45% of total assets at September 30, 2022.
•Nonperforming loans totaled $38.4 million, or 0.28% of total loans held for investment at September 30, 2023, compared to $37.9 million, or 0.28% at June 30, 2023 and $57.0 million, or 0.43% at September 30, 2022.
•The decrease in nonperforming loans and nonperforming assets for the year over year period was primarily due to the sale of a $7.7 million commercial nonaccrual loan and the payoff and partial charge-off of a $10.2 million commercial nonaccrual loan, both occurring in fourth quarter 2022, as well as $2.2 million in writedowns on other real estate properties for the year-over-year period.
•Net charge-offs (recoveries) were 0.01% annualized in the third quarter 2023 compared to (0.03)% annualized in the linked quarter and 0.04% annualized in the prior year quarter.
Deposits, Borrowings and Liquidity

•Total deposits were $15.3 billion at September 30, 2023 compared to $14.9 billion at June 30, 2023 and compared to $15.0 billion at September 30, 2022.
•Estimated uninsured deposits, excluding public funds deposits totaled $4.6 billion, or 29.9% of total deposits as of September 30, 2023 compared to $4.6 billion, or 31.1% as of June 30, 2023.
•Total borrowings (other than junior subordinated debentures) were $546.7 million at September 30, 2023, a decrease of $633.6 million from June 30, 2023 and an increase of $79.8 million from September 30, 2022. The year over year change primarily reflects a $75.0 million increase in short-term FHLB advances and $33.8 million outstanding on the Company's unsecured line of credit at quarter-end offset by the redemption of $30.0 million of subordinated debentures in first quarter 2023. The linked quarter change reflects reductions in FHLB advances of $600.0 million as well as a $33.8 million paydown on the Company's line of credit.
Capital

•The Company continues to be well capitalized under regulatory guidelines. At September 30, 2023, the estimated common equity Tier 1 to risk-weighted assets, Tier 1 capital to average assets, Tier 1 capital to risk-weighted assets and total capital to risk-weighted asset ratios were 9.86%, 9.09%, 10.21% and 11.89%, respectively, compared to 9.78%, 8.92%, 10.13%, and 11.95%, respectively, at June 30, 2023 and 10.00%, 9.41%, 10.35%, and 12.27%, respectively at September 30, 2022.
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Third Quarter 2023 Operating Results
Net Interest Income

•Net interest income was $109.0 million for third quarter 2023 compared to $147.3 million for third quarter 2022 and $113.6 million for second quarter 2023. The decrease from the prior year was primarily due to the increased funding costs on our deposit products and FHLB advances due to Fed rate increases over the last year offset to a lesser extent by increased earnings on interest earning assets, primarily loans and interest-bearing cash accounts. The prior year decrease also reflects lower acquired loan accretion for the year over year period. The decrease from the linked quarter was primarily due to continued increases in deposit funding costs offset by lower interest expense on FHLB advances due to a $948.7 million reduction in average balances as well as increased earnings on loans due to growth. The third quarter 2023 includes $940 thousand in acquired loan accretion compared to $2.1 million in third quarter 2022 and $870 thousand in second quarter 2023.
•The average balance of total interest-earning assets grew by $616.6 million and totaled $16.7 billion for the quarter ended September 30, 2023 compared to $16.0 billion for the quarter ended September 30, 2022 and decreased $140.5 million from $16.8 billion for the quarter ended June 30, 2023. The increase from the prior year is primarily due to higher average loans of $579.1 million due to organic growth for the year over year period but also due in part to a $258.0 million increase in average interest-bearing cash balances offset by a $192.1 million decrease in average taxable securities balances. The decrease from the linked quarter is primarily due to lower average interest-bearing cash balances offset by an increase in average loan balances.
•The yield on interest-earning assets was 5.31% for third quarter 2023 compared to 4.30% for third quarter 2022 and 5.14% for second quarter 2023. The increase in asset yield compared to the linked quarter and prior year is primarily a result of increases in the Fed Funds rate over the last year. The average loan yield, net of acquired loan accretion and PPP income was 5.67% for the current quarter, compared to 4.62% for prior year quarter and 5.51% for the linked quarter.
•The cost of interest-bearing liabilities, including borrowings, was 3.72% for third quarter 2023 compared to 1.02% for third quarter 2022 and 3.37% for second quarter 2023. The increase from the linked quarter and prior year is reflective of higher funding costs, primarily on deposit products and FHLB advances as a result of Fed Funds rate increases. In addition, deposit funding costs were also higher due to promotional campaigns for certificate of deposit accounts.
•The net interest margin was 2.60% for third quarter 2023 compared to 3.64% for third quarter 2022 and 2.71% for second quarter 2023. The net interest margin excluding acquired loan accretion was 2.58% for third quarter 2023 compared to 3.59% for third quarter 2022 and 2.69% for second quarter 2023. The decrease in net interest margin from the prior year was primarily due to the increased funding costs on deposits and short-term advances resulting from continued Fed rate increases over the year, offset by higher earnings on loans due to organic growth and rate increases and higher earnings on interest-bearing cash balances due to rate increases for the respective periods. The decrease from the linked quarter also reflects the increased funding costs on deposits offset by higher earnings due to loan growth and lower interest expense on FHLB advances.
Noninterest Income

•Total noninterest income increased $169 thousand compared to third quarter 2022 and decreased $449 thousand compared to second quarter 2023.
•The change from the prior year quarter reflects increases of $374 thousand in service charge income and $314 thousand in investment management fees offset by decreases of $405 thousand in mortgage banking revenue and $226 thousand in other noninterest income.
•The change from the linked quarter primarily reflects a decrease of $474 thousand in mortgage banking revenue offset by a $285 thousand increase in other noninterest income. In addition, a $367 thousand gain on the sale of vacant land was recognized in the linked quarter.
Noninterest Expense

•Total noninterest expense decreased $10.4 million compared to third quarter 2022 and $4.4 million compared to second quarter 2023.
•The net decrease in noninterest expense in third quarter 2023 compared to the prior year is due primarily to decreases of $10.5 million in salaries and benefits expense and $2.2 million in professional fees offset by an increase of $1.9 million in FDIC assessment.
•The decrease in noninterest expense in third quarter 2023 compared to the linked quarter is due primarily to decreases of $3.3 million in salaries and benefits expense. In addition, impairment expense of $1.0 million was recorded in second quarter 2023 on an other real estate property.
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•The decrease in salaries and benefits from the prior year is due primarily to $5.3 million in lower combined salaries and bonus expenses due to the fourth quarter 2022 reduction-in-force and overall strategic efforts to reduce costs, as well as lower contract labor costs of $1.4 million. Furthermore, third quarter 2022 includes $2.6 million in severance and stock grant amortization related to the separation of an executive officer offset by a $1.0 million economic development incentive grant related to job growth that was recorded in third quarter 2022 as a reduction to salaries expense. Third quarter 2023 was also impacted by lower stock grant amortization of $2.2 million related to performance-based executive compensation. The linked quarter change also reflects $377 thousand lower contract labor costs in addition to the lower stock amortization expense mentioned above.
•The decrease in professional fees compared to the prior year was due primarily to lower legal fees as a result of the settlement of litigation in first quarter 2023 but also due to lower consulting fees compared to the prior year.
•The increase in FDIC assessment compared to prior year was due to increases in the assessment rate charged by the FDIC which took effect in 2023, as well as an increase in the liquidity stress rate.

Provision for Credit Losses

•The Company recorded $340 thousand provision for credit losses for third quarter 2023, compared to $3.1 million provision for third quarter 2022 and $220 thousand provision for the linked quarter. Provision expense during a given period is generally dependent on changes in various factors, including economic conditions, credit quality and past due trends, as well as loan growth and charge-offs or specific credit loss allocations taken during the respective period. The higher provision expense in third quarter 2022 reflects loan growth during that period.
•The allowance for credit losses on loans was $148.2 million, or 1.08% of total loans held for investment, net of mortgage warehouse purchase loans, at September 30, 2023, compared to $146.4 million, or 1.10% at September 30, 2022 and compared to $147.8 million, or 1.08% at June 30, 2023.
•The allowance for credit losses on off-balance sheet exposures was $4.4 million at September 30, 2023 compared to $4.3 million at September 30, 2022 and compared to $4.9 million at June 30, 2023. Changes in the allowance for unfunded commitments are generally driven by the remaining unfunded amount and the expected utilization rate of a given loan segment.
Income Taxes

•Federal income tax expense of $8.2 million was recorded for the third quarter 2023, an effective rate of 20.1% compared to tax expense of $13.5 million and an effective rate of 20.5% for the prior year quarter and income tax expense of $8.7 million and an effective rate of 20.5% for the linked quarter.
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Subsequent Events
The Company is required, under generally accepted accounting principles, to evaluate subsequent events through the filing of its consolidated financial statements for the quarter ended September 30, 2023 on Form 10-Q. As a result, the Company will continue to evaluate the impact of any subsequent events on critical accounting assumptions and estimates made as of September 30, 2023 and will adjust amounts preliminarily reported, if necessary.
About Independent Bank Group, Inc.
Independent Bank Group, Inc. is a bank holding company headquartered in McKinney, Texas. Through its wholly owned subsidiary, Independent Bank, doing business as Independent Financial, Independent Bank Group serves customers across Texas and Colorado with a wide range of relationship-driven banking services tailored to meet the needs of businesses, professionals and individuals. Independent Bank Group, Inc. operates in four market regions located in the Dallas/Fort Worth, Austin and Houston areas in Texas and the Colorado Front Range area, including Denver, Colorado Springs and Fort Collins.
Conference Call
A conference call covering Independent Bank Group’s third quarter earnings announcement will be held on Tuesday, October 24, 2023 at 8:30 am (ET) and can be accessed by the webcast link, https://www.webcast-eqs.com/indepbankgroup10242023_en/en or by calling 1-877-407-0989 and by identifying the meeting number 13741490 or by identifying "Independent Bank Group Third Quarter 2023 Earnings Conference Call." The conference materials will also be available by accessing the Investor Relations page of our website, https://ir.ifinancial.com. If you are unable to participate in the live event, a recording of the conference call will be accessible via the Investor Relations page of our website.
Forward-Looking Statements
From time to time the Company’s comments and releases may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties and are made pursuant to the safe harbor provisions of Section 27A of the Securities Act, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and other related federal security laws. Forward-looking statements include information about the Company’s possible or assumed future results of operations, including its future revenues, income, expenses, provision for taxes, effective tax rate, earnings (loss) per share and cash flows, its future capital expenditures and dividends, its future financial condition and changes therein, including changes in the Company’s loan portfolio and allowance for credit losses, the Company’s future capital structure or changes therein, the plan and objectives of management for future operations, the Company’s future or proposed acquisitions, the future or expected effect of acquisitions on the Company’s operations, results of operations and financial condition, the Company’s future economic performance and the statements of the assumptions underlying any such statement. Such statements are typically, but not exclusively, identified by the use in the statements of words or phrases such as “aim,” “anticipate,” “estimate,” “expect,” “goal,” “guidance,” “intend,” “is anticipated,” “is estimated,” “is expected,” “is intended,” “objective,” “plan,” “projected,” “projection,” “will affect,” “will be,” “will continue,” “will decrease,” “will grow,” “will impact,” “will increase,” “will incur,” “will reduce,” “will remain,” “will result,” “would be,” variations of such words or phrases (including where the word “could,” “may” or “would” is used rather than the word “will” in a phrase) and similar words and phrases indicating that the statement addresses some future result, occurrence, plan or objective. The forward-looking statements that the Company makes are based on its current expectations and assumptions regarding its business, the economy, and other future conditions. Because forward-looking statements relate to future results and occurrences, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. The Company’s actual results may differ materially from those contemplated by the forward looking statements, which are neither statements of historical fact nor guarantees or assurances of future performance. Many possible events or factors could affect the Company’s future financial results and performance and could cause those results or performance to differ materially from those expressed in the forward-looking statements.
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These possible events or factors include, but are not limited to: 1) the effects of infectious disease outbreaks, including the ongoing COVID-19 pandemic and the significant impact that the COVID-19 pandemic and associated efforts to limit its spread have had and may continue to have on economic conditions and the Company's business, employees, customers, asset quality and financial performance; 2) the Company’s ability to sustain its current internal growth rate and total growth rate; 3) changes in geopolitical, business and economic events, occurrences and conditions, including changes in rates of inflation or deflation, nationally, regionally and in the Company’s target markets, particularly in Texas and Colorado; 4) worsening business and economic conditions nationally, regionally and in the Company’s target markets, particularly in Texas and Colorado, and the geographic areas in those states in which the Company operates; 5) the Company’s dependence on its management team and its ability to attract, motivate and retain qualified personnel; 6) the concentration of the Company’s business within its geographic areas of operation in Texas and Colorado; 7) changes in asset quality, including increases in default rates on loans and higher levels of nonperforming loans and loan charge-offs generally; 8) concentration of the loan portfolio of Independent Financial, before and after the completion of acquisitions of financial institutions, in commercial and residential real estate loans and changes in the prices, values and sales volumes of commercial and residential real estate; 9) the ability of Independent Financial to make loans with acceptable net interest margins and levels of risk of repayment and to otherwise invest in assets at acceptable yields and that present acceptable investment risks; 10) inaccuracy of the assumptions and estimates that the managements of the Company and the financial institutions that the Company acquires make in establishing reserves for credit losses and other estimates generally; 11) lack of liquidity, including as a result of a reduction in the amount of sources of liquidity the Company currently has; 12) material increases or decreases in the amount of deposits held by Independent Financial or other financial institutions that the Company acquires and the cost of those deposits; 13) the Company’s access to the debt and equity markets and the overall cost of funding its operations; 14) regulatory requirements to maintain minimum capital levels or maintenance of capital at levels sufficient to support the Company’s anticipated growth; 15) changes in market interest rates that affect the pricing of the loans and deposits of each of Independent Financial and the financial institutions that the Company acquires and that affect the net interest income, other future cash flows, or the market value of the assets of each of Independent Financial and the financial institutions that the Company acquires, including investment securities; 16) fluctuations in the market value and liquidity of the securities the Company holds for sale, including as a result of changes in market interest rates; 17) effects of competition from a wide variety of local, regional, national and other providers of financial, investment and insurance services; 18) changes in economic and market conditions, that affect the amount and value of the assets of Independent Financial and of financial institutions that the Company acquires; 19) the institution and outcome of, and costs associated with, litigation and other legal proceedings against one or more of the Company, Independent Financial and financial institutions that the Company acquired or will acquire or to which any of such entities is subject; 20) the occurrence of market conditions adversely affecting the financial industry generally; 21) the impact of recent and future legislative regulatory changes, including changes in banking, securities, and tax laws and regulations and their application by the Company’s regulators, and changes in federal government policies, as well as regulatory requirements applicable to, and resulting from regulatory supervision of, the Company and Independent Financial as a financial institution with total assets greater than $10 billion; 22) changes in accounting policies, practices, principles and guidelines, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the SEC and the Public Company Accounting Oversight Board, as the case may be; 23) governmental monetary and fiscal policies; 24) changes in the scope and cost of FDIC insurance and other coverage; 25) the effects of war or other conflicts, including, but not limited to, the conflicts between Russia and the Ukraine and Israel and Hamas, acts of terrorism (including cyberattacks) or other catastrophic events, including natural disasters such as storms, droughts, tornadoes, hurricanes and flooding, that may affect general economic conditions; 26) the Company’s actual cost savings resulting from previous or future acquisitions are less than expected, the Company is unable to realize those cost savings as soon as expected, or the Company incurs additional or unexpected costs; 27) the Company’s revenues after previous or future acquisitions are less than expected; 28) the liquidity of, and changes in the amounts and sources of liquidity available to the Company, before and after the acquisition of any financial institutions that the Company acquires; 29) deposit attrition, operating costs, customer loss and business disruption before and after the Company completed acquisitions, including, without limitation, difficulties in maintaining relationships with employees, may be greater than the Company expected; 30) the effects of the combination of the operations of financial institutions that the Company has acquired in the recent past or may acquire in the future with the Company’s operations and the operations of Independent Financial, the effects of the integration of such operations being unsuccessful, and the effects of such integration being more difficult, time consuming, or costly than expected or not yielding the cost savings the Company expects; 31) the impact of investments that the Company or Independent Financial may have made or may make and the changes in the value of those investments; 32) the quality of the assets of financial institutions and companies that the Company has acquired in the recent past or may acquire in the future being different than it determined or determine in its due diligence investigation in connection with the acquisition of such financial institutions and any inadequacy of credit loss reserves relating to, and exposure to unrecoverable losses on, loans acquired; 33) the Company’s ability to continue to identify acquisition targets and successfully acquire desirable financial institutions to sustain its growth, to expand its presence in the Company’s markets and to enter new markets; 34) changes in general business and economic conditions in the markets in which the Company currently operates and may operate in the future; 35) changes occur in business conditions and inflation generally; 36) an increase in the rate of personal or commercial customers’ bankruptcies generally; 37) technology-related changes are harder to make or are more expensive than expected; 38) attacks on the security of, and breaches of, the Company's and Independent Financial's digital infrastructure or information systems, the costs the Company or Independent Financial incur to provide security against such attacks and any costs and liability the Company or Independent Financial incurs in connection with any breach of those systems; 39) the potential impact of climate change and related government regulation on the Company and its customers; 40) the potential impact of technology and “FinTech” entities on the banking industry generally; 41) other economic, competitive, governmental, regulatory, technological and geopolitical factors affecting the Company's operations, pricing and services; and 42) the other factors that are described or referenced in Part I, Item 1A, of the Company’s Annual Report on Form 10-K filed with the SEC on February 21, 2023, the Company’s Quarterly Reports on Form 10-Q, in each case under the caption “Risk Factors”; and The Company urges you to consider all of these risks, uncertainties and other factors carefully in evaluating all such forward-looking statements made by the Company. As a result of these and other matters, including changes in facts, assumptions not being realized or other factors, the actual results relating to the subject matter of any forward-looking statement may differ materially from the anticipated results expressed or implied in that forward-looking statement. Any forward-looking statement made in this filing or made by the Company in any report, filing, document or information incorporated by reference in this filing, speaks only as of the date on which it is made.
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The Company undertakes no obligation to update any such forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. A forward-looking statement may include a statement of the assumptions or bases underlying the forward-looking statement. The Company believes that these assumptions or bases have been chosen in good faith and that they are reasonable. However, the Company cautions you that assumptions as to future occurrences or results almost always vary from actual future occurrences or results, and the differences between assumptions and actual occurrences and results can be material. Therefore, the Company cautions you not to place undue reliance on the forward-looking statements contained in this filing or incorporated by reference herein.
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 “adjusted net income,” “adjusted earnings,” “tangible book value,” “tangible book value per common share,” “adjusted efficiency ratio,” “tangible common equity to tangible assets,” “adjusted net interest margin,” “return on tangible equity,” “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 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 credit losses and the effect of goodwill, other intangible assets 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.
CONTACTS:

Analysts/Investors:
Paul Langdale
Executive Vice President, Chief Financial Officer
(972) 562-9004
Paul.Langdale@ifinancial.com
Media:
Wendi Costlow
Executive Vice President, Chief Marketing Officer
(972) 562-9004
Wendi.Costlow@ifinancial.com

Source: Independent Bank Group, Inc.
7

            
Independent Bank Group, Inc. and Subsidiaries
Consolidated Financial Data
Three Months Ended September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022 and September 30, 2022
(Dollars in thousands, except for share data)
(Unaudited)
As of and for the Quarter Ended
September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022
Selected Income Statement Data
Interest income $ 222,744  $ 215,294  $ 201,176  $ 189,769  $ 173,687 
Interest expense 113,695  101,687  73,254  47,982  26,413 
   Net interest income 109,049  113,607  127,922  141,787  147,274 
Provision for credit losses 340  220  90  2,833  3,100 
   Net interest income after provision for credit losses 108,709  113,387  127,832  138,954  144,174 
Noninterest income 13,646  14,095  12,754  11,227  13,477 
Noninterest expense 81,334  85,705  189,380  98,774  91,733 
Income tax expense (benefit) 8,246  8,700  (11,284) 10,653  13,481 
Net income (loss) 32,775  33,077  (37,510) 40,754  52,437 
Adjusted net income (1)
32,624  33,726  44,083  49,433  54,880 
Per Share Data (Common Stock)
Earnings (loss):
Basic $ 0.79  $ 0.80  $ (0.91) $ 0.99  $ 1.27 
Diluted 0.79  0.80  (0.91) 0.99  1.27 
Adjusted earnings:
Basic (1)
0.79  0.82  1.07  1.20  1.33 
Diluted (1)
0.79  0.82  1.07  1.20  1.33 
Dividends 0.38  0.38  0.38  0.38  0.38 
Book value 56.49  57.00  56.95  57.91  57.19 
Tangible book value (1)
31.11  31.55  31.42  32.25  31.44 
Common shares outstanding 41,284,003  41,279,460  41,281,904  41,190,677  41,165,006 
Weighted average basic shares outstanding (2)
41,284,964  41,280,312  41,223,376  41,193,716  41,167,258 
Weighted average diluted shares outstanding (2)
41,381,034  41,365,275  41,316,798  41,285,383  41,253,662 
Selected Period End Balance Sheet Data
Total assets $ 18,519,872  $ 18,719,802  $ 18,798,354  $ 18,258,414  $ 17,944,493 
Cash and cash equivalents 711,709  902,882  1,048,590  654,322  516,159 
Securities available for sale 1,545,904  1,637,682  1,675,415  1,691,784  1,730,163 
Securities held to maturity 205,689  206,146  206,602  207,059  207,516 
Loans, held for sale 18,068  18,624  16,576  11,310  21,973 
Loans, held for investment (3)
13,781,102  13,628,025  13,606,039  13,597,264  13,285,757 
Mortgage warehouse purchase loans 442,302  491,090  400,547  312,099  409,044 
Allowance for credit losses on loans 148,249  147,804  146,850  148,787  146,395 
Goodwill and other intangible assets 1,047,687  1,050,798  1,053,909  1,057,020  1,060,131 
Other real estate owned 22,505  22,505  22,700  23,900  23,900 
Noninterest-bearing deposits 3,703,784  3,905,492  4,148,360  4,736,830  5,107,001 
Interest-bearing deposits 11,637,185  10,968,014  9,907,327  10,384,587  9,854,007 
Borrowings (other than junior subordinated debentures) 546,666  1,180,262  2,137,607  567,066  466,892 
Junior subordinated debentures 54,568  54,518  54,469  54,419  54,370 
Total stockholders' equity 2,332,098  2,353,042  2,350,857  2,385,383  2,354,340 
8

            
Independent Bank Group, Inc. and Subsidiaries
Consolidated Financial Data
Three Months Ended September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022 and September 30, 2022
(Dollars in thousands, except for share data)
(Unaudited)
As of and for the Quarter Ended
September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022
Selected Performance Metrics
Return on average assets 0.70  % 0.71  % (0.83) % 0.90  % 1.16  %
Return on average equity 5.51  5.62  (6.39) 6.85  8.66 
Return on tangible equity (4)
9.92  10.14  (11.48) 12.42  15.52 
Adjusted return on average assets (1)
0.70  0.73  0.98  1.09  1.22 
Adjusted return on average equity (1)
5.48  5.73  7.51  8.31  9.07 
Adjusted return on tangible equity (1) (4)
9.87  10.34  13.49  15.07  16.24 
Net interest margin 2.60  2.71  3.17  3.49  3.64 
Efficiency ratio (5)
63.75  64.68  132.41  62.52  55.13 
Adjusted efficiency ratio (1) (5)
63.84  63.93  58.17  55.51  53.23 
Credit Quality Ratios (3) (6)
Nonperforming assets to total assets 0.33  % 0.32  % 0.32  % 0.35  % 0.45  %
Nonperforming loans to total loans held for investment 0.28  0.28  0.27  0.29  0.43 
Nonperforming assets to total loans held for investment and other real estate 0.44  0.44  0.44  0.47  0.61 
Allowance for credit losses on loans to nonperforming loans 385.81  389.84  393.69  371.14  256.65 
Allowance for credit losses to total loans held for investment 1.08  1.08  1.08  1.09  1.10 
Net (recoveries) charge-offs to average loans outstanding (annualized) 0.01  (0.03) 0.04  0.02  0.04 
Capital Ratios
Estimated common equity Tier 1 capital to risk-weighted assets 9.86  % 9.78  % 9.70  % 10.09  % 10.00  %
Estimated tier 1 capital to average assets 9.09  8.92  9.01  9.49  9.41 
Estimated tier 1 capital to risk-weighted assets 10.21  10.13  10.05  10.45  10.35 
Estimated total capital to risk-weighted assets 11.89  11.95  11.88  12.35  12.27 
Total stockholders' equity to total assets 12.59  12.57  12.51  13.06  13.12 
Tangible common equity to tangible assets (1)
7.35  7.37  7.31  7.72  7.67 
____________
(1) Non-GAAP financial measure. See reconciliation.
(2) Total number of shares includes participating shares (those with dividend rights).
(3) Loans held for investment excludes mortgage warehouse purchase loans.
(4) Non-GAAP financial measure. Excludes average balance of goodwill and net other intangible assets.
(5) Efficiency ratio excludes amortization of other intangible assets. See reconciliation of Non-GAAP financial measures.
(6) Credit metrics - Nonperforming assets, which consist of nonperforming loans, OREO and other repossessed assets, totaled $61,044, $60,533, $60,115, $64,109 and $81,054, respectively. Nonperforming loans, which consists of nonaccrual loans, loans delinquent 90 days and still accruing interest, and troubled debt restructurings (TDR) totaled $38,425, $37,914, $37,301, $40,089 and $57,040, respectively. With the adoption of ASU 2022-02, effective January 1, 2023, TDR accounting has been eliminated.






9

            
Independent Bank Group, Inc. and Subsidiaries
Consolidated Statements of Income
Three and Nine Months Ended September 30, 2023 and 2022
(Dollars in thousands)
(Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
2023 2022 2023 2022
Interest income:
Interest and fees on loans $ 202,725  $ 160,160  $ 580,631  $ 427,765 
Interest on taxable securities 7,674  8,306  23,323  24,908 
Interest on nontaxable securities 2,558  2,655  7,747  7,729 
Interest on interest-bearing deposits and other 9,787  2,566  27,513  4,846 
Total interest income 222,744  173,687  639,214  465,248 
Interest expense:
Interest on deposits 102,600  21,586  243,005  35,306 
Interest on FHLB advances 6,054  443  29,903  786 
Interest on other borrowings 3,808  3,635  12,248  10,986 
Interest on junior subordinated debentures 1,233  749  3,480  1,749 
Total interest expense 113,695  26,413  288,636  48,827 
Net interest income 109,049  147,274  350,578  416,421 
Provision for credit losses 340  3,100  650  1,657 
Net interest income after provision for credit losses 108,709  144,174  349,928  414,764 
Noninterest income:
Service charges on deposit accounts 3,568  3,194  10,436  8,996 
Investment management fees 2,470  2,156  7,215  6,998 
Mortgage banking revenue 1,774  2,179  5,646  7,695 
Mortgage warehouse purchase program fees 555  596  1,414  2,285 
Loss on sale of loans (7) —  (14) (1,501)
(Loss) gain on sale and disposal of premises and equipment (56) (101) 345  (310)
Increase in cash surrender value of BOLI 1,465  1,350  4,252  3,987 
Other 3,877  4,103  11,201  12,089 
Total noninterest income 13,646  13,477  40,495  40,239 
Noninterest expense:
Salaries and employee benefits 43,618  54,152  136,833  154,837 
Occupancy 12,408  11,493  35,607  31,526 
Communications and technology 6,916  6,545  21,202  18,276 
FDIC assessment 3,653  1,749  10,171  4,831 
Advertising and public relations 587  424  2,195  1,583 
Other real estate owned (income) expenses, net (253) 133  (482) 199 
Impairment of other real estate —  —  2,200  — 
Amortization of other intangible assets 3,111  3,117  9,333  9,380 
Litigation settlement —  —  102,500  — 
Professional fees 1,262  3,457  6,112  10,990 
Other 10,032  10,663  30,748  28,493 
Total noninterest expense 81,334  91,733  356,419  260,115 
Income before taxes 41,021  65,918  34,004  194,888 
Income tax expense 8,246  13,481  5,662  39,351 
Net income $ 32,775  $ 52,437  $ 28,342  $ 155,537 
10

            
Independent Bank Group, Inc. and Subsidiaries
Consolidated Balance Sheets
As of September 30, 2023 and December 31, 2022
(Dollars in thousands)
(Unaudited)

September 30, December 31,
Assets 2023 2022
Cash and due from banks $ 92,921  $ 134,183 
Interest-bearing deposits in other banks 618,788  520,139 
Cash and cash equivalents 711,709  654,322 
Certificates of deposit held in other banks 248  496 
Securities available for sale, at fair value 1,545,904  1,691,784 
Securities held to maturity, net of allowance for credit losses of $0 and $0, respectively 205,689  207,059 
Loans held for sale (includes $10,499 and $10,612 carried at fair value, respectively) 18,068  11,310 
Loans, net of allowance for credit losses of $148,249 and $148,787, respectively 14,075,155  13,760,576 
Premises and equipment, net 355,533  355,368 
Other real estate owned 22,505  23,900 
Federal Home Loan Bank (FHLB) of Dallas stock and other restricted stock 25,496  23,436 
Bank-owned life insurance (BOLI) 243,980  240,448 
Deferred tax asset 106,658  78,669 
Goodwill 994,021  994,021 
Other intangible assets, net 53,666  62,999 
Other assets 161,240  154,026 
Total assets $ 18,519,872  $ 18,258,414 
Liabilities and Stockholders’ Equity
Deposits:
Noninterest-bearing $ 3,703,784  $ 4,736,830 
Interest-bearing 11,637,185  10,384,587 
Total deposits 15,340,969  15,121,417 
FHLB advances 275,000  300,000 
Other borrowings 271,666  267,066 
Junior subordinated debentures 54,568  54,419 
Other liabilities 245,571  130,129 
Total liabilities 16,187,774  15,873,031 
Commitments and contingencies —  — 
Stockholders’ equity:
Preferred stock (0 and 0 shares outstanding, respectively) —  — 
Common stock (41,284,003 and 41,190,677 shares outstanding, respectively) 413  412 
Additional paid-in capital 1,964,764  1,959,193 
Retained earnings 617,673  638,354 
Accumulated other comprehensive loss (250,752) (212,576)
Total stockholders’ equity 2,332,098  2,385,383 
Total liabilities and stockholders’ equity $ 18,519,872  $ 18,258,414 

11

            
Independent Bank Group, Inc. and Subsidiaries
Consolidated Average Balance Sheet Amounts, Interest Earned and Yield Analysis
Three Months Ended September 30, 2023 and 2022
(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.

Three Months Ended September 30,
2023 2022
Average
Outstanding
Balance
Interest
Yield/
Rate (4)
Average
Outstanding
Balance
Interest
Yield/
Rate (4)
Interest-earning assets:
Loans (1)
$ 14,118,264  $ 202,725  5.70  % $ 13,539,196  $ 160,160  4.69  %
Taxable securities 1,411,578  7,674  2.16  1,603,668  8,306  2.05 
Nontaxable securities 410,391  2,558  2.47  438,728  2,655  2.40 
Interest-bearing deposits and other 716,271  9,787  5.42  458,276  2,566  2.22 
Total interest-earning assets 16,656,504  222,744  5.31  16,039,868  173,687  4.30 
Noninterest-earning assets 1,864,096  1,853,204 
Total assets $ 18,520,600  $ 17,893,072 
Interest-bearing liabilities:
Checking accounts $ 5,596,274  $ 47,657  3.38  % $ 5,906,102  $ 12,296  0.83  %
Savings accounts 590,577  90  0.06  795,401  98  0.05 
Money market accounts 1,565,181  15,200  3.85  2,181,812  6,770  1.23 
Certificates of deposit 3,566,496  39,653  4.41  976,105  2,422  0.98 
Total deposits 11,318,528  102,600  3.60  9,859,420  21,586  0.87 
FHLB advances 463,967  6,054  5.18  102,717  443  1.71 
Other borrowings - short-term 41,087  738  7.13  17,809  171  3.81 
Other borrowings - long-term 237,862  3,070  5.12  266,832  3,464  5.15 
Junior subordinated debentures 54,550  1,233  8.97  54,352  749  5.47 
Total interest-bearing liabilities 12,115,994  113,695  3.72  10,301,130  26,413  1.02 
Noninterest-bearing checking accounts 3,798,091  5,081,649 
Noninterest-bearing liabilities 246,340  108,749 
Stockholders’ equity 2,360,175  2,401,544 
Total liabilities and equity $ 18,520,600  $ 17,893,072 
Net interest income $ 109,049  $ 147,274 
Interest rate spread 1.59  % 3.28  %
Net interest margin (2)
2.60  3.64 
Net interest income and margin (tax equivalent basis) (3)
$ 110,077  2.62  $ 148,454  3.67 
Average interest-earning assets to interest-bearing liabilities 137.48  155.71 
____________
(1) Average loan balances include nonaccrual loans.
(2) Net interest margins for the periods presented represent: (i) the difference between interest income on interest-earning assets and the interest expense on interest-bearing liabilities, divided by (ii) average interest-earning assets for the period.
(3) A tax-equivalent adjustment has been computed using a federal income tax rate of 21%.
(4) Yield and rates for the three month periods are annualized.
12

            
Independent Bank Group, Inc. and Subsidiaries
Consolidated Average Balance Sheet Amounts, Interest Earned and Yield Analysis
Nine Months Ended September 30, 2023 and 2022
(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.

Nine Months Ended September 30,
2023 2022
Average
Outstanding
Balance
Interest
Yield/Rate (4)
Average
Outstanding
Balance
Interest
Yield/Rate (4)
Interest-earning assets:
Loans (1)
$ 14,026,604  $ 580,631  5.53  % $ 12,955,318  $ 427,765  4.41  %
Taxable securities 1,444,280  23,323  2.16  1,665,264  24,908  2.00 
Nontaxable securities 417,459  7,747  2.48  430,586  7,729  2.40 
Interest-bearing deposits and other 724,787  27,513  5.08  1,067,991  4,846  0.61 
Total interest-earning assets 16,613,130  639,214  5.14  16,119,159  465,248  3.86 
Noninterest-earning assets 1,855,135  1,894,972 
Total assets $ 18,468,265  $ 18,014,131 
Interest-bearing liabilities:
Checking accounts $ 5,836,196  $ 128,493  2.94  % $ 6,007,021  $ 19,965  0.44  %
Savings accounts 652,067  263  0.05  791,052  289  0.05 
Money market accounts 1,587,340  38,646  3.26  2,196,900  11,182  0.68 
Certificates of deposit 2,604,697  75,603  3.88  942,288  3,870  0.55 
Total deposits 10,680,300  243,005  3.04  9,937,261  35,306  0.48 
FHLB advances 817,436  29,903  4.89  128,114  786  0.82 
Other borrowings - short-term 40,196  2,082  6.93  21,282  593  3.73 
Other borrowings - long-term 247,258  10,166  5.50  266,659  10,393  5.21 
Junior subordinated debentures 54,501  3,480  8.54  54,303  1,749  4.31 
Total interest-bearing liabilities 11,839,691  288,636  3.26  10,407,619  48,827  0.63 
Noninterest-bearing checking accounts 4,058,686  5,028,921 
Noninterest-bearing liabilities 203,021  107,414 
Stockholders’ equity 2,366,867  2,470,177 
Total liabilities and equity $ 18,468,265  $ 18,014,131 
Net interest income $ 350,578  $ 416,421 
Interest rate spread 1.88  % 3.23  %
Net interest margin (2)
2.82  3.45 
Net interest income and margin (tax equivalent basis) (3)
$ 353,680  2.85  $ 419,788  3.48 
Average interest-earning assets to interest-bearing liabilities 140.32  154.88 
____________
(1) Average loan balances include nonaccrual loans.
(2) Net interest margins for the periods presented represent: (i) the difference between interest income on interest-earning assets and the interest expense on interest-bearing liabilities, divided by (ii) average interest-earning assets for the period.
(3) A tax-equivalent adjustment has been computed using a federal income tax rate of 21%.
(4) Yield and rates for the nine month periods are annualized.


13

            
Independent Bank Group, Inc. and Subsidiaries
Loan Portfolio Composition
As of September 30, 2023 and December 31, 2022
(Dollars in thousands)
(Unaudited)

Total Loans By Class
September 30, 2023 December 31, 2022
Amount % of Total Amount % of Total
Commercial
$ 2,208,032  15.5  % $ 2,240,959  16.1  %
Mortgage warehouse purchase loans 442,302  3.1  312,099  2.2 
Real estate:
Commercial real estate 8,088,783  56.8  7,817,447  56.2 
Commercial construction, land and land development 1,156,877  8.1  1,231,071  8.8 
Residential real estate (1)
1,652,964  11.6  1,604,169  11.5 
Single-family interim construction 491,051  3.4  508,839  3.7 
Agricultural 121,883  0.9  124,422  0.9 
Consumer 79,580  0.6  81,667  0.6 
Total loans 14,241,472  100.0  % 13,920,673  100.0  %
Allowance for credit losses (148,249) (148,787)
Total loans, net $ 14,093,223  $ 13,771,886 
____________
(1) Includes loans held for sale of $18,068 and $11,310 at September 30, 2023 and December 31, 2022, respectively.

14

            
Independent Bank Group, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
Three Months Ended September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022 and September 30, 2022
(Dollars in thousands, except for share data)
(Unaudited)

For the Three Months Ended
September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022
ADJUSTED NET INCOME
Net Interest Income - Reported (a) $ 109,049  $ 113,607  $ 127,922  $ 141,787  $ 147,274 
Provision Expense - Reported (b) 340  220  90  2,833  3,100 
Noninterest Income - Reported (c) 13,646  14,095  12,754  11,227  13,477 
Loss on sale of loans —  343  — 
Loss (gain) on sale and disposal of premises and equipment 56  (354) (47) 184  101 
Recoveries on loans charged off prior to acquisition (279) (13) (117) (36) (60)
Adjusted Noninterest Income (d) 13,430  13,735  12,590  11,718  13,518 
Noninterest Expense - Reported (e) 81,334  85,705  189,380  98,774  91,733 
Litigation settlement —  —  (102,500) —  — 
Separation expense (1)
—  —  —  (7,131) (2,809)
Economic development employee incentive grant —  —  —  —  1,000 
OREO impairment —  (1,000) (1,200) —  — 
Impairment of assets —  (153) (802) (3,286) (1,156)
Acquisition expense (2)
(27) (27) (26) (40) (65)
Adjusted Noninterest Expense (f) 81,307  84,525  84,852  88,317  88,703 
Income Tax Expense (Benefit) - Reported (g) 8,246  8,700  (11,284) 10,653  13,481 
Net Income (Loss) - Reported (a) - (b) + (c) - (e) - (g) = (h) 32,775  33,077  (37,510) 40,754  52,437 
Adjusted Net Income (3)
(a) - (b) + (d) - (f) = (i) $ 32,624  $ 33,726  $ 44,083  $ 49,433  $ 54,880 
ADJUSTED PROFITABILITY (4)
Total Average Assets (j) $ 18,520,600  $ 18,652,450  $ 18,228,521  $ 17,994,131  $ 17,893,072 
Total Average Stockholders' Equity (k) 2,360,175  2,360,226  2,380,421  2,359,637  2,401,544 
Total Average Tangible Stockholders' Equity (5)
(l) 1,311,417  1,308,368  1,325,475  1,301,558  1,340,363 
Reported Return on Average Assets (h) / (j) 0.70  % 0.71  % (0.83) % 0.90  % 1.16  %
Reported Return on Average Equity (h) / (k) 5.51  5.62  (6.39) 6.85  8.66 
Reported Return on Average Tangible Equity (h) / (l) 9.92  10.14  (11.48) 12.42  15.52 
Adjusted Return on Average Assets (6)
(i) / (j) 0.70  0.73  0.98  1.09  1.22 
Adjusted Return on Average Equity (6)
(i) / (k) 5.48  5.73  7.51  8.31  9.07 
Adjusted Return on Tangible Equity (6)
(i) / (l) 9.87  10.34  13.49  15.07  16.24 
EFFICIENCY RATIO
Amortization of other intangible assets (m) $ 3,111  $ 3,111  $ 3,111  $ 3,111  $ 3,117 
Reported Efficiency Ratio (e - m) / (a + c) 63.75  % 64.68  % 132.41  % 62.52  % 55.13  %
Adjusted Efficiency Ratio (f - m) / (a + d) 63.84  63.93  58.17  55.51  53.23 
____________
(1) Separation expenses include severance and accelerated vesting expense for stock awards related to the separation of certain employees. The quarter ended December 31, 2022 reflects a reduction in workforce due to the restructuring of certain departments and business lines. The quarter ended September 30, 2022 reflect payments made due to the separation of an executive officer and also includes $202 thousand in severance payments and accelerated vesting expense for stock awards related to the dissolution of a Company department.
(2) Acquisition expenses includes compensation related expenses for equity awards granted at acquisition.
(3) Assumes an adjusted effective tax rate of 20.1%, 20.8%, 20.7%, 20.7%, and 20.5%, respectively. First quarter 2023 normalized rate excludes the effect of the litigation settlement.
(4) Quarterly metrics are annualized.
(5) Excludes average balance of goodwill and net other intangible assets.
(6) Calculated using adjusted net income.
15

            
Independent Bank Group, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
As of September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022 and September 30, 2022
(Dollars in thousands, except per share information)
(Unaudited)

Tangible Book Value & Tangible Common Equity To Tangible Assets Ratio
As of the Quarter Ended
September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022
Tangible Common Equity
Total common stockholders' equity $ 2,332,098  $ 2,353,042  $ 2,350,857  $ 2,385,383  $ 2,354,340 
Adjustments:
Goodwill (994,021) (994,021) (994,021) (994,021) (994,021)
Other intangible assets, net (53,666) (56,777) (59,888) (62,999) (66,110)
Tangible common equity $ 1,284,411  $ 1,302,244  $ 1,296,948  $ 1,328,363  $ 1,294,209 
Tangible Assets
Total assets $ 18,519,872  $ 18,719,802  $ 18,798,354  $ 18,258,414  $ 17,944,493 
Adjustments:
Goodwill (994,021) (994,021) (994,021) (994,021) (994,021)
Other intangible assets, net (53,666) (56,777) (59,888) (62,999) (66,110)
Tangible assets $ 17,472,185  $ 17,669,004  $ 17,744,445  $ 17,201,394  $ 16,884,362 
Common shares outstanding 41,284,003  41,279,460  41,281,904  41,190,677  41,165,006 
Tangible common equity to tangible assets 7.35  % 7.37  % 7.31  % 7.72  % 7.67  %
Book value per common share $ 56.49  $ 57.00  $ 56.95  $ 57.91  $ 57.19 
Tangible book value per common share 31.11  31.55  31.42  32.25  31.44 

16
EX-99.2 3 exhibit992erpresentation.htm EX-99.2 exhibit992erpresentation
Earnings Presentation October 23, 2023 NASDAQ: IBTX Exhibit 99.2


 
NASDAQ: IBTX 2 Safe Harbor Statement The numbers as of and for the quarter ended September 30, 2023 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 "aim," “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” "guidance," “intends,” “plans,” “projects,” “could,” “may,” “should,” “will” or other similar words and expressions are intended to identify these forward- looking statements. These forward-looking statements are based on IBTX’s current expectations and assumptions regarding IBTX’s business, the economy, and other future conditions. Because forward- looking statements relate to future results and occurrences, they are subject to inherent uncertainties, assumptions, risks, and changes in circumstances that are difficult to predict. Many possible events or factors could materialize or IBTX’s underlying assumptions could prove incorrect and affect IBTX’s future financial results and performance and could cause actual results or performance to differ materially from anticipated results or performance. Such risks and uncertainties include, among others, potential regulatory actions, changes in consumer behaviors and impacts on and modifications to the operations and business of IBTX relating thereto, the impact of business, economic and political conditions in the markets in which IBTX operates, and risks relating to the coronavirus (COVID-19) pandemic and its effect on U.S. and world financial markets. Except to the extent required by applicable law or regulation, IBTX disclaims any obligation to update such factors or to publicly announce the results of any revisions to any of the forward-looking statements included herein to reflect future events or developments. Further information regarding IBTX and factors which could affect the forward-looking statements contained herein can be found in IBTX’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, Quarterly Reports on Form 10-Q for the periods ended March 31, 2023, June 30, 2023 and its other filings with the Securities and Exchange Commission.


 
NASDAQ: IBTX 3 Safe Harbor Statement (cont.) Non-GAAP Financial Measures In addition to results presented in accordance with GAAP, this presentation contains certain non-GAAP financial measures. These measures and ratios include “adjusted net income,” “tangible book value,” “tangible book value per common share,” “adjusted efficiency ratio,” “tangible common equity to tangible assets,” “return on tangible common equity,” “adjusted return on average assets,” “adjusted return on average common equity,” “adjusted return on tangible common equity,” “adjusted earnings per share,” “adjusted diluted earnings per share,” “adjusted net interest margin,” “adjusted net interest income,” “adjusted noninterest expenses” and “adjusted noninterest income” 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 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 financial measures. Certain non-GAAP financial measures exclude items of income, expenditures, expenses, assets, or liabilities, including provisions for credit losses and the effect of goodwill, other intangible assets 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 this presentation.


 
NASDAQ: IBTX 4 David R. Brooks Chairman of the Board and CEO, Director • 45 years in the financial services industry; 37 years at Independent Bank • Active in community banking since the early 1980s - led the investor group that acquired Independent Bank in 1988 Paul B. Langdale Executive Vice President, Chief Financial Officer • 13 years in the financial services industry; 5 years at Independent Bank Daniel W. Brooks Vice Chairman, Director • 42 years in the financial services industry; 36 years at Independent Bank • Active in community banking since the early 1980s Today's Presenters


 
NASDAQ: IBTX 5 2023 Q3 Results GAAP $0.79 EPS $32.8 Million Net Income 0.70% Return on Average Assets 5.51% Return on Average Equity 11.89% Total Capital Ratio 9.09% Leverage Ratio Non-GAAP1 $0.79 Adj. EPS $32.6 Million Adj. Net Income 0.70% Adj. Return on Average Assets 5.48% Adj. Return on Average Equity 9.87% Adjusted Return on Tangible Equity 7.35% TCE Highlights • Organic loan growth of 4.5% annualized for the quarter (excluding warehouse) • Resilient credit quality with nonperforming assets of 0.33% of total assets and net charge-offs of 0.01% annualized for the quarter • Continued expense discipline with total noninterest expense of $81.3 million for the quarter • Decreased loan to deposit ratio to 92.7% at quarter-end compared to 95.1% at the end of second quarter • Capital remains strong, with ratios well above the standards to be considered well-capitalized under regulatory requirements, with an estimated total capital ratio of 11.89%, leverage ratio of 9.09%, and (non-GAAP) tangible common equity (TCE) ratio of 7.35% 1Adjusted (non-GAAP) metrics. See Appendix for reconciliation to the closest applicable GAAP metrics.


 
NASDAQ: IBTX 6 2023 Q3 Selected Financials $ in thousands, except per share data As of and for the Quarter Ended Selected Balance Sheet Data September 30, 2023 June 30, 2023 September 30, 2022 Linked Quarter Change Annual Change Total Assets $ 18,519,872 $ 18,719,802 $ 17,944,493 (1.1) % 3.2 % LHFI, Excluding Mortgage Warehouse Loans 1 13,781,102 13,628,025 13,285,757 1.1 3.7 Mortgage Warehouse Loans 442,302 491,090 409,044 (9.9) 8.1 Total Deposits 15,340,969 14,873,506 14,961,008 3.1 2.5 Total Borrowings (Other Than Junior Subordinated Debentures) 546,666 1,180,262 466,892 (53.7) 17.1 Total Stockholders’ Equity 2,332,098 2,353,042 2,354,340 (0.9) (0.9) Selected Earnings and Profitability Data Net Interest Income $ 109,049 $ 113,607 $ 147,274 (4.0) % (26.0) % Net Interest Margin 2.60 % 2.71 % 3.64 % (4.1) (28.6) Noninterest Income $ 13,646 $ 14,095 $ 13,477 (3.2) 1.3 Noninterest Expense 81,334 85,705 91,733 (5.1) (11.3) Net Income 32,775 33,077 52,437 (0.9) (37.5) Adjusted Net Income 2 32,624 33,726 54,880 (3.3) (40.6) Basic EPS 0.79 0.80 1.27 (1.3) (37.8) Adjusted Basic EPS 2 0.79 0.82 1.33 (3.7) (40.6) Diluted EPS 0.79 0.80 1.27 (1.3) (37.8) Adjusted Diluted EPS 2 0.79 0.82 1.33 (3.7) (40.6) Return on Average Assets 0.70 % 0.71 % 1.16 % (1.4) (39.7) Adjusted Return on Average Assets 2 0.70 0.73 1.22 (4.1) (42.6) 1 LHFI excludes mortgage warehouse purchase loans. 2 Adjusted (non-GAAP) metrics. See Appendix for reconciliation to the closest applicable GAAP metrics.


 
NASDAQ: IBTX 7 (1) Adjusted (non-GAAP) metrics. See Appendix for reconciliation to the closest applicable GAAP metrics. (2) Includes a $53,880 reduction to retained earnings due to the January 1, 2021 CECL adoption 7 Year Ending $27.44 $28.99 $33.23 $35.25 $32.25 Tangible Book Value (1) 2018 2019 2020 2021 (2) 2022 Quarter Ending $31.44 $32.25 $31.42 $31.55 $31.11 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Tangible Book Value Trends


 
NASDAQ: IBTX 8 Quarter Ending $147.3 $109.0 $13.5 $13.4 $88.7 $81.3 $3.1 $3.1 53.23% 63.84% Q3 2022 Q3 2023 Year Ending $513.2 $520.3 $558.2 $79.7 $66.3 $53.6 $285.7 $312.0 $344.1 $12.7 $12.6 $12.5 46.04% 51.04% 54.20% Adjusted net interest income Adjusted noninterest income Adjusted noninterest expense Amortization of other intangible assets Adjusted efficiency ratio 2020 2021 2022 (1) Adjusted (non-GAAP) metrics. See Appendix for reconciliation to the closest applicable GAAP metrics. 8 $ in Millions Adjusted Efficiency Ratio Trends (1)


 
NASDAQ: IBTX 9 Total Loans by Year and Current Annual Trend ($ in Millions)(1) Quarter Ending $13,717 $14,241 Q3 2022 Q3 2023 (1) Includes loans held for sale 9 Year Ending $13,159 $12,472 $13,921 Organic Mortgage warehouse purchase loans PPP Loans 2020 2021 2022 3.8% Total Increase 2020 - 2022 CAGR 2.9% Loan Portfolio Growth


 
NASDAQ: IBTX 10 North Texas 35.3% Central Texas 13.2% Houston 24.6% Colorado 26.9% Owner Occupied CRE 21.9% As of September 30, 2023: $13,781 Million LHFI 1 $442 Million Mortgage Warehouse 0.28% NPLs/LHFI 0.01% NCOs/Avg. Total Loans 2023 Q3 Annualized 385.81% Allowance/NPLs LOANS BY REGION (9/30/2023) Non-Owner Occupied CRE 78.1% LOAN COMPOSITION (9/30/2023) 1 LHFI excludes mortgage warehouse purchase loans. Loan Portfolio Overview 5.53% 2023 YTD Loan Yield CRE 56.8% Mortgage Warehouse 3.1% 1-4 Family 11.6% 1-4 Family Construction 3.4% Consumer 0.6% C&I 15.5% Agricultural 0.9% Construction & Development 8.1%


 
NASDAQ: IBTX 11 Land/Land Development 31.7% CRE Construction 39.8% SFR Construction 28.5% Retail 20.6% Office 13.2% Industrial 5.4% Hotel/Motel 0.8% Multifamily 36.1% Healthcare 4.2% Misc. CRE 19.7% Construction & Development As of September 30, 2023: $1.6 Billion C&D Portfolio Size 82% C&D / Bank Regulatory Capital 97.2% # Loans in IBTX Markets1 (Texas and Colorado) $2.2 Million Average Loan Size1 651 C&D Loans1 32.6% Owner Occupied C&D Loans1 CRE CONSTRUCTION PORTFOLIO LOANS > $500 THOUSAND (9/30/2023) C&D PORTFOLIO LOANS > $500 THOUSAND (9/30/2023) 1Loans > $500 thousand


 
NASDAQ: IBTX 12 Multifamily 11.7% Office and Office Warehouse 19.2% Retail 30.1% Hotel/Motel 4.6% Industrial 11.4% Daycare/School 2.7% Healthcare 4.5% Church 1.6% Convenience Store 3.7% Mini Storage 1.3% Restaurant 2.0% Miscellaneous 3.9% Mixed Use (Non-Retail) 0.7% Dealerships 0.8% RV & Mobile Home Parks 1.8% Commercial Real Estate CRE COMPOSITION (9/30/2023) As of September 30, 2023: $8.1 Billion CRE Loans $32.7 Million Largest CRE Loan Size $1.7 Million Average CRE Loan Size 21.9% Owner Occupied


 
NASDAQ: IBTX 13 Retail CRE & C&D As of September 30, 2023: $2.6 Billion Retail Loan Portfolio Size $31.5 Million Largest Retail Loan 1,067 Total Retail Loans 88.6% Loans in IBTX Markets (Texas and Colorado) $2.4 Million Average Loan Size 137 Number of Loans >$5MM $10.1 Million Avg. Size of Loans >$5MM Strip Center 67.8% Big Box 1.2% Mixed Use 18.0% Free Standing / Single Tenant 13.0% RETAIL CRE & C&D COMPOSITION LOANS > $500 THOUSAND 9/30/2023


 
NASDAQ: IBTX 14 Office Non-Owner Occupied 50.8% Office Owner Occupied 16.0% Office/Warehouse Non- Owner Occupied 21.5% Office/Warehouse Owner Occupied 11.7% Office CRE & C&D As of September 30, 2023: $1.6 Billion Total Office CRE & C&D $23.1 Million Largest Office Loan $1.2 Million Average Loan Size 27.7% Owner Occupied 33.2% Office/Warehouse OFFICE CRE & C&D COMPOSITION 9/30/2023


 
NASDAQ: IBTX 15 Hotel Loans by Property Location 48.8% 35.8% Texas Colorado Other Hotel & Motel As of September 30, 2023: $379.2 Million Hotel & Motel Loan Portfolio Size $5.7 Million Average Loan Size 50.8% Average LTV We maintain a granular book of hotel loans in our markets, the majority of which are branded, limited/ select service properties in our core markets across Texas and Colorado. Hotel Loans by Type 98.8% 1.2% CRE Construction & Development 15.4% Hotel Loans by Product Type 17.1% 76.6% 6.3% Full Service Brand Limited/Selected Service Brand Boutique/Independent


 
NASDAQ: IBTX 16 Energy Lending As of September 30, 2023: $613.9 Million Size of Energy Portfolio 99.0% / 1.0% E&P Loans / Services Loans 1.4% Energy ACL / Energy Loans 4.5% Energy Loans / Total LHFI Energy by Type (1) $607.8 $6.1 E&P Services $ in millions (1) Energy assets are well-diversified by basin across the United States.


 
NASDAQ: IBTX 17 3.03% 3.43% 2.91% 2.36% 1.83% 1.44% 1.49% 1.50% 0.91% 0.68% 0.64% 0.76% 0.53% 0.41% 0.48% 4.41% 4.15% 4.11% 3.36% 2.67% 2.07% 1.71% 1.57% 1.31% 1.12% 0.98% 1.22% 0.94% 0.80% 0.67% 1.62% 1.89% 1.14% 0.81% 0.53% 0.32% 0.37% 0.39% 0.24% 0.16% 0.24% 0.44% 0.49% 0.29% 0.28% IBTX U.S. Average Texas Average 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Q3 1.22% 1.05% 0.74% 0.40% 0.19% 0.11% 0.16% 0.28% 0.18% 0.18% 0.16% 0.26% 0.05% 0.05% 0.08% 2.67% 2.67% 1.64% 1.12% 0.70% 0.49% 0.43% 0.46% 0.48% 0.46% 0.49% 0.49% 0.24% 0.26% 0.43% 0.21% 0.31% 0.11% 0.06% 0.09% 0.03% 0.02% 0.12% 0.01% 0.06% 0.07% 0.05% 0.06% 0.04% 0.01% IBTX U.S. Average Texas Average 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 YTD Historically Strong Credit Culture Source: S&P Capital IQ. Note: Financial data as of and for the YTD period ended June 30, 2023 for U.S. and Texas banking industry aggregate data and September 30, 2023 for IBTX. (1) LHFI excludes mortgage warehouse purchase loans. NCOs / Average Total LoansNPLs / LHFI (1)


 
NASDAQ: IBTX 18 Quarter Ending $3,100 $2,833 $90 $220 $340 $1,295 $808 $1,216 $(886) $437 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Year Ending $42,993 $(9,000) $4,490 $6,634 $7,420 $5,187 Provision expense Net charge-offs 2020 2021 2022 $ in Thousands 18 Provision & Net Charge-offs 0.05% 0.04%0.06% (0.03)% 0.01%0.04% 0.04%0.02% NCOs / Avg. Total Loans (1) (1) Quarterly metrics are annualized.


 
NASDAQ: IBTX 19 Period Ending $11,941 $14,399 $15,554 $15,121 $15,341 1.08% 0.59% 0.29% 0.52% 2.20% Deposits Average YTD Rate (3) 2019 2020 2021 2022 Q3 2023 Noninterest- Bearing Demand 24.1% Interest-Bearing Checking 25.2% Public Funds 12.4% Savings 3.7% Money Market 10.6% Brokered CDs 9.6% CDs < $100k 2.9% CDs > $100k 11.1% IRAs 0.4% (3) Average rate for total deposits 19 QTD Q3 2023 average rate for interest-bearing deposits: 3.60% Total cost of deposits QTD (3) Q3 2023: 2.69% Deposit Mix, Uninsured Deposits & Pricing DEPOSIT MIX 9/30/2023 DEPOSIT GROWTH VS. AVERAGE RATE $ in Millions ($ in Millions) Total Ratio (1) Uninsured Deposits $ 6,254 40.8 % Adjusted Uninsured Deposits (2) 4,586 29.9 UNINSURED DEPOSITS 9/30/2023 (1) Calculated as a % of total deposits (2) Excludes $1,668M of fully collateralized preferred deposits in the public funds portfolio


 
NASDAQ: IBTX 20 20 Funding Vertical Trends $3,761 $7,070 $1,762 $414 $1,867 $875 $3,594 $7,479 $2,193 $330 $1,745 $275 June 30, 2023 September 30, 2023 Branch Deposits - Non-Interest Bearing Branch Deposits - Interest Bearing Brokered Deposits Non-Brokered Specialty Treasury Deposits Public Funds FHLB Advances $ in Millions


 
NASDAQ: IBTX 21 CRA —% Agency Securities 21.4% Tax-Exempt Municipals 22.7% Mortgage- Backed Securities 39.7% Taxable Municipals 1.8% U.S. Treasury Securities 12.4% Corporates 2.0% 23.9% 76.1% 54.5% 45.5% Securities Portfolio As of September 30, 2023: 2.23% QTD Yield 7.69 Duration in Years 9.5% of Total Assets $1.5 Billion AFS Portfolio Size $205.7 Million HTM Portfolio Size INVESTMENT PORTFOLIO COMPOSITION 9/30/2023 HTM AFS HTM AFS


 
NASDAQ: IBTX 22 Consolidated Capital (1) Adjusted (non-GAAP) metrics. See Appendix for reconciliation to the closest applicable GAAP metrics. Period Ending 9.76% 10.33% 11.12% 10.09% 9.70% 9.78% 9.86%9.32% 9.12% 8.80% 9.49% 9.01% 8.92% 9.09% 11.83% 13.32% 13.67% 12.35% 11.88% 11.95% 11.89% 8.98% 8.60% 8.53% 7.72% 7.31% 7.37% 7.35% 10.19% 10.74% 11.52% 10.45% 10.05% 10.13% 10.21% Common equity tier 1 to risk-weighted assets Tier 1 capital to average assets Total capital to risk-weighted assets Tangible common equity to tangible assets (1) Tier 1 capital to risk-weighted assets 12/31/19 12/31/20 12/31/21 12/31/22 2023 Q1 2023 Q2 2023 Q3


 
23 APPENDIX Supplemental Information – Reconciliation of Non-GAAP Financial Measures (Unaudited) Reconciliation of Adjusted Net Income, EPS, Efficiency Ratio and Profitability Ratios – Quarterly Periods As of and for the Quarter Ended ($ in thousands except per share data) September 30, 2023 June 30, 2023 September 30, 2022 Net Interest Income - Reported (a) $109,049 $113,607 $147,274 Provision Expense - Reported (b) 340 220 3,100 Noninterest Income - Reported (c) 13,646 14,095 13,477 Loss on sale of loans 7 7 — Loss (gain) on sale and disposal of premises and equipment 56 (354) 101 Recoveries on loans charged off prior to acquisition (279) (13) (60) Adjusted Noninterest Income (d) 13,430 13,735 13,518 Noninterest Expense - Reported (e) 81,334 85,705 91,733 Separation expense (1) — — (2,809) Economic development employee incentive grant — — 1,000 OREO impairment — (1,000) — Impairment of assets — (153) (1,156) Acquisition expense (2) (27) (27) (65) Adjusted Noninterest Expense (f) 81,307 84,525 88,703 Income Tax Expense - Reported (g) 8,246 8,700 13,481 Net Income - Reported (a) - (b) + (c) - (e) - (g) = (h) 32,775 33,077 52,437 Adjusted Net Income (3) (a) - (b) + (d) - (f) = (i) $32,624 $33,726 $54,880 Average shares for basic EPS (j) 41,284,964 41,280,312 41,167,258 Average shares for diluted EPS (k) 41,381,034 41,365,275 41,253,662 Reported Basic EPS (h) / (j) $0.79 $0.80 $1.27 Reported Diluted EPS (h) / (k) $0.79 0.80 1.27 Adjusted Basic EPS (i) / (j) 0.79 0.82 1.33 Adjusted Diluted EPS (i) / (k) 0.79 0.82 1.33 EFFICIENCY RATIO Amortization of other intangible assets (l) $3,111 $3,111 $3,117 Reported Efficiency Ratio (e - l) / (a + c) 63.75% 64.68% 55.13% Adjusted Efficiency Ratio (f - l) / (a + d) 63.84 63.93 53.23 PROFITABILITY (4) Total Average Assets (m) $18,520,600 $18,652,450 $17,893,072 Total Average Stockholders Common Equity (n) 2,360,175 2,360,226 2,401,544 Total Average Tangible Common Equity (5) (o) 1,311,417 1,308,368 1,340,363 Reported Return on Average Assets (h) / (m) 0.70% 0.71% 1.16% Reported Return on Average Common Equity (h) / (n) 5.51 5.62 8.66 Reported Return on Average Common Tangible Equity (h) / (o) 9.92 10.14 15.52 Adjusted Return on Average Assets (6) (i) / (m) 0.70 0.73 1.22 Adjusted Return on Average Common Equity (6) (i) / (n) 5.48 5.73 9.07 Adjusted Return on Tangible Common Equity (6) (i) / (o) 9.87 10.34 16.24 (1) Separation expenses include severance and accelerated vesting expense for stock awards related to the separation of certain employees. The quarter ended September 30, 2022 reflect payments made due to the separation of an executive officer and also includes $202 thousand in severance payments and accelerated vesting expense for stock awards related to the dissolution of a Company department. (2) Acquisition expenses includes compensation related expenses for equity awards granted at acquisition. (3) Assumes an adjusted effective tax rate of 20.1%, 20.8% and 20.5%, respectively. (4) Quarterly metrics are annualized. (5) Excludes average balance of goodwill and net other intangible assets. (6) Calculated using adjusted net income.


 
24 APPENDIX Supplemental Information – Reconciliation of Non-GAAP Financial Measures (Unaudited) Reconciliation of Adjusted Net Income, EPS, Efficiency Ratio and Profitability Ratios – Annual Periods For the Year Ended December 31, ($ in thousands except per share data) 2022 2021 2020 Net Interest Income - Reported (a) $558,208 $520,322 $516,446 Unexpected income recognized on credit impaired acquired loans (1) — — (3,209) Adjusted Net Interest Income (b) 558,208 520,322 513,237 Provision Expense - Reported (c) 4,490 (9,000) 42,993 Noninterest Income - Reported (d) 51,466 66,517 85,063 Loss (gain) on sale of loans 1,844 (56) (356) (Gain) loss on sale of other real estate — (63) 36 Gain on sale of securities available for sale — (13) (382) Loss (gain) on sale and disposal of premises and equipment 494 304 (370) Recoveries on loans charged off prior to acquisition (192) (381) (4,312) Adjusted Noninterest Income (e) 53,612 66,308 79,679 Noninterest Expense - Reported (f) 358,889 313,606 306,134 Separation expense (2) (11,046) — — Economic development employee incentive grant 1,000 — — OREO impairment — — (784) Impairment of assets (4,442) (124) (462) COVID-19 expense (3) — (614) (1,915) Acquisition expense (4) (300) (900) (17,294) Adjusted Noninterest Expense (g) 344,101 311,968 285,679 Income Tax Expense - Reported (h) 50,004 57,483 51,173 Net Income - Reported (a) - (c) + (d) - (f) - (h) = (i) 196,291 224,750 201,209 Adjusted Net Income (5) (b) - (c) + (e) - (g) = (j) $209,747 $225,893 $210,017 Average shares for basic EPS (k) 41,710,829 43,070,452 43,116,965 Average shares for diluted EPS (l) 41,794,088 43,129,237 43,116,965 Reported Basic EPS (i) / (k) $4.71 $5.22 $4.67 Reported Diluted EPS (i) / (l) 4.70 5.21 4.67 Adjusted Basic EPS (j) / (k) 5.03 5.24 4.87 Adjusted Diluted EPS (j) / (l) 5.02 5.24 4.87 EFFICIENCY RATIO Amortization of other intangible assets (m) $12,491 $12,580 $12,671 Reported Efficiency Ratio (f - m) / (a + d) 56.82% 51.30% 48.79% Adjusted Efficiency Ratio (g - m) / (b + e) 54.20 51.04 46.04 PROFITABILITY Total Average Assets (n) $18,009,090 $18,558,168 $16,357,736 Total Average Stockholders Common Equity (o) 2,442,315 2,536,658 2,435,474 Total Average Tangible Common Equity (6) (p) 1,379,603 1,461,400 1,347,584 Reported Return on Average Assets (i) / (n) 1.09% 1.21% 1.23% Reported Return on Average Common Equity (i) / (o) 8.04 8.86 8.26 Reported Return on Average Common Tangible Equity (i) / (p) 14.23 15.38 14.93 Adjusted Return on Average Assets (7) (j) / (n) 1.16 1.22 1.28 Adjusted Return on Average Common Equity (7) (j) / (o) 8.59 8.91 8.62 Adjusted Return on Tangible Common Equity (7) (j) / (p) 15.20 15.46 15.58 (1) This is not applicable starting in 2021 under the adoption of CECL. (2) Separation expenses include severance and accelerated vesting expense for stock awards related to the separation of certain employees. The year ended December 31, 2022 reflects a reduction in workforce due to the restructuring of certain departments and business lines, payments made due to the separation of executive officers and payments made related to the dissolution of a Company department. (3) COVID-19 expense includes expenses for COVID testing kits, vaccination incentive bonuses, and personal protection and cleaning supplies. (4) Acquisition expenses includes compensation related expenses for equity awards granted at acquisition and for 2020 also includes legal, accounting and advisory services, as well as data processing conversion costs and contract termination costs related to acquisition of other banks. (5) Assumes an adjusted effective tax rate of 20.3%, 20.4% and 20.5%, respectively. (6) Excludes average balance of goodwill and net other intangible assets and preferred stock. (7) Calculated using adjusted net income.


 
25 APPENDIX Supplemental Information – Reconciliation of Non-GAAP Financial Measures (Unaudited) Reconciliation of Tangible Common Equity to Tangible Assets and Tangible Book Value Per Common Share – Quarterly Periods ($ in thousands, except per share information) September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 Tangible Common Equity Total common stockholders equity $2,332,098 $2,353,042 $2,350,857 $2,385,383 $2,354,340 Adjustments: Goodwill (994,021) (994,021) (994,021) (994,021) (994,021) Other intangible assets, net (53,666) (56,777) (59,888) (62,999) (66,110) Tangible Common Equity $1,284,411 $1,302,244 $1,296,948 $1,328,363 $1,294,209 Tangible Assets Total Assets $18,519,872 $18,719,802 $18,798,354 $18,258,414 $17,944,493 Adjustments: Goodwill (994,021) (994,021) (994,021) (994,021) (994,021) Other intangible assets, net (53,666) (56,777) (59,888) (62,999) (66,110) Tangible Assets $17,472,185 $17,669,004 $17,744,445 $17,201,394 $16,884,362 Common shares outstanding 41,284,003 41,279,460 41,281,904 41,190,677 41,165,006 Tangible Common Equity To Tangible Assets 7.35% 7.37% 7.31% 7.72% 7.67% Book value per common share $56.49 $57.00 $56.95 $57.91 $57.19 Tangible book value per common share $31.11 $31.55 $31.42 $32.25 $31.44


 
26 APPENDIX Supplemental Information – Reconciliation of Non-GAAP Financial Measures (Unaudited) Reconciliation of Tangible Common Equity to Tangible Assets and Tangible Book Value Per Common Share – Annual Periods ($ in thousands, except per share information) December 31, 2022 December 31, 2021 December 31, 2020 December 31, 2019 December 31, 2018 Tangible Common Equity Total common stockholders equity $2,385,383 $2,576,650 $2,515,371 $2,339,773 $1,606,433 Adjustments: Goodwill (994,021) (994,021) (994,021) (994,021) (721,797) Other intangible assets, net (62,999) (75,490) (88,070) (100,741) (45,042) Tangible Common Equity $1,328,363 $1,507,139 $1,433,280 $1,245,011 $839,594 Tangible Assets Total Assets $18,258,414 $18,732,648 $17,753,476 $14,958,207 $9,849,965 Adjustments: Goodwill (994,021) (994,021) (994,021) (994,021) (721,797) Other intangible assets, net (62,999) (75,490) (88,070) (100,741) (45,042) Tangible Assets $17,201,394 $17,663,137 $16,671,385 $13,863,445 $9,083,126 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 common share $57.91 $60.26 $58.31 $54.48 $52.50 Tangible book value per common share $32.25 $35.25 $33.23 $28.99 $27.44