ý | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. |
¨ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. |
Texas | 13-4219346 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
1600 Redbud Boulevard, Suite 400 McKinney, Texas | 75069-3257 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | ý | Accelerated filer | ¨ | ||||
Non-accelerated filer | ¨ | (Do not check if a smaller reporting company) | |||||
Smaller reporting company | ¨ | ||||||
Emerging growth company | ¨ |
PART I. | |||
Item 1. | |||
Item 2. | |||
Item 3. | |||
Item 4. | |||
PART II. | |||
Item 1. | |||
Item 1A. | |||
Item 2 | |||
Item 3. | |||
Item 4. | |||
Item 5. | |||
Item 6. | |||
June 30, | December 31, | |||||||
Assets | 2018 | 2017 | ||||||
Cash and due from banks | $ | 321,241 | $ | 187,574 | ||||
Interest-bearing deposits in other banks | 125,808 | 243,528 | ||||||
Cash and cash equivalents | 447,049 | 431,102 | ||||||
Certificates of deposit held in other banks | 1,225 | 12,985 | ||||||
Securities available for sale, at fair value | 791,065 | 763,002 | ||||||
Loans held for sale | 30,056 | 39,202 | ||||||
Loans, net | 7,598,644 | 6,432,273 | ||||||
Premises and equipment, net | 155,187 | 147,835 | ||||||
Other real estate owned | 4,200 | 7,126 | ||||||
Federal Home Loan Bank (FHLB) of Dallas stock and other restricted stock | 39,003 | 29,184 | ||||||
Bank-owned life insurance (BOLI) | 127,848 | 113,170 | ||||||
Deferred tax asset | 14,790 | 9,763 | ||||||
Goodwill | 721,578 | 621,458 | ||||||
Core deposit intangible, net | 48,052 | 43,244 | ||||||
Other assets | 38,340 | 34,119 | ||||||
Total assets | $ | 10,017,037 | $ | 8,684,463 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Deposits: | ||||||||
Noninterest-bearing | $ | 2,170,639 | $ | 1,907,770 | ||||
Interest-bearing | 5,362,766 | 4,725,052 | ||||||
Total deposits | 7,533,405 | 6,632,822 | ||||||
FHLB advances | 750,626 | 530,667 | ||||||
Other borrowings | 137,098 | 136,911 | ||||||
Junior subordinated debentures | 27,753 | 27,654 | ||||||
Other liabilities | 29,886 | 20,391 | ||||||
Total liabilities | 8,478,768 | 7,348,445 | ||||||
Commitments and contingencies | ||||||||
Stockholders’ equity: | ||||||||
Preferred stock (0 and 0 shares outstanding, respectively) | — | — | ||||||
Common stock (30,468,413 and 28,254,893 shares outstanding, respectively) | 305 | 283 | ||||||
Additional paid-in capital | 1,312,432 | 1,151,990 | ||||||
Retained earnings | 235,689 | 184,232 | ||||||
Accumulated other comprehensive loss | (10,157 | ) | (487 | ) | ||||
Total stockholders’ equity | 1,538,269 | 1,336,018 | ||||||
Total liabilities and stockholders’ equity | $ | 10,017,037 | $ | 8,684,463 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Interest income: | ||||||||||||||||
Interest and fees on loans | $ | 91,614 | $ | 75,194 | $ | 174,889 | $ | 128,938 | ||||||||
Interest on taxable securities | 3,501 | 2,303 | 6,404 | 3,067 | ||||||||||||
Interest on nontaxable securities | 1,179 | 992 | 2,372 | 1,533 | ||||||||||||
Interest on interest-bearing deposits and other | 788 | 1,394 | 1,531 | 2,284 | ||||||||||||
Total interest income | 97,082 | 79,883 | 185,196 | 135,822 | ||||||||||||
Interest expense: | ||||||||||||||||
Interest on deposits | 12,827 | 6,981 | 22,626 | 12,010 | ||||||||||||
Interest on FHLB advances | 2,847 | 1,351 | 4,733 | 2,522 | ||||||||||||
Interest on repurchase agreements and other borrowings | 2,097 | 1,716 | 4,199 | 3,421 | ||||||||||||
Interest on junior subordinated debentures | 402 | 335 | 762 | 502 | ||||||||||||
Total interest expense | 18,173 | 10,383 | 32,320 | 18,455 | ||||||||||||
Net interest income | 78,909 | 69,500 | 152,876 | 117,367 | ||||||||||||
Provision for loan losses | 2,730 | 2,472 | 5,425 | 4,495 | ||||||||||||
Net interest income after provision for loan losses | 76,179 | 67,028 | 147,451 | 112,872 | ||||||||||||
Noninterest income: | ||||||||||||||||
Service charges on deposit accounts | 3,533 | 3,760 | 7,018 | 5,687 | ||||||||||||
Mortgage banking revenue | 3,609 | 5,019 | 7,023 | 6,286 | ||||||||||||
Gain (loss) on sale of other real estate | 58 | (36 | ) | 118 | (36 | ) | ||||||||||
(Loss) gain on sale of securities available for sale | (10 | ) | 52 | (234 | ) | 52 | ||||||||||
(Loss) gain on sale of premises and equipment | (89 | ) | 1 | (97 | ) | 6 | ||||||||||
Increase in cash surrender value of BOLI | 758 | 782 | 1,497 | 1,181 | ||||||||||||
Other | 2,274 | 1,417 | 4,263 | 2,402 | ||||||||||||
Total noninterest income | 10,133 | 10,995 | 19,588 | 15,578 | ||||||||||||
Noninterest expense: | ||||||||||||||||
Salaries and employee benefits | 26,790 | 27,089 | 51,958 | 43,926 | ||||||||||||
Occupancy | 6,018 | 6,147 | 11,682 | 10,019 | ||||||||||||
Data processing | 2,467 | 2,615 | 4,872 | 3,903 | ||||||||||||
FDIC assessment | 712 | 1,201 | 1,453 | 2,079 | ||||||||||||
Advertising and public relations | 332 | 317 | 717 | 614 | ||||||||||||
Communications | 793 | 852 | 1,734 | 1,327 | ||||||||||||
Other real estate owned expenses, net | 119 | 125 | 209 | 162 | ||||||||||||
Impairment of other real estate | — | 120 | 85 | 120 | ||||||||||||
Core deposit intangible amortization | 1,393 | 1,410 | 2,724 | 1,902 | ||||||||||||
Professional fees | 1,133 | 1,166 | 2,252 | 1,939 | ||||||||||||
Acquisition expense, including legal | 3,444 | 5,673 | 3,989 | 5,819 | ||||||||||||
Other | 5,957 | 4,613 | 12,441 | 7,546 | ||||||||||||
Total noninterest expense | 49,158 | 51,328 | 94,116 | 79,356 | ||||||||||||
Income before taxes | 37,154 | 26,695 | 72,923 | 49,094 | ||||||||||||
Income tax expense | 7,519 | 8,561 | 14,324 | 15,289 | ||||||||||||
Net income | $ | 29,635 | $ | 18,134 | $ | 58,599 | $ | 33,805 | ||||||||
Basic earnings per share | $ | 1.02 | $ | 0.65 | $ | 2.04 | $ | 1.45 | ||||||||
Diluted earnings per share | $ | 1.02 | $ | 0.65 | $ | 2.04 | $ | 1.44 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net income | $ | 29,635 | $ | 18,134 | $ | 58,599 | $ | 33,805 | ||||||||
Other comprehensive income (loss) before tax: | ||||||||||||||||
Change in net unrealized gains (losses) on available for sale securities during the year | (1,264 | ) | 5,314 | (12,179 | ) | 7,314 | ||||||||||
Reclassification for amount realized through sales of securities available for sale included in net income | 10 | (52 | ) | 234 | (52 | ) | ||||||||||
Other comprehensive income (loss) before tax | (1,254 | ) | 5,262 | (11,945 | ) | 7,262 | ||||||||||
Income tax expense (benefit) | (263 | ) | 1,842 | (2,508 | ) | 2,542 | ||||||||||
Other comprehensive income (loss), net of tax | (991 | ) | 3,420 | (9,437 | ) | 4,720 | ||||||||||
Comprehensive income | $ | 28,644 | $ | 21,554 | $ | 49,162 | $ | 38,525 |
Preferred Stock $.01 Par Value 10 million shares authorized | Common Stock $.01 Par Value 100 million shares authorized | Additional Paid in Capital | Retained Earnings | Accumulated Other Comprehensive (Loss) Income | Total | |||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||
Balance, December 31, 2017 | $ | — | 28,254,893 | $ | 283 | $ | 1,151,990 | $ | 184,232 | $ | (487 | ) | $ | 1,336,018 | ||||||||||||
Cumulative effect of accounting change | — | — | — | — | 233 | (233 | ) | — | ||||||||||||||||||
Net income | — | — | — | — | 58,599 | — | 58,599 | |||||||||||||||||||
Other comprehensive loss, net of tax | — | — | — | — | — | (9,437 | ) | (9,437 | ) | |||||||||||||||||
Stock issued for acquisition of bank, net of offering costs of $209 | — | 2,071,981 | 21 | 157,033 | — | — | 157,054 | |||||||||||||||||||
Restricted stock forfeited | — | (3,845 | ) | — | — | — | — | — | ||||||||||||||||||
Restricted stock granted | — | 118,912 | 1 | (1 | ) | — | — | — | ||||||||||||||||||
Stock based compensation expense | — | — | — | 2,955 | — | — | 2,955 | |||||||||||||||||||
Exercise of warrants | — | 26,472 | — | 455 | — | — | 455 | |||||||||||||||||||
Cash dividends ($0.26 per share) | — | — | — | — | (7,375 | ) | — | (7,375 | ) | |||||||||||||||||
Balance, June 30, 2018 | $ | — | 30,468,413 | $ | 305 | $ | 1,312,432 | $ | 235,689 | $ | (10,157 | ) | $ | 1,538,269 | ||||||||||||
Balance, December 31, 2016 | $ | — | 18,870,312 | $ | 189 | $ | 555,325 | $ | 117,951 | $ | (1,100 | ) | $ | 672,365 | ||||||||||||
Net income | — | — | — | — | 33,805 | — | 33,805 | |||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | — | — | 4,720 | 4,720 | |||||||||||||||||||
Stock issued for acquisition of bank, net of offering costs of $942 | 8,804,699 | 88 | 565,112 | — | — | 565,200 | ||||||||||||||||||||
Restricted stock granted | — | 111,930 | 1 | (1 | ) | — | — | — | ||||||||||||||||||
Stock based compensation expense | — | — | — | 2,166 | — | — | 2,166 | |||||||||||||||||||
Exercise of warrants | — | 3,203 | — | 55 | — | — | 55 | |||||||||||||||||||
Cash dividends ($0.20 per share) | — | — | — | — | (4,670 | ) | — | (4,670 | ) | |||||||||||||||||
Balance, June 30, 2017 | $ | — | 27,790,144 | $ | 278 | $ | 1,122,657 | $ | 147,086 | $ | 3,620 | $ | 1,273,641 |
Six Months Ended June 30, | ||||||||
2018 | 2017 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 58,599 | $ | 33,805 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation expense | 4,129 | 4,036 | ||||||
Accretion of income recognized on acquired loans | (6,177 | ) | (2,066 | ) | ||||
Amortization of core deposit intangibles | 2,724 | 1,902 | ||||||
Amortization of premium on securities, net | 2,037 | 1,635 | ||||||
Amortization of discount and origination costs on borrowings | 315 | 228 | ||||||
Stock based compensation expense | 2,955 | 2,166 | ||||||
Excess tax benefit on restricted stock vested | (613 | ) | (1,244 | ) | ||||
FHLB stock dividends | (318 | ) | (189 | ) | ||||
Loss (gain) on sale of securities available for sale | 234 | (52 | ) | |||||
Loss (gain) on sale of premises and equipment | 97 | (6 | ) | |||||
(Gain) loss on sale of other real estate owned | (118 | ) | 36 | |||||
Impairment of other real estate | 85 | 120 | ||||||
Deferred tax expense | 770 | 2,036 | ||||||
Provision for loan losses | 5,425 | 4,495 | ||||||
Increase in cash surrender value of BOLI | (1,497 | ) | (1,181 | ) | ||||
Originations of loans held for sale | (206,814 | ) | (191,220 | ) | ||||
Proceeds from sale of loans held for sale | 215,960 | 188,579 | ||||||
Net change in other assets | (1,074 | ) | (6,229 | ) | ||||
Net change in other liabilities | (141 | ) | (5,672 | ) | ||||
Net cash provided by operating activities | 76,578 | 31,179 | ||||||
Cash flows from investing activities: | ||||||||
Proceeds from maturities, calls and pay downs of securities available for sale | 1,060,297 | 699,005 | ||||||
Proceeds from sale of securities available for sale | 27,473 | 16,810 | ||||||
Purchases of securities available for sale | (1,105,323 | ) | (778,030 | ) | ||||
Purchases of certificates of deposits held in other banks | — | (1,960 | ) | |||||
Proceeds from maturities of certificates of deposits held in other banks | 11,760 | — | ||||||
Purchase of bank owned life insurance contracts | (5,000 | ) | — | |||||
Net (purchases) redemptions of FHLB stock | (6,144 | ) | 8,907 | |||||
Net loans originated held for investment | (513,801 | ) | (273,256 | ) | ||||
Net originations of mortgage warehouse purchase loans | (96 | ) | (19,895 | ) | ||||
Additions to premises and equipment | (9,937 | ) | (1,756 | ) | ||||
Proceeds from sale of premises and equipment | 3,139 | 10 | ||||||
Proceeds from sale of other real estate owned | 2,959 | 1,235 | ||||||
Capitalized additions to other real estate | — | (853 | ) | |||||
Cash received from acquired bank | 44,723 | 148,444 | ||||||
Cash paid in connection with acquisition | (31,016 | ) | (17,773 | ) | ||||
Net cash used in investing activities | (520,966 | ) | (219,112 | ) | ||||
Cash flows from financing activities: | ||||||||
Net increase in demand deposits, money market and savings accounts | 240,738 | 316,272 | ||||||
Net increase (decrease) in time deposits | 66,767 | (46,031 | ) | |||||
Proceeds from FHLB advances | 960,000 | — | ||||||
Repayments of FHLB advances | (800,041 | ) | (39 | ) | ||||
Net change in repurchase agreements | — | (1,839 | ) | |||||
Proceeds from exercise of common stock warrants | 455 | 55 | ||||||
Offering costs paid in connection with acquired bank | (209 | ) | (942 | ) | ||||
Dividends paid | (7,375 | ) | (4,670 | ) | ||||
Net cash provided by financing activities | 460,335 | 262,806 | ||||||
Net change in cash and cash equivalents | 15,947 | 74,873 | ||||||
Cash and cash equivalents at beginning of year | 431,102 | 505,027 | ||||||
Cash and cash equivalents at end of period | $ | 447,049 | $ | 579,900 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Basic earnings per share: | |||||||||||||||
Net income | $ | 29,635 | $ | 18,134 | $ | 58,599 | $ | 33,805 | |||||||
Less: | |||||||||||||||
Undistributed earnings allocated to participating securities | 221 | 134 | 465 | 301 | |||||||||||
Dividends paid on participating securities | 35 | 24 | 68 | 48 | |||||||||||
Net income available to common shareholders | $ | 29,379 | $ | 17,976 | $ | 58,066 | $ | 33,456 | |||||||
Weighted-average basic shares outstanding | 28,814,759 | 27,541,007 | 28,434,002 | 23,128,653 | |||||||||||
Basic earnings per share | $ | 1.02 | $ | 0.65 | $ | 2.04 | $ | 1.45 | |||||||
Diluted earnings per share: | |||||||||||||||
Net income available to common shareholders | $ | 29,379 | $ | 17,976 | $ | 58,066 | $ | 33,456 | |||||||
Total weighted-average basic shares outstanding | 28,814,759 | 27,541,007 | 28,434,002 | 23,128,653 | |||||||||||
Add dilutive stock warrants | 92,392 | 104,901 | 92,187 | 106,050 | |||||||||||
Total weighted-average diluted shares outstanding | 28,907,151 | 27,645,908 | 28,526,189 | 23,234,703 | |||||||||||
Diluted earnings per share | $ | 1.02 | $ | 0.65 | $ | 2.04 | $ | 1.44 | |||||||
Anti-dilutive participating securities | 63,003 | 92,658 | 111,538 | 109,465 |
Six Months Ended June 30, | ||||||||
2018 | 2017 | |||||||
Cash transactions: | ||||||||
Interest expense paid | $ | 31,410 | $ | 17,891 | ||||
Income taxes paid | $ | 9,009 | $ | 14,511 | ||||
Noncash transactions: | ||||||||
Transfers of loans to other real estate owned | $ | — | $ | 750 | ||||
Securities purchased, not yet settled | $ | — | $ | 33,270 |
Six Months Ended June 30, | ||||||||
2018 | 2017 | |||||||
Noncash assets acquired | ||||||||
Certificates of deposit held in other banks | $ | — | $ | 11,025 | ||||
Securities available for sale | 24,726 | 336,540 | ||||||
Restricted stock | 3,357 | 11,110 | ||||||
Loans | 651,722 | 1,384,041 | ||||||
Premises and equipment | 4,800 | 63,561 | ||||||
Other real estate owned | — | 9,976 | ||||||
Goodwill | 100,120 | 362,993 | ||||||
Core deposit intangibles | 7,532 | 36,717 | ||||||
Bank owned life insurance | 8,181 | 53,213 | ||||||
Other assets | 6,416 | 25,301 | ||||||
Total assets | $ | 806,854 | $ | 2,294,477 | ||||
Noncash liabilities assumed: | ||||||||
Deposits | $ | 593,078 | $ | 1,825,181 | ||||
Repurchase agreements | — | 18,003 | ||||||
FHLB advances | 60,000 | — | ||||||
Junior subordinated debt | — | 9,359 | ||||||
Other liabilities | 10,220 | 6,463 | ||||||
Total liabilities | $ | 663,298 | $ | 1,859,006 | ||||
Cash and cash equivalents acquired from acquisitions | $ | 44,723 | $ | 148,444 | ||||
Cash paid to shareholders of acquired banks | $ | 31,016 | $ | 17,773 | ||||
Fair value of common stock issued to shareholders of acquired bank | $ | 157,263 | $ | 566,142 |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
Securities Available for Sale | ||||||||||||||||
June 30, 2018 | ||||||||||||||||
U.S. treasuries | $ | 20,420 | $ | — | $ | (601 | ) | $ | 19,819 | |||||||
Government agency securities | 207,403 | 41 | (3,969 | ) | 203,475 | |||||||||||
Obligations of state and municipal subdivisions | 212,279 | 925 | (3,481 | ) | 209,723 | |||||||||||
Residential pass-through securities guaranteed by FNMA, GNMA, and FHLMC | 364,570 | 296 | (6,818 | ) | 358,048 | |||||||||||
$ | 804,672 | $ | 1,262 | $ | (14,869 | ) | $ | 791,065 | ||||||||
December 31, 2017 | ||||||||||||||||
U.S. treasuries | $ | 37,480 | $ | — | $ | (326 | ) | $ | 37,154 | |||||||
Government agency securities | 213,649 | 83 | (2,223 | ) | 211,509 | |||||||||||
Obligations of state and municipal subdivisions | 228,782 | 2,118 | (1,287 | ) | 229,613 | |||||||||||
Residential pass-through securities guaranteed by FNMA, GNMA, FHLMC, FHR and GNR | 274,356 | 1,229 | (1,208 | ) | 274,377 | |||||||||||
Other securities | 10,397 | — | (48 | ) | 10,349 | |||||||||||
$ | 764,664 | $ | 3,430 | $ | (5,092 | ) | $ | 763,002 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Proceeds from sale | $ | 12,672 | $ | 16,810 | $ | 27,473 | $ | 16,810 | ||||||||
Gross gains | $ | 88 | $ | 104 | $ | 103 | $ | 104 | ||||||||
Gross losses | $ | 98 | $ | 52 | $ | 337 | $ | 52 |
June 30, 2018 | ||||||||
Securities Available for Sale | ||||||||
Amortized Cost | Fair Value | |||||||
Due in one year or less | $ | 69,055 | $ | 68,798 | ||||
Due from one year to five years | 173,021 | 169,719 | ||||||
Due from five to ten years | 98,665 | 96,477 | ||||||
Thereafter | 99,361 | 98,023 | ||||||
440,102 | 433,017 | |||||||
Residential pass-through securities guaranteed by FNMA, GNMA, and FHLMC | 364,570 | 358,048 | ||||||
$ | 804,672 | $ | 791,065 |
Less Than 12 Months | Greater Than 12 Months | Total | ||||||||||||||||||||||||||
Description of Securities | Number of Securities | Estimated Fair Value | Unrealized Losses | Number of Securities | Estimated Fair Value | Unrealized Losses | Estimated Fair Value | Unrealized Losses | ||||||||||||||||||||
Securities Available for Sale | ||||||||||||||||||||||||||||
June 30, 2018 | ||||||||||||||||||||||||||||
U.S. treasuries | 4 | $ | 16,779 | $ | (504 | ) | 1 | $ | 3,040 | $ | (97 | ) | $ | 19,819 | $ | (601 | ) | |||||||||||
Government agency securities | 36 | 100,388 | (1,947 | ) | 34 | 85,429 | (2,022 | ) | 185,817 | (3,969 | ) | |||||||||||||||||
Obligations of state and municipal subdivisions | 258 | 122,652 | (2,183 | ) | 73 | 30,519 | (1,298 | ) | 153,171 | (3,481 | ) | |||||||||||||||||
Residential pass-through securities guaranteed by FNMA, GNMA and FHLMC | 181 | 309,333 | (5,841 | ) | 13 | 27,394 | (977 | ) | 336,727 | (6,818 | ) | |||||||||||||||||
479 | $ | 549,152 | $ | (10,475 | ) | 121 | $ | 146,382 | $ | (4,394 | ) | $ | 695,534 | $ | (14,869 | ) | ||||||||||||
December 31, 2017 | ||||||||||||||||||||||||||||
U.S. treasuries | 7 | $ | 34,053 | $ | (267 | ) | 1 | $ | 3,101 | $ | (59 | ) | $ | 37,154 | $ | (326 | ) | |||||||||||
Government agency securities | 51 | 142,991 | (1,155 | ) | 27 | 60,030 | (1,068 | ) | 203,021 | (2,223 | ) | |||||||||||||||||
Obligations of state and municipal subdivisions | 202 | 87,625 | (564 | ) | 54 | 26,883 | (723 | ) | 114,508 | (1,287 | ) | |||||||||||||||||
Residential pass-through securities guaranteed by FNMA, GNMA, FHLMC, FHR and GNR | 55 | 125,970 | (834 | ) | 10 | 25,398 | (374 | ) | 151,368 | (1,208 | ) | |||||||||||||||||
Other securities | 1 | 10,349 | (48 | ) | — | — | — | 10,349 | (48 | ) | ||||||||||||||||||
316 | $ | 400,988 | $ | (2,868 | ) | 92 | $ | 115,412 | $ | (2,224 | ) | $ | 516,400 | $ | (5,092 | ) |
June 30, | December 31, | |||||||
2018 | 2017 | |||||||
Commercial | $ | 1,316,420 | $ | 1,059,984 | ||||
Real estate: | ||||||||
Commercial | 3,944,306 | 3,369,892 | ||||||
Commercial construction, land and land development | 919,564 | 744,868 | ||||||
Residential | 998,709 | 892,293 | ||||||
Single family interim construction | 347,801 | 289,680 | ||||||
Agricultural | 81,866 | 82,583 | ||||||
Consumer | 35,818 | 34,639 | ||||||
Other | 283 | 304 | ||||||
7,644,767 | 6,474,243 | |||||||
Deferred loan fees | (2,815 | ) | (2,568 | ) | ||||
Allowance for loan losses | (43,308 | ) | (39,402 | ) | ||||
$ | 7,598,644 | $ | 6,432,273 |
Commercial | Commercial Real Estate, Land and Land Development | Residential Real Estate | Single-Family Interim Construction | Agricultural | Consumer | Other | Unallocated | Total | |||||||||||||||||||
Three Months Ended June 30, 2018 | |||||||||||||||||||||||||||
Balance at the beginning of period | $ | 12,261 | $ | 24,219 | $ | 3,589 | $ | 1,636 | $ | 248 | $ | 180 | $ | 4 | $ | (177 | ) | $ | 41,960 | ||||||||
Provision for loan losses | 556 | 2,310 | (268 | ) | 7 | (24 | ) | 8 | 29 | 112 | 2,730 | ||||||||||||||||
Charge-offs | (1,013 | ) | (342 | ) | (2 | ) | — | — | (3 | ) | (47 | ) | — | (1,407 | ) | ||||||||||||
Recoveries | 1 | 5 | — | — | — | 2 | 17 | — | 25 | ||||||||||||||||||
Balance at end of period | $ | 11,805 | $ | 26,192 | $ | 3,319 | $ | 1,643 | $ | 224 | $ | 187 | $ | 3 | $ | (65 | ) | $ | 43,308 | ||||||||
Six Months Ended June 30, 2018 | |||||||||||||||||||||||||||
Balance at the beginning of period | $ | 10,599 | $ | 23,301 | $ | 3,447 | $ | 1,583 | $ | 250 | $ | 205 | $ | (32 | ) | $ | 49 | $ | 39,402 | ||||||||
Provision for loan losses | 2,296 | 3,236 | (125 | ) | 60 | (26 | ) | (2 | ) | 100 | (114 | ) | 5,425 | ||||||||||||||
Charge-offs | (1,095 | ) | (353 | ) | (5 | ) | — | — | (19 | ) | (95 | ) | — | (1,567 | ) | ||||||||||||
Recoveries | 5 | 8 | 2 | — | — | 3 | 30 | — | 48 | ||||||||||||||||||
Balance at end of period | $ | 11,805 | $ | 26,192 | $ | 3,319 | $ | 1,643 | $ | 224 | $ | 187 | $ | 3 | $ | (65 | ) | $ | 43,308 | ||||||||
Three months ended June 30, 2017 | |||||||||||||||||||||||||||
Balance at the beginning of period | $ | 8,005 | $ | 20,467 | $ | 2,828 | $ | 1,402 | $ | 201 | $ | 252 | $ | 34 | $ | 242 | $ | 33,431 | |||||||||
Provision for loan losses | 675 | 1,029 | 463 | (15 | ) | 71 | 35 | 23 | 191 | 2,472 | |||||||||||||||||
Charge-offs | — | — | — | — | — | (11 | ) | (55 | ) | — | (66 | ) | |||||||||||||||
Recoveries | 20 | 1 | 1 | — | — | 12 | 10 | — | 44 | ||||||||||||||||||
Balance at end of period | $ | 8,700 | $ | 21,497 | $ | 3,292 | $ | 1,387 | $ | 272 | $ | 288 | $ | 12 | $ | 433 | $ | 35,881 | |||||||||
Six months ended June 30, 2017 | |||||||||||||||||||||||||||
Balance at the beginning of period | $ | 8,593 | $ | 18,399 | $ | 2,760 | $ | 1,301 | $ | 207 | $ | 242 | $ | 29 | $ | 60 | $ | 31,591 | |||||||||
Provision for loan losses | 85 | 3,077 | 530 | 220 | 65 | 99 | 46 | 373 | 4,495 | ||||||||||||||||||
Charge-offs | — | — | — | (134 | ) | — | (67 | ) | (77 | ) | — | (278 | ) | ||||||||||||||
Recoveries | 22 | 21 | 2 | — | — | 14 | 14 | — | 73 | ||||||||||||||||||
Balance at end of period | $ | 8,700 | $ | 21,497 | $ | 3,292 | $ | 1,387 | $ | 272 | $ | 288 | $ | 12 | $ | 433 | $ | 35,881 |
Commercial | Commercial Real Estate, Land and Land Development | Residential Real Estate | Single-Family Interim Construction | Agricultural | Consumer | Other | Unallocated | Total | |||||||||||||||||||
June 30, 2018 | |||||||||||||||||||||||||||
Allowance for losses: | |||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 5,020 | $ | — | $ | — | $ | — | $ | — | $ | 3 | $ | — | $ | — | $ | 5,023 | |||||||||
Collectively evaluated for impairment | 6,785 | 26,192 | 3,319 | 1,643 | 224 | 184 | 3 | (65 | ) | 38,285 | |||||||||||||||||
Loans acquired with deteriorated credit quality | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Ending balance | $ | 11,805 | $ | 26,192 | $ | 3,319 | $ | 1,643 | $ | 224 | $ | 187 | $ | 3 | $ | (65 | ) | $ | 43,308 | ||||||||
Loans: | |||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 9,719 | $ | 2,694 | $ | 2,285 | $ | — | $ | — | $ | 37 | $ | — | $ | — | $ | 14,735 | |||||||||
Collectively evaluated for impairment | 1,282,319 | 4,774,305 | 994,174 | 347,801 | 78,778 | 35,749 | 283 | — | 7,513,409 | ||||||||||||||||||
Acquired with deteriorated credit quality | 24,382 | 86,871 | 2,250 | — | 3,088 | 32 | — | — | 116,623 | ||||||||||||||||||
Ending balance | $ | 1,316,420 | $ | 4,863,870 | $ | 998,709 | $ | 347,801 | $ | 81,866 | $ | 35,818 | $ | 283 | $ | — | $ | 7,644,767 | |||||||||
December 31, 2017 | |||||||||||||||||||||||||||
Allowance for losses: | |||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 3,500 | $ | 311 | $ | — | $ | — | $ | — | $ | 2 | $ | — | $ | — | $ | 3,813 | |||||||||
Collectively evaluated for impairment | 7,099 | 22,990 | 3,447 | 1,583 | 250 | 203 | (32 | ) | 49 | 35,589 | |||||||||||||||||
Loans acquired with deteriorated credit quality | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Ending balance | $ | 10,599 | $ | 23,301 | $ | 3,447 | $ | 1,583 | $ | 250 | $ | 205 | $ | (32 | ) | $ | 49 | $ | 39,402 | ||||||||
Loans: | |||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 10,297 | $ | 3,054 | $ | 1,727 | $ | — | $ | — | $ | 74 | $ | — | $ | — | $ | 15,152 | |||||||||
Collectively evaluated for impairment | 1,037,401 | 4,039,332 | 887,292 | 289,680 | 78,646 | 34,544 | 304 | — | 6,367,199 | ||||||||||||||||||
Acquired with deteriorated credit quality | 12,286 | 72,374 | 3,274 | — | 3,937 | 21 | — | — | 91,892 | ||||||||||||||||||
Ending balance | $ | 1,059,984 | $ | 4,114,760 | $ | 892,293 | $ | 289,680 | $ | 82,583 | $ | 34,639 | $ | 304 | $ | — | $ | 6,474,243 |
Commercial | Commercial Real Estate, Land and Land Development | Residential Real Estate | Single-Family Interim Construction | Agricultural | Consumer | Other | Total | |||||||||||||||||||||||||
June 30, 2018 | ||||||||||||||||||||||||||||||||
Nonaccrual loans | $ | 7,469 | $ | 2,271 | $ | 2,113 | $ | — | $ | — | $ | 37 | $ | — | $ | 11,890 | ||||||||||||||||
Loans past due 90 days and still accruing | 69 | 5 | 3 | — | — | 2 | — | 79 | ||||||||||||||||||||||||
Troubled debt restructurings (not included in nonaccrual or loans past due and still accruing) | — | 423 | 172 | — | — | — | — | 595 | ||||||||||||||||||||||||
$ | 7,538 | $ | 2,699 | $ | 2,288 | $ | — | $ | — | $ | 39 | $ | — | $ | 12,564 | |||||||||||||||||
December 31, 2017 | ||||||||||||||||||||||||||||||||
Nonaccrual loans | $ | 10,304 | $ | 2,716 | $ | 998 | $ | — | $ | — | $ | 55 | $ | — | $ | 14,073 | ||||||||||||||||
Loans past due 90 days and still accruing | 8 | 120 | 8 | — | — | — | — | 136 | ||||||||||||||||||||||||
Troubled debt restructurings (not included in nonaccrual or loans past due and still accruing) | — | 455 | 730 | — | — | 20 | — | 1,205 | ||||||||||||||||||||||||
$ | 10,312 | $ | 3,291 | $ | 1,736 | $ | — | $ | — | $ | 75 | $ | — | $ | 15,414 |
Commercial | Commercial Real Estate, Land and Land Development | Residential Real Estate | Single-Family Interim Construction | Agricultural | Consumer | Other | Total | |||||||||||||||||||||||||
June 30, 2018 | ||||||||||||||||||||||||||||||||
Recorded investment in impaired loans: | ||||||||||||||||||||||||||||||||
Impaired loans with an allowance for loan losses | $ | 8,790 | $ | — | $ | — | $ | — | $ | — | $ | 3 | $ | — | $ | 8,793 | ||||||||||||||||
Impaired loans with no allowance for loan losses | 929 | 2,694 | 2,285 | — | — | 34 | — | 5,942 | ||||||||||||||||||||||||
Total | $ | 9,719 | $ | 2,694 | $ | 2,285 | $ | — | $ | — | $ | 37 | $ | — | $ | 14,735 | ||||||||||||||||
Unpaid principal balance of impaired loans | $ | 9,748 | $ | 2,782 | $ | 2,373 | $ | — | $ | — | $ | 46 | $ | — | $ | 14,949 | ||||||||||||||||
Allowance for loan losses on impaired loans | $ | 5,020 | $ | — | $ | — | $ | — | $ | — | $ | 3 | $ | — | $ | 5,023 | ||||||||||||||||
December 31, 2017 | ||||||||||||||||||||||||||||||||
Recorded investment in impaired loans: | ||||||||||||||||||||||||||||||||
Impaired loans with an allowance for loan losses | $ | 9,255 | $ | 1,793 | $ | — | $ | — | $ | — | $ | 2 | $ | — | $ | 11,050 | ||||||||||||||||
Impaired loans with no allowance for loan losses | 1,042 | 1,261 | 1,727 | — | — | 72 | — | 4,102 | ||||||||||||||||||||||||
Total | $ | 10,297 | $ | 3,054 | $ | 1,727 | $ | — | $ | — | $ | 74 | $ | — | $ | 15,152 | ||||||||||||||||
Unpaid principal balance of impaired loans | $ | 13,456 | $ | 3,124 | $ | 1,818 | $ | — | $ | — | $ | 197 | $ | — | $ | 18,595 | ||||||||||||||||
Allowance for loan losses on impaired loans | $ | 3,500 | $ | 311 | $ | — | $ | — | $ | — | $ | 2 | $ | — | $ | 3,813 | ||||||||||||||||
For the three months ended June 30, 2018 | ||||||||||||||||||||||||||||||||
Average recorded investment in impaired loans | $ | 9,517 | $ | 3,015 | $ | 2,205 | $ | — | $ | — | $ | 46 | $ | — | $ | 14,783 | ||||||||||||||||
Interest income recognized on impaired loans | $ | 17 | $ | 8 | $ | 37 | $ | — | $ | — | $ | — | $ | — | $ | 62 | ||||||||||||||||
For the six months ended June 30, 2018 | ||||||||||||||||||||||||||||||||
Average recorded investment in impaired loans | $ | 9,777 | $ | 3,028 | $ | 2,045 | $ | — | $ | — | $ | 55 | $ | — | $ | 14,905 | ||||||||||||||||
Interest income recognized on impaired loans | $ | 20 | $ | 14 | $ | 43 | $ | — | $ | — | $ | 1 | $ | — | $ | 78 | ||||||||||||||||
For the three months ended June 30, 2017 | ||||||||||||||||||||||||||||||||
Average recorded investment in impaired loans | $ | 8,189 | $ | 2,798 | $ | 2,658 | $ | — | $ | — | $ | 251 | $ | — | $ | 13,896 | ||||||||||||||||
Interest income recognized on impaired loans | $ | 3 | $ | 15 | $ | 12 | $ | — | $ | — | $ | 3 | $ | — | $ | 33 | ||||||||||||||||
For the six months ended June 30, 2017 | ||||||||||||||||||||||||||||||||
Average recorded investment in impaired loans | $ | 8,032 | $ | 4,228 | $ | 2,401 | $ | 295 | $ | — | $ | 260 | $ | — | $ | 15,216 | ||||||||||||||||
Interest income recognized on impaired loans | $ | 4 | $ | 412 | $ | 24 | $ | — | $ | — | $ | 5 | $ | — | $ | 445 |
Commercial | Commercial Real Estate, Land and Land Development | Residential Real Estate | Single-Family Interim Construction | Agricultural | Consumer | Other | Total | |||||||||||||||||||||||||
Troubled debt restructurings during the three months ended June 30, 2018 | ||||||||||||||||||||||||||||||||
Number of contracts | 1 | — | — | — | — | — | — | 1 | ||||||||||||||||||||||||
Pre-restructuring outstanding recorded investment | $ | 2,755 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 2,755 | ||||||||||||||||
Post-restructuring outstanding recorded investment | $ | 2,755 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 2,755 | ||||||||||||||||
Troubled debt restructurings during the six months ended June 30, 2018 | ||||||||||||||||||||||||||||||||
Number of contracts | 1 | — | — | — | — | — | — | 1 | ||||||||||||||||||||||||
Pre-restructuring outstanding recorded investment | $ | 2,755 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 2,755 | ||||||||||||||||
Post-restructuring outstanding recorded investment | $ | 2,755 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 2,755 | ||||||||||||||||
Troubled debt restructurings during the three months ended June 30, 2017 | ||||||||||||||||||||||||||||||||
Number of contracts | — | — | 1 | — | — | 1 | — | 2 | ||||||||||||||||||||||||
Pre-restructuring outstanding recorded investment | $ | — | $ | — | $ | 465 | $ | — | $ | — | $ | 22 | $ | — | $ | 487 | ||||||||||||||||
Post-restructuring outstanding recorded investment | $ | — | $ | — | $ | 465 | $ | — | $ | — | $ | 22 | $ | — | $ | 487 | ||||||||||||||||
Troubled debt restructurings during the six months ended June 30, 2017 | ||||||||||||||||||||||||||||||||
Number of contracts | — | — | 1 | — | — | 1 | — | 2 | ||||||||||||||||||||||||
Pre-restructuring outstanding recorded investment | $ | — | $ | — | $ | 465 | $ | — | $ | — | $ | 22 | $ | — | $ | 487 | ||||||||||||||||
Post-restructuring outstanding recorded investment | $ | — | $ | — | $ | 465 | $ | — | $ | — | $ | 22 | $ | — | $ | 487 |
Loans 30-89 Days Past Due | Loans 90 or More Past Due | Total Past Due Loans | Current Loans | Total Loans | ||||||||||||||||
June 30, 2018 | ||||||||||||||||||||
Commercial | $ | 4,668 | $ | 6,622 | $ | 11,290 | $ | 1,280,748 | $ | 1,292,038 | ||||||||||
Commercial real estate, land and land development | 1,140 | 832 | 1,972 | 4,775,027 | 4,776,999 | |||||||||||||||
Residential real estate | 736 | 1,572 | 2,308 | 994,151 | 996,459 | |||||||||||||||
Single-family interim construction | — | — | — | 347,801 | 347,801 | |||||||||||||||
Agricultural | 612 | — | 612 | 78,166 | 78,778 | |||||||||||||||
Consumer | 128 | 29 | 157 | 35,629 | 35,786 | |||||||||||||||
Other | — | — | — | 283 | 283 | |||||||||||||||
7,284 | 9,055 | 16,339 | 7,511,805 | 7,528,144 | ||||||||||||||||
Acquired with deteriorated credit quality | 2,525 | 3,052 | 5,577 | 111,046 | 116,623 | |||||||||||||||
$ | 9,809 | $ | 12,107 | $ | 21,916 | $ | 7,622,851 | $ | 7,644,767 | |||||||||||
December 31, 2017 | ||||||||||||||||||||
Commercial | $ | 730 | $ | 10,300 | $ | 11,030 | $ | 1,036,668 | $ | 1,047,698 | ||||||||||
Commercial real estate, land and land development | 4,083 | 1,944 | 6,027 | 4,036,359 | 4,042,386 | |||||||||||||||
Residential real estate | 6,269 | 138 | 6,407 | 882,612 | 889,019 | |||||||||||||||
Single-family interim construction | 1,436 | — | 1,436 | 288,244 | 289,680 | |||||||||||||||
Agricultural | — | — | — | 78,646 | 78,646 | |||||||||||||||
Consumer | 373 | 47 | 420 | 34,198 | 34,618 | |||||||||||||||
Other | — | — | — | 304 | 304 | |||||||||||||||
12,891 | 12,429 | 25,320 | 6,357,031 | 6,382,351 | ||||||||||||||||
Acquired with deteriorated credit quality | 2,748 | 4,013 | 6,761 | 85,131 | 91,892 | |||||||||||||||
$ | 15,639 | $ | 16,442 | $ | 32,081 | $ | 6,442,162 | $ | 6,474,243 |
Pass | Pass/ Watch | Special Mention | Substandard | Doubtful | Total | |||||||||||||||||||
June 30, 2018 | ||||||||||||||||||||||||
Commercial | $ | 1,222,866 | $ | 20,813 | $ | 33,732 | $ | 39,009 | $ | — | $ | 1,316,420 | ||||||||||||
Commercial real estate, construction, land and land development | 4,734,866 | 74,276 | 19,701 | 34,835 | 192 | 4,863,870 | ||||||||||||||||||
Residential real estate | 985,937 | 5,363 | 685 | 6,724 | — | 998,709 | ||||||||||||||||||
Single-family interim construction | 346,143 | 1,658 | — | — | — | 347,801 | ||||||||||||||||||
Agricultural | 61,876 | 4,218 | 13,056 | 2,716 | — | 81,866 | ||||||||||||||||||
Consumer | 35,600 | 57 | 49 | 112 | — | 35,818 | ||||||||||||||||||
Other | 283 | — | — | — | — | 283 | ||||||||||||||||||
$ | 7,387,571 | $ | 106,385 | $ | 67,223 | $ | 83,396 | $ | 192 | $ | 7,644,767 | |||||||||||||
December 31, 2017 | ||||||||||||||||||||||||
Commercial | $ | 989,953 | $ | 35,105 | $ | 3,737 | $ | 31,189 | $ | — | $ | 1,059,984 | ||||||||||||
Commercial real estate, construction, land and land development | 4,040,385 | 46,288 | 11,915 | 16,172 | — | 4,114,760 | ||||||||||||||||||
Residential real estate | 883,653 | 2,722 | 462 | 5,456 | — | 892,293 | ||||||||||||||||||
Single-family interim construction | 288,020 | 1,660 | — | — | — | 289,680 | ||||||||||||||||||
Agricultural | 59,392 | 5,762 | 13,802 | 3,627 | — | 82,583 | ||||||||||||||||||
Consumer | 34,510 | 25 | 4 | 100 | — | 34,639 | ||||||||||||||||||
Other | 304 | — | — | — | — | 304 | ||||||||||||||||||
$ | 6,296,217 | $ | 91,562 | $ | 29,920 | $ | 56,544 | $ | — | $ | 6,474,243 |
Pass | Pass/ Watch | Special Mention | Substandard | Doubtful | Total | |||||||||||||||||||
June 30, 2018 | $ | 40,118 | $ | 34,550 | $ | 12,819 | $ | 28,944 | $ | 192 | $ | 116,623 | ||||||||||||
December 31, 2017 | 36,928 | 32,674 | 2,662 | 19,628 | — | 91,892 |
Acquisition Date | ||||||||
June 1, 2018 | April 1, 2017 | |||||||
Integrity Bancshares, Inc.* | Carlile Bancshares, Inc. | |||||||
Outstanding balance | $ | 40,227 | $ | 101,153 | ||||
Nonaccretable difference | (7,864 | ) | (14,700 | ) | ||||
Accretable yield | — | (685 | ) | |||||
Carrying amount | $ | 32,363 | $ | 85,768 |
June 30, 2018 | December 31, 2017 | ||||||
Outstanding balance | $ | 134,815 | $ | 105,685 | |||
Carrying amount | 116,623 | 91,892 |
For the Six Months Ended June 30, | |||||||
2018 | 2017 | ||||||
Balance at January 1, | $ | 1,546 | $ | 1,526 | |||
Additions | — | 944 | |||||
Accretion | (1,121 | ) | (187 | ) | |||
Transfers from nonaccretable | 1,286 | — | |||||
Balance at June 30, | $ | 1,711 | $ | 2,283 |
June 30, | December 31, | |||||||
2018 | 2017 | |||||||
Commitments to extend credit | $ | 1,605,525 | $ | 1,286,704 | ||||
Standby letters of credit | 15,704 | 10,532 | ||||||
$ | 1,621,229 | $ | 1,297,236 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Income tax expense for the period | $ | 7,519 | $ | 8,561 | $ | 14,324 | $ | 15,289 | |||||||
Effective tax rate | 20.2 | % | 32.1 | % | 19.6 | % | 31.1 | % |
Fair Value Measurements at Reporting Date Using | ||||||||||||||||
Assets/ Liabilities Measured at Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
June 30, 2018 | ||||||||||||||||
Measured on a recurring basis: | ||||||||||||||||
Assets: | ||||||||||||||||
Investment securities available for sale: | ||||||||||||||||
U.S. treasuries | $ | 19,819 | $ | — | $ | 19,819 | $ | — | ||||||||
Government agency securities | 203,475 | — | 203,475 | — | ||||||||||||
Obligations of state and municipal subdivisions | 209,723 | — | 209,723 | — | ||||||||||||
Residential pass-through securities guaranteed by FNMA, GNMA, and FHLMC | 358,048 | — | 358,048 | — | ||||||||||||
December 31, 2017 | ||||||||||||||||
Measured on a recurring basis: | ||||||||||||||||
Assets: | ||||||||||||||||
Investment securities available for sale: | ||||||||||||||||
U.S. treasuries | $ | 37,154 | $ | — | $ | 37,154 | $ | — | ||||||||
Government agency securities | 211,509 | — | 211,509 | — | ||||||||||||
Obligations of state and municipal subdivisions | 229,613 | — | 229,613 | — | ||||||||||||
Residential pass-through securities guaranteed by FNMA, GNMA, FHLMC, FHR and GNR | 274,377 | — | 274,377 | — | ||||||||||||
Other securities | 10,349 | 10,349 | — | — |
Fair Value Measurements at Reporting Date Using | ||||||||||||||||||||
Assets Measured at Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Period Ended Total Losses | ||||||||||||||||
June 30, 2018 | ||||||||||||||||||||
Measured on a nonrecurring basis: | ||||||||||||||||||||
Assets: | ||||||||||||||||||||
Impaired loans | $ | 3,770 | $ | — | $ | — | $ | 3,770 | $ | 2,023 | ||||||||||
Other real estate | — | — | — | — | — | |||||||||||||||
December 31, 2017 | ||||||||||||||||||||
Measured on a nonrecurring basis: | ||||||||||||||||||||
Assets: | ||||||||||||||||||||
Impaired loans | $ | 7,237 | $ | — | $ | — | $ | 7,237 | $ | 3,719 | ||||||||||
Other real estate | 1,726 | — | — | 1,726 | 375 |
Fair Value Measurements at Reporting Date Using | ||||||||||||||||||||
Carrying Amount | Estimated Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||
June 30, 2018 | ||||||||||||||||||||
Financial assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 447,049 | $ | 447,049 | $ | 447,049 | $ | — | $ | — | ||||||||||
Certificates of deposit held in other banks | 1,225 | 1,239 | — | 1,239 | — | |||||||||||||||
Securities available for sale | 791,065 | 791,065 | — | 791,065 | — | |||||||||||||||
Loans held for sale | 30,056 | 31,064 | — | 31,064 | — | |||||||||||||||
Loans, net | 7,598,644 | 7,615,524 | — | 7,611,754 | 3,770 | |||||||||||||||
FHLB of Dallas stock and other restricted stock | 39,003 | 39,003 | — | 39,003 | — | |||||||||||||||
Accrued interest receivable | 23,318 | 23,318 | — | 23,318 | — | |||||||||||||||
Financial liabilities: | ||||||||||||||||||||
Deposits | 7,533,405 | 7,543,099 | — | 7,543,099 | — | |||||||||||||||
Accrued interest payable | 5,565 | 5,565 | — | 5,565 | — | |||||||||||||||
FHLB advances | 750,626 | 747,142 | — | 747,142 | — | |||||||||||||||
Other borrowings | 137,098 | 140,550 | — | 140,550 | — | |||||||||||||||
Junior subordinated debentures | 27,753 | 29,780 | — | 29,780 | — | |||||||||||||||
Off-balance sheet assets (liabilities): | ||||||||||||||||||||
Commitments to extend credit | — | — | — | — | — | |||||||||||||||
Standby letters of credit | — | — | — | — | — | |||||||||||||||
December 31, 2017 | ||||||||||||||||||||
Financial assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 431,102 | $ | 431,102 | $ | 431,102 | $ | — | $ | — | ||||||||||
Certificates of deposit held in other banks | 12,985 | 13,049 | — | 13,049 | — | |||||||||||||||
Securities available for sale | 763,002 | 763,002 | 10,349 | 752,653 | — | |||||||||||||||
Loans held for sale | 39,202 | 40,436 | — | 40,436 | — | |||||||||||||||
Loans, net | 6,432,273 | 6,350,416 | — | 6,343,179 | 7,237 | |||||||||||||||
FHLB of Dallas stock and other restricted stock | 29,184 | 29,184 | — | 29,184 | — | |||||||||||||||
Accrued interest receivable | 20,835 | 20,835 | — | 20,835 | — | |||||||||||||||
Financial liabilities: | ||||||||||||||||||||
Deposits | 6,632,822 | 6,637,813 | — | 6,637,813 | — | |||||||||||||||
Accrued interest payable | 4,654 | 4,654 | — | 4,654 | — | |||||||||||||||
FHLB advances | 530,667 | 526,514 | — | 526,514 | — | |||||||||||||||
Other borrowings | 136,911 | 141,650 | — | 141,650 | — | |||||||||||||||
Junior subordinated debentures | 27,654 | 20,008 | — | 20,008 | — | |||||||||||||||
Off-balance sheet assets (liabilities): | ||||||||||||||||||||
Commitments to extend credit | — | — | — | — | — | |||||||||||||||
Standby letters of credit | — | — | — | — | — |
Number of Shares | Weighted Average Grant Date Fair Value | ||||||
Nonvested shares, December 31, 2017 | 242,056 | $ | 49.17 | ||||
Granted during the period | 118,912 | 72.36 | |||||
Vested during the period | (105,385 | ) | 43.78 | ||||
Forfeited during the period | (3,845 | ) | 64.47 | ||||
Nonvested shares, June 30, 2018 | 251,738 | $ | 62.15 | ||||
Nonvested shares, December 31, 2016 | 280,524 | $ | 36.88 | ||||
Granted during the period | 87,770 | 62.51 | |||||
Vested during the period | (130,819 | ) | 33.96 | ||||
Nonvested shares, June 30, 2017 | 237,475 | $ | 47.96 |
First year | 104,344 | ||
Second year | 59,487 | ||
Third year | 43,681 | ||
Fourth year | 25,856 | ||
Fifth year | 18,370 | ||
Total nonvested shares | 251,738 |
Actual | Minimum for Capital Adequacy Purposes | To Be Well Capitalized Under Prompt Corrective Action Provisions | |||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||
June 30, 2018 | |||||||||||||||||||||
Total capital to risk weighted assets: | |||||||||||||||||||||
Consolidated | $ | 999,359 | 11.85 | % | $ | 674,882 | 8.00 | % | N/A | N/A | |||||||||||
Bank | 976,485 | 11.58 | 674,415 | 8.00 | $ | 843,018 | 10.00 | % | |||||||||||||
Tier 1 capital to risk weighted assets: | |||||||||||||||||||||
Consolidated | 816,051 | 9.67 | 506,162 | 6.00 | N/A | N/A | |||||||||||||||
Bank | 933,177 | 11.07 | 505,811 | 6.00 | 674,415 | 8.00 | |||||||||||||||
Common equity tier 1 to risk weighted assets: | |||||||||||||||||||||
Consolidated | 785,451 | 9.31 | 379,621 | 4.50 | N/A | N/A | |||||||||||||||
Bank | 933,177 | 11.07 | 379,358 | 4.50 | 547,962 | 6.50 | |||||||||||||||
Tier 1 capital to average assets: | |||||||||||||||||||||
Consolidated | 816,051 | 9.71 | 336,078 | 4.00 | N/A | N/A | |||||||||||||||
Bank | 933,177 | 11.12 | 335,824 | 4.00 | 419,780 | 5.00 | |||||||||||||||
December 31, 2017 | |||||||||||||||||||||
Total capital to risk weighted assets: | |||||||||||||||||||||
Consolidated | $ | 897,760 | 12.56 | % | $ | 572,025 | 8.00 | % | N/A | N/A | |||||||||||
Bank | 867,082 | 12.15 | 571,142 | 8.00 | $ | 713,928 | 10.00 | % | |||||||||||||
Tier 1 capital to risk weighted assets: | |||||||||||||||||||||
Consolidated | 718,358 | 10.05 | 429,019 | 6.00 | N/A | N/A | |||||||||||||||
Bank | 827,680 | 11.59 | 428,357 | 6.00 | 571,142 | 8.00 | |||||||||||||||
Common equity tier 1 to risk weighted assets: | |||||||||||||||||||||
Consolidated | 687,006 | 9.61 | 321,764 | 4.50 | N/A | N/A | |||||||||||||||
Bank | 827,680 | 11.59 | 321,268 | 4.50 | 464,053 | 6.50 | |||||||||||||||
Tier 1 capital to average assets: | |||||||||||||||||||||
Consolidated | 718,358 | 8.92 | 322,124 | 4.00 | N/A | N/A | |||||||||||||||
Bank | 827,680 | 10.30 | 321,384 | 4.00 | 401,730 | 5.00 |
Assets of acquired bank: | |||
Cash and cash equivalents | $ | 44,723 | |
Securities available for sale | 24,726 | ||
Restricted stock | 3,357 | ||
Loans | 651,722 | ||
Premises and equipment | 4,800 | ||
Goodwill | 100,120 | ||
Core deposit intangible | 7,532 | ||
Bank owned life insurance | 8,181 | ||
Other assets | 6,416 | ||
Total assets acquired | $ | 851,577 | |
Liabilities of acquired bank: | |||
Deposits | $ | 593,078 | |
FHLB advances | 60,000 | ||
Other liabilities | 10,220 | ||
Total liabilities assumed | $ | 663,298 | |
Common stock issued at $75.90 per share | $ | 157,263 | |
Cash paid | $ | 31,016 |
• | our ability to sustain our current internal growth rate and total growth rate; |
• | changes in geopolitical, business and economic events, occurrences and conditions, including changes in rates of inflation or deflation, nationally, regionally and in our target markets, particularly in Texas and Colorado; |
• | worsening business and economic conditions nationally, regionally and in our target markets, particularly in Texas and Colorado, and the geographic areas in those states in which we operate; |
• | our dependence on our management team and our ability to attract, motivate and retain qualified personnel; |
• | the concentration of our business within our geographic areas of operation in Texas and Colorado; |
• | changes in asset quality, including increases in default rates and loans and higher levels of nonperforming loans and loan charge-offs; |
• | concentration of the loan portfolio of Independent Bank, 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, values and dales volumes of commercial and residential real estate; |
• | the ability of Independent Bank to make loans with acceptable net interest margins and levels of risk of repayment and to otherwise invest in assets at acceptable yields and presenting acceptable investment risks; |
• | inaccuracy of the assumptions and estimates that the managements of our Company and the financial institutions that we acquire make in establishing reserves for probable loan losses and other estimates; |
• | lack of liquidity, including as a result of a reduction in the amount of sources of liquidity we currently have; |
• | material increases or decreases in the amount of deposits held by Independent Bank or other financial institutions that we acquire and the cost of those deposits; |
• | our access to the debt and equity markets and the overall cost of funding our operations; |
• | regulatory requirements to maintain minimum capital levels or maintenance of capital at levels sufficient to support our anticipated growth; |
• | changes in market interest rates that affect the pricing of the loans and deposits of each of Independent Bank and the financial institutions that we acquire and the net interest income of each of Independent Bank and the financial institutions that we acquire; |
• | fluctuations in the market value and liquidity of the securities we hold for sale, including as a result of changes in market interest rates; |
• | effects of competition from a wide variety of local, regional, national and other providers of financial, investment and insurance services; |
• | changes in economic and market conditions that affect the amount and value of the assets of Independent Bank and of financial institutions that we acquire; |
• | the institution and outcome of, and costs associated with, litigation and other legal proceedings against one of more of us, Independent Bank and financial institutions that we acquire or to which any of such entities is subject; |
• | the occurrence of market conditions adversely affecting the financial industry generally; |
• | the impact of recent and future legislative and regulatory changes, including changes in banking, securities and tax laws and regulations and their application by our regulators, and changes in federal government policies; |
• | changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the SEC and the Public Company Accounting Oversight Board, as the case may be; |
• | governmental monetary and fiscal policies; |
• | changes in the scope and cost of FDIC insurance and other coverage; |
• | the effects of war or other conflicts, acts of terrorism (including cyber attacks) or other catastrophic events, including storms, droughts, tornadoes, hurricanes and flooding, that may affect general economic conditions; |
• | our actual cost savings resulting from previous or future acquisitions are less than expected, we are unable to realize those cost savings as soon as expected, or we incur additional or unexpected costs; |
• | our revenues after previous or future acquisitions are less than expected; |
• | the liquidity of, and changes in the amounts and sources of liquidity available to, us, before and after the acquisition of any financial institutions that we acquire; |
• | deposit attrition, operating costs, customer loss and business disruption before and after our completed acquisitions, including, without limitation, difficulties in maintaining relationships with employees, may be greater than we expected; |
• | the effects of the combination of the operations of financial institutions that we have acquired in the recent past or may acquire in the future with our operations and the operations of Independent Bank, 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 that we expect; |
• | the impact of investments that we or Independent Bank may have made or may make and the changes in the value of those investments; |
• | the quality of the assets of financial institutions and companies that we have acquired in the recent past or may acquire in the future being different than we determined or determine in our due diligence investigation in connection with the acquisition of such financial institutions and any inadequacy of loan loss reserves relating to, and exposure to unrecoverable losses on, loans acquired; |
• | our ability to continue to identify acquisition targets and successfully acquire desirable financial institutions to sustain our growth, to expand our presence in our markets and to enter new markets; |
• | general business and economic conditions in our markets change or are less favorable than expected; |
• | changes occur in business conditions and inflation; |
• | an increase in the rate of personal or commercial customers’ bankruptcies; |
• | technology-related changes are harder to make or are more expensive than expected; |
• | attacks on the security of, and breaches of, our Independent Bank's digital information systems, the costs we or Independent Bank incur to provide security against such attacks and any costs and liability we or Independent Bank incurs in connection with any breach of those systems; |
• | the potential impact of technology and "FinTech" entities on the banking industry generally; and |
• | the other factors that are described or referenced in Part I, Item 1A. of this Annual Report on Form 10-K under the caption "Risk Factors." |
Three Months Ended June 30, | ||||||||||||||||||||||
2018 | 2017 | |||||||||||||||||||||
Average Outstanding Balance | Interest | Yield/ Rate (3) | Average Outstanding Balance | Interest | Yield/ Rate (3) | |||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||
Loans (1) | $ | 7,021,447 | $ | 91,614 | 5.23 | % | $ | 6,166,878 | $ | 75,194 | 4.89 | % | ||||||||||
Taxable securities | 605,009 | 3,501 | 2.32 | 533,690 | 2,303 | 1.73 | ||||||||||||||||
Nontaxable securities | 183,043 | 1,179 | 2.58 | 161,402 | 992 | 2.47 | ||||||||||||||||
Interest-bearing deposits and other | 154,986 | 788 | 2.04 | 460,511 | 1,394 | 1.21 | ||||||||||||||||
Total interest-earning assets | 7,964,485 | $ | 97,082 | 4.89 | 7,322,481 | $ | 79,883 | 4.38 | ||||||||||||||
Noninterest-earning assets | 1,200,430 | 1,155,879 | ||||||||||||||||||||
Total assets | $ | 9,164,915 | $ | 8,478,360 | ||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||
Checking accounts | $ | 2,959,101 | $ | 6,217 | 0.84 | $ | 2,351,619 | $ | 2,560 | 0.44 | ||||||||||||
Savings accounts | 284,103 | 136 | 0.19 | 309,369 | 97 | 0.13 | ||||||||||||||||
Money market accounts | 884,630 | 3,889 | 1.76 | 993,663 | 1,936 | 0.78 | ||||||||||||||||
Certificates of deposit | 893,931 | 2,585 | 1.16 | 1,153,990 | 2,388 | 0.83 | ||||||||||||||||
Total deposits | 5,021,765 | 12,827 | 1.02 | 4,808,641 | 6,981 | 0.58 | ||||||||||||||||
FHLB advances | 563,875 | 2,847 | 2.03 | 460,713 | 1,351 | 1.18 | ||||||||||||||||
Repurchase agreements and other borrowings | 137,843 | 2,097 | 6.10 | 124,177 | 1,716 | 5.54 | ||||||||||||||||
Junior subordinated debentures | 27,736 | 402 | 5.81 | 27,506 | 335 | 4.89 | ||||||||||||||||
Total interest-bearing liabilities | 5,751,219 | 18,173 | 1.27 | 5,421,037 | 10,383 | 0.77 | ||||||||||||||||
Noninterest-bearing checking accounts | 1,973,582 | 1,787,955 | ||||||||||||||||||||
Noninterest-bearing liabilities | 21,578 | 26,037 | ||||||||||||||||||||
Stockholders’ equity | 1,418,536 | 1,243,331 | ||||||||||||||||||||
Total liabilities and equity | $ | 9,164,915 | $ | 8,478,360 | ||||||||||||||||||
Net interest income | $ | 78,909 | $ | 69,500 | ||||||||||||||||||
Interest rate spread | 3.62 | % | 3.61 | % | ||||||||||||||||||
Net interest margin (2) | 3.97 | 3.81 | ||||||||||||||||||||
Net interest income and margin (tax equivalent basis) (4) | $ | 79,324 | 3.99 | $ | 70,201 | 3.85 | ||||||||||||||||
Average interest earning assets to interest bearing liabilities | 138.48 | 135.08 |
(1) | Average loan balances include nonaccrual loans. |
(2) | Net interest margins for the periods presented represent: (i) the difference between interest income on interest-earning assets and the interest expense on interest-bearing liabilities, divided by (ii) average interest-earning assets for the period. |
(3) | Yield and rates for the three month periods are annualized. |
(4) | A tax-equivalent adjustment has been computed using a federal income tax rate of 21% and 35% for the three months ended June 30, 2018 and 2017, respectively. |
Six Months Ended June 30, | ||||||||||||||||||||||
2018 | 2017 | |||||||||||||||||||||
Average Outstanding Balance | Interest | Yield/ Rate (3) | Average Outstanding Balance | Interest | Yield/ Rate (3) | |||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||
Loans (1) | $ | 6,730,278 | $ | 174,889 | 5.24 | % | $ | 5,403,638 | $ | 128,938 | 4.81 | % | ||||||||||
Taxable securities | 596,779 | 6,404 | 2.16 | 389,060 | 3,067 | 1.59 | ||||||||||||||||
Nontaxable securities | 186,219 | 2,372 | 2.57 | 121,807 | 1,533 | 2.54 | ||||||||||||||||
Interest-bearing deposits and other | 161,808 | 1,531 | 1.91 | 399,611 | 2,284 | 1.15 | ||||||||||||||||
Total interest-earning assets | 7,675,084 | $ | 185,196 | 4.87 | 6,314,116 | $ | 135,822 | 4.34 | ||||||||||||||
Noninterest-earning assets | 1,187,653 | 872,462 | ||||||||||||||||||||
Total assets | $ | 8,862,737 | $ | 7,186,578 | ||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||
Checking accounts | $ | 2,938,343 | $ | 11,175 | 0.77 | $ | 2,153,035 | $ | 4,726 | 0.44 | ||||||||||||
Savings accounts | 281,849 | 250 | 0.18 | 232,467 | 163 | 0.14 | ||||||||||||||||
Money market accounts | 802,540 | 6,511 | 1.64 | 781,427 | 2,992 | 0.77 | ||||||||||||||||
Certificates of deposit | 878,263 | 4,690 | 1.08 | 1,001,150 | 4,129 | 0.83 | ||||||||||||||||
Total deposits | 4,900,995 | 22,626 | 0.93 | 4,168,079 | 12,010 | 0.58 | ||||||||||||||||
FHLB advances | 523,345 | 4,733 | 1.82 | 460,724 | 2,522 | 1.10 | ||||||||||||||||
Repurchase agreements and other borrowings | 137,821 | 4,199 | 6.14 | 115,813 | 3,421 | 5.96 | ||||||||||||||||
Junior subordinated debentures | 27,711 | 762 | 5.55 | 22,852 | 502 | 4.43 | ||||||||||||||||
Total interest-bearing liabilities | 5,589,872 | 32,320 | 1.17 | 4,767,468 | 18,455 | 0.78 | ||||||||||||||||
Noninterest-bearing checking accounts | 1,871,129 | 1,432,802 | ||||||||||||||||||||
Noninterest-bearing liabilities | 18,699 | 22,374 | ||||||||||||||||||||
Stockholders’ equity | 1,383,037 | 963,934 | ||||||||||||||||||||
Total liabilities and equity | $ | 8,862,737 | $ | 7,186,578 | ||||||||||||||||||
Net interest income | $ | 152,876 | $ | 117,367 | ||||||||||||||||||
Interest rate spread | 3.70 | % | 3.56 | % | ||||||||||||||||||
Net interest margin (2) | 4.02 | 3.75 | ||||||||||||||||||||
Net interest income and margin (tax equivalent basis) (4) | $ | 153,746 | 4.04 | $ | 118,472 | 3.78 | ||||||||||||||||
Average interest earning assets to interest bearing liabilities | 137.30 | 132.44 |
(1) | Average loan balances include nonaccrual loans. |
(2) | Net interest margins for the periods presented represent: (i) the difference between interest income on interest-earning assets and the interest expense on interest-bearing liabilities, divided by (ii) average interest-earning assets for the period. |
(3) | Yield and rates for the six month periods are annualized. |
(4) | A tax-equivalent adjustment has been computed using a federal income tax rate of 21% and 35% for the six months ended June 30, 2018 and 2017, respectively. |
Three Months Ended June 30, | Variance | Six Months Ended June 30, | Variance | ||||||||||||||||||||||
(dollars in thousands) | 2018 | 2017 | 2018 v. 2017 | 2018 | 2017 | 2018 v. 2017 | |||||||||||||||||||
Noninterest Income | |||||||||||||||||||||||||
Service charges on deposit accounts | $ | 3,533 | $ | 3,760 | $ | (227 | ) | (6.0 | )% | $ | 7,018 | $ | 5,687 | $ | 1,331 | 23.4 | % | ||||||||
Mortgage banking revenue | 3,609 | 5,019 | (1,410 | ) | (28.1 | ) | 7,023 | 6,286 | 737 | 11.7 | |||||||||||||||
Gain (loss) on sale of other real estate | 58 | (36 | ) | 94 | N/M | 118 | (36 | ) | 154 | N/M | |||||||||||||||
(Loss) gain on sale of securities available for sale | (10 | ) | 52 | (62 | ) | N/M | (234 | ) | 52 | (286 | ) | N/M | |||||||||||||
(Loss) gain on sale of premises and equipment | (89 | ) | 1 | (90 | ) | N/M | (97 | ) | 6 | (103 | ) | N/M | |||||||||||||
Increase in cash surrender value of BOLI | 758 | 782 | (24 | ) | (3.1 | ) | 1,497 | 1,181 | 316 | 26.8 | |||||||||||||||
Other | 2,274 | 1,417 | 857 | 60.5 | 4,263 | 2,402 | 1,861 | 77.5 | |||||||||||||||||
Total noninterest income | $ | 10,133 | $ | 10,995 | $ | (862 | ) | (7.8 | )% | $ | 19,588 | $ | 15,578 | $ | 4,010 | 25.7 | % | ||||||||
N/M - not meaningful |
Three Months Ended June 30, | Variance | Six Months Ended June 30, | Variance | ||||||||||||||||||||||
(dollars in thousands) | 2018 | 2017 | 2018 v. 2017 | 2018 | 2017 | 2018 v. 2017 | |||||||||||||||||||
Noninterest Expense | |||||||||||||||||||||||||
Salaries and employee benefits | $ | 26,790 | $ | 27,089 | $ | (299 | ) | (1.1 | )% | $ | 51,958 | $ | 43,926 | $ | 8,032 | 18.3 | % | ||||||||
Occupancy | 6,018 | 6,147 | (129 | ) | (2.1 | ) | 11,682 | 10,019 | 1,663 | 16.6 | |||||||||||||||
Data processing | 2,467 | 2,615 | (148 | ) | (5.7 | ) | 4,872 | 3,903 | 969 | 24.8 | |||||||||||||||
FDIC assessment | 712 | 1,201 | (489 | ) | (40.7 | ) | 1,453 | 2,079 | (626 | ) | (30.1 | ) | |||||||||||||
Advertising and public relations | 332 | 317 | 15 | 4.7 | 717 | 614 | 103 | 16.8 | |||||||||||||||||
Communications | 793 | 852 | (59 | ) | (6.9 | ) | 1,734 | 1,327 | 407 | 30.7 | |||||||||||||||
Other real estate owned expenses, net | 119 | 125 | (6 | ) | (4.8 | ) | 209 | 162 | 47 | 29.0 | |||||||||||||||
Impairment of other real estate | — | 120 | (120 | ) | (100.0 | ) | 85 | 120 | (35 | ) | (29.2 | ) | |||||||||||||
Core deposit intangible amortization | 1,393 | 1,410 | (17 | ) | (1.2 | ) | 2,724 | 1,902 | 822 | 43.2 | |||||||||||||||
Professional fees | 1,133 | 1,166 | (33 | ) | (2.8 | ) | 2,252 | 1,939 | 313 | 16.1 | |||||||||||||||
Acquisition expense, including legal | 3,444 | 5,673 | (2,229 | ) | (39.3 | ) | 3,989 | 5,819 | (1,830 | ) | (31.4 | ) | |||||||||||||
Other | 5,957 | 4,613 | 1,344 | 29.1 | 12,441 | 7,546 | 4,895 | 64.9 | |||||||||||||||||
Total noninterest expense | $ | 49,158 | $ | 51,328 | $ | (2,170 | ) | (4.2 | )% | $ | 94,116 | $ | 79,356 | $ | 14,760 | 18.6 | % |
(dollars in thousands) | June 30, 2018 | December 31, 2017 | |||||||||||
Commercial (1) | $ | 1,316,420 | 17.1 | % | $ | 1,059,984 | 16.3 | % | |||||
Real estate: | |||||||||||||
Commercial | 3,944,306 | 51.4 | 3,369,892 | 51.7 | |||||||||
Commercial construction, land and land development | 919,564 | 12.0 | 744,868 | 11.5 | |||||||||
Residential (2) | 1,028,765 | 13.4 | 931,495 | 14.3 | |||||||||
Single family interim construction | 347,801 | 4.5 | 289,680 | 4.4 | |||||||||
Agricultural | 81,866 | 1.1 | 82,583 | 1.3 | |||||||||
Consumer | 35,818 | 0.5 | 34,639 | 0.5 | |||||||||
Other | 283 | — | 304 | — | |||||||||
7,674,823 | 100.0 | % | 6,513,445 | 100.0 | % | ||||||||
Deferred loan fees | (2,815 | ) | (2,568 | ) | |||||||||
Allowance for loan losses | (43,308 | ) | (39,402 | ) | |||||||||
Total loans, net | $ | 7,628,700 | $ | 6,471,475 |
(dollars in thousands) | June 30, 2018 | December 31, 2017 | ||||||
Nonaccrual loans | ||||||||
Commercial | $ | 7,469 | $ | 10,304 | ||||
Real estate: | ||||||||
Commercial real estate, construction, land and land development | 2,271 | 2,716 | ||||||
Residential real estate | 2,113 | 998 | ||||||
Consumer | 37 | 55 | ||||||
Total nonaccrual loans (1) | 11,890 | 14,073 | ||||||
Loans delinquent 90 days or more and still accruing | ||||||||
Commercial | 69 | 8 | ||||||
Real estate: | ||||||||
Commercial real estate, construction, land and land development | 5 | 120 | ||||||
Residential real estate | 3 | 8 | ||||||
Consumer | 2 | — | ||||||
Total loans delinquent 90 days or more and still accruing | 79 | 136 | ||||||
Troubled debt restructurings, not included in nonaccrual loans | ||||||||
Real estate: | ||||||||
Commercial real estate, construction, land and land development | 423 | 455 | ||||||
Residential real estate | 172 | 730 | ||||||
Consumer | — | 20 | ||||||
Total troubled debt restructurings, not included in nonaccrual loans (2) | 595 | 1,205 | ||||||
Total nonperforming loans | 12,564 | 15,414 | ||||||
Other real estate owned and other repossessed assets: | ||||||||
Commercial real estate, construction, land and land development | 4,200 | 5,400 | ||||||
Residential real estate | — | 764 | ||||||
Single family interim construction | — | 963 | ||||||
Consumer | 114 | 114 | ||||||
Total other real estate owned and other repossessed assets | 4,314 | 7,241 | ||||||
Total nonperforming assets | $ | 16,878 | $ | 22,655 | ||||
Ratio of nonperforming loans to total loans held for investment (3) | 0.17 | % | 0.24 | % | ||||
Ratio of nonperforming assets to total assets | 0.17 | 0.26 |
(1) | Nonaccrual loans include troubled debt restructurings of $542 thousand and $1.0 million at June 30, 2018 and December 31, 2017, respectively and excludes loans acquired with deteriorated credit quality of $10.5 million and $7.9 million as of June 30, 2018 and December 31, 2017, respectively. |
(2) | Excluding loans acquired with deteriorated credit quality of $2.7 million and $0 as of June 30, 2018 and December 31, 2017, respectively. |
(3) | Excluding mortgage warehouse purchase loans of $164.8 million and $164.7 million as of June 30, 2018 and December 31, 2017, respectively. |
As of June 30, 2018 | ||||||
Actual Consolidated | Actual Bank | Required to be considered adequately capitalized | Required to be considered well capitalized (Bank only) | |||
Ratio | Ratio | Ratio | Ratio | |||
Tier 1 capital to average assets ratio | 9.71 | % | 11.12 | % | 4.00-5.00% | ≥5.00% |
Common equity tier 1 capital to risk-weighted assets ratio | 9.31 | 11.07 | 4.50-6.50 | ≥6.50 | ||
Tier 1 capital to risk-weighted assets ratio | 9.67 | 11.07 | 6.00-8.00 | ≥8.00 | ||
Total capital to risk-weighted assets ratio | 11.85 | 11.58 | 8.00-10.00 | ≥10.00 |
Hypothetical Shift in Interest Rates (in bps) | % Change in Projected Net Interest Income |
200 | (1.50)% |
100 | (0.64) |
(100) | 1.06 |
Exhibit 3.1 | ||
Exhibit 3.2 | ||
Exhibit 3.3 | ||
Exhibit 3.4 | ||
Exhibit 3.5 | ||
Exhibit 3.6 | ||
Exhibit 3.7 | ||
Exhibit 3.8 | ||
Exhibit 3.9* | ||
Exhibit 3.10* | ||
Exhibit 4.1 | ||
Exhibit 4.2 | ||
Exhibit 4.3 | ||
Exhibit 4.4 | ||
Exhibit 4.5 | ||
Exhibit 4.6 | ||
Exhibit 4.7 | ||
The other instruments defining the rights of holders of the long-term debt securities of the Registrant and its subsidiaries are omitted pursuant to section (b)(4)(iii)(A) of Item 601 of Regulation S-K. The Registrant hereby agrees to furnish copies of these instruments to the SEC upon request. | ||
Exhibit 4.8 | ||
Exhibit 10.1 | ||
Exhibit 31.1* | ||
Exhibit 31.2* | ||
Exhibit 32.1** | ||
Exhibit 32.2** | ||
Exhibit 101.INS * | XBRL Instance Document | |
Exhibit 101.SCH * | XBRL Taxonomy Extension Schema Document | |
Exhibit 101.CAL * | XBRL Taxonomy Extension Calculation Linkbase Document | |
Exhibit 101.DEF * | XBRL Taxonomy Extension Definition Linkbase Document | |
Exhibit 101.LAB * | XBRL Taxonomy Extension Label Linkbase Document | |
Exhibit 101.PRE * | XBRL Taxonomy Extension Presentation Linkbase Document | |
* | Filed herewith as an Exhibit. |
** | Furnished herewith as an Exhibit. |
Independent Bank Group, Inc. | ||
Date: July 26, 2018 | By: /s/ David R. Brooks | |
David R. Brooks | ||
Chairman, Chief Executive Officer and President |
Date: July 26, 2018 | By: /s/ Michelle S. Hickox | |
Michelle S. Hickox | ||
Executive Vice President | ||
Chief Financial Officer |
Name of Merging Party | Entity Type | State of Organization | Texas SOS Filing Number | Surviving Entity |
Independent Bank Group, Inc. | For profit corporation | Texas | 800125042 | Yes |
Integrity Bancshares, Inc. | For profit corporation | Texas | 801505046 | No |
INDEPENDENT BANK GROUP, INC. | INTEGRITY BANCSHARES, INC. | |
By: /s/ David R. Brooks | By: /s/ Charles M. Neff, Jr. | |
David R. Brooks Chairman of the Board and CEO | Charles M. Neff, Jr. President and Chief Executive Officer |
Name of Parent Corporation | Entity Type | State of Organization | Texas SOS File Number | Surviving Entity |
Independent Bank Group, Inc. | For profit corporation | Texas | 800125042 | Yes |
Name of Subsidiary Corporation | Entity Type | State of Organization | Texas SOS File Number | Surviving Entity |
Washington Investment Company | For profit corporation | Colorado | N/A | No |
Name of Subsidiary Corporation | Designation of Class | Number of Shares Outstanding | Number of Shares Owned by the Parent Corporation |
Washington Investment Company | Common | 3,647.77 | 3,647.77 (100%) |
INDEPENDENT BANK GROUP, INC. |
By: /s/ David R. Brooks |
David R. Brooks Chairman of the Board and CEO |
1. | I have reviewed this Quarterly Report on Form 10-Q of Independent Bank Group, Inc. (the “registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information related to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors: |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | July 26, 2018 | /s/ David R. Brooks |
David R. Brooks Chairman, Chief Executive Officer and President |
1. | I have reviewed this Quarterly Report on Form 10-Q of Independent Bank Group, Inc. (the “registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information related to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors: |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | July 26, 2018 | /s/ Michelle S. Hickox |
Michelle S. Hickox Executive Vice President and Chief Financial Officer |
/s/ David R. Brooks |
David R. Brooks |
Chairman, Chief Executive Officer and President |
/s/ Michelle S. Hickox |
Michelle S. Hickox |
Executive Vice President and Chief Financial Officer |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jul. 24, 2018 |
|
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | IBTX | |
Entity Registrant Name | Independent Bank Group, Inc. | |
Entity Central Index Key | 0001564618 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 30,468,713 |
Consolidated Balance Sheets (Parenthetical) - shares |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, shares outstanding (shares) | 0 | 0 |
Common stock, shares outstanding (shares) | 30,468,413 | 28,254,893 |
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
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Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 29,635 | $ 18,134 | $ 58,599 | $ 33,805 |
Other comprehensive income (loss) before tax: | ||||
Change in net unrealized gains (losses) on available for sale securities during the year | (1,264) | 5,314 | (12,179) | 7,314 |
Reclassification for amount realized through sales of securities available for sale included in net income | 10 | (52) | 234 | (52) |
Other comprehensive income (loss) before tax | (1,254) | 5,262 | (11,945) | 7,262 |
Income tax expense (benefit) | (263) | 1,842 | (2,508) | 2,542 |
Other comprehensive income (loss), net of tax | (991) | 3,420 | (9,437) | 4,720 |
Comprehensive income | $ 28,644 | $ 21,554 | $ 49,162 | $ 38,525 |
Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Statement of Stockholders' Equity [Abstract] | ||
Offering costs | $ 209 | $ 942 |
Dividends paid (usd per share) | $ 0.26 | $ 0.20 |
Common stock par value (usd per share) | $ 0.01 | $ 0.01 |
Common stock shares authorized (shares) | 100,000,000 | 100,000,000 |
Preferred stock par value (usd per share) | $ 0.01 | $ 0.01 |
Preferred stock shares authorized (shares) | 10,000,000 | 10,000,000 |
Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Nature of Operations: Independent Bank Group, Inc. (IBG) through its subsidiary, Independent Bank, a Texas state banking corporation (Bank) (collectively known as the Company), provides a full range of banking services to individual and corporate customers in the North, Central and Southeast, Texas areas and along the Colorado Front Range, through its various branch locations in those areas. The Company is engaged in traditional community banking activities, which include commercial and retail lending, deposit gathering, investment and liquidity management activities. The Company’s primary deposit products are demand deposits, money market accounts and certificates of deposit, and its primary lending products are commercial business and real estate, real estate mortgage and consumer loans. Basis of Presentation: The accompanying consolidated financial statements include the accounts of IBG, its wholly-owned subsidiaries, the Bank, IBG Adriatica Holdings, Inc. (Adriatica) and Carlile Capital, LLC and the Bank’s wholly-owned subsidiaries, IBG Real Estate Holdings, Inc., IBG Real Estate Holdings II, Inc., IBG Aircraft Company III, Preston Grand, Inc., CFRH II, LLC, McKinney Avenue Holdings, Inc. and its wholly owned subsidiary, McKinney Avenue Holdings SPE 1, Inc. Adriatica, CFRH II, LLC, McKinney Avenue Holdings, Inc. and its subsidiary are currently not active entities. On June 1, 2018, the Company acquired Integrity Bancshares, Inc. (Integrity) and its wholly owned subsidiary, Integrity Bank, SSB, Houston, Texas. Integrity has been merged into the Company and dissolved and Integrity Bank has been merged with the Bank as of acquisition date. See Note 10, Business Combinations for more details of the Integrity acquisition. All material intercompany transactions and balances have been eliminated in consolidation. In addition, the Company wholly-owns IB Trust I (Trust I), IB Trust II (Trust II), IB Trust III (Trust III), IB Centex Trust I (Centex Trust I), Community Group Statutory Trust I (CGI Trust I), Northstar Statutory Trust II (Northstar Trust II) and Northstar Statutory Trust III (Northstar Trust III). The Trusts were formed to issue trust preferred securities and do not meet the criteria for consolidation. The consolidated interim financial statements are unaudited, but include all adjustments, which, in the opinion of management, are necessary for a fair presentation of the results of the periods presented. All such adjustments were of a normal and recurring nature. These financial statements should be read in conjunction with the financial statements and the notes thereto in the Company's Annual Report of Form10-K for the year ended December 31, 2017. The consolidated statement of condition at December 31, 2017 had been derived from the audited financial statements as of that date, but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. Segment Reporting: The Company has one reportable segment. The Company’s chief operating decision-maker uses consolidated results to make operating and strategic decisions. Subsequent events: Companies are required to evaluate events and transactions that occur after the balance sheet date but before the date the financial statements are issued. They must recognize in the financial statements the effect of all events or transactions that provide additional evidence of conditions that existed at the balance sheet date, including the estimates inherent in the financial statement preparation process. Entities shall not recognize the impact of events or transactions that provide evidence about conditions that did not exist at the balance sheet date but arose after that date. The Company has evaluated subsequent events through the date of filing these financial statements with the Securities and Exchange Commission (SEC) and noted no subsequent events requiring financial statement recognition or disclosure, except as disclosed in Note 11. Earnings per share: Basic earnings per common share are net income available to common shareholders divided by the weighted average number of common shares outstanding during the period. The unvested share-based payment awards that contain rights to non forfeitable dividends are considered participating securities for this calculation. Diluted earnings per common share include the dilutive effect of additional potential common shares issuable under stock warrants. The participating nonvested common stock was not included in dilutive shares as it was anti-dilutive for the three and six months ended June 30, 2018 and 2017. Proceeds from the assumed exercise of dilutive stock warrants are assumed to be used to repurchase common stock at the average market price. The following table presents a reconciliation of net income available to common shareholders and the number of shares used in the calculation of basic and diluted earnings per common share.
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Statement of Cash Flows |
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Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Statement of Cash Flows | Statement of Cash Flows As allowed by the accounting standards, the Company has chosen to report on a net basis its cash receipts and cash payments for time deposits accepted and repayments of those deposits, and loans made to customers and principal collections on those loans. The Company uses the indirect method to present cash flows from operating activities. Other supplemental cash flow information is presented below:
Supplemental schedule of noncash investing activities from acquisitions is as follows:
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Securities Available for Sale |
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Available-for-sale Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities Available for Sale | Securities Available for Sale Securities available for sale have been classified in the consolidated balance sheets according to management’s intent. The amortized cost of securities and their approximate fair values at June 30, 2018 and December 31, 2017, are as follows:
Securities with a carrying amount of approximately $262,040 and $238,344 at June 30, 2018 and December 31, 2017, respectively, were pledged to secure public fund deposits and repurchase agreements. Proceeds from sale of securities available for sale and gross gains and gross losses for the three and six months ended June 30, 2018 and 2017 were as follows:
The amortized cost and estimated fair value of securities available for sale at June 30, 2018, by contractual maturity, are shown below. Maturities of pass-through certificates will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
The number of securities, unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of June 30, 2018 and December 31, 2017, are summarized as follows:
Unrealized losses are generally due to changes in interest rates. The Company has the intent to hold these securities until maturity or a forecasted recovery, and it is more likely than not that the Company will not have to sell the securities before the recovery of their cost basis. As such, the losses are deemed to be temporary. |
Loans, Net and Allowance for Loan Losses |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans, Net and Allowance for Loan Losses | Loans, Net and Allowance for Loan Losses Loans, net, at June 30, 2018 and December 31, 2017, consisted of the following:
The Company has certain lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. Management reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by providing management with frequent reports related to loan production, loan quality, concentrations of credit, loan delinquencies and non-performing and potential problem loans. Commercial loans are underwritten after evaluating and understanding the borrower’s ability to operate profitably and prudently expand its business. The Company’s management examines current and projected cash flows to determine the ability of the borrower to repay their obligations as agreed. Commercial loans are primarily made based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. These cash flows, however, may not be as expected and the value of collateral securing the loans may fluctuate. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee; however, some short term loans may be made on an unsecured basis. Additionally, our commercial loan portfolio includes loans made to customers in the energy industry, which is a complex, technical and cyclical industry. Experienced bankers with specialized energy lending experience originate our energy loans. Companies in this industry produce, extract, develop, exploit and explore for oil and natural gas. Loans are primarily collateralized with proven producing oil and gas reserves based on a technical evaluation of these reserves. At June 30, 2018 and December 31, 2017, there were approximately $120,534 and $106,060 of energy related loans outstanding, respectively. With the acquisition of Carlile in second quarter of 2017, the Company acquired a mortgage warehouse purchase program, which provides a mortgage warehouse lending vehicle to third party mortgage bankers across a broad geographic scale. The mortgage loans are underwritten, in part, on approved investor takeout commitments. These loans have a very short duration ranging between 10 days and 15 days. In some cases, loans to larger mortgage originators may be financed for up to 60 days. These loans are reported as commercial loans since the loans are secured by notes receivable, not real estate. As of June 30, 2018 and December 31, 2017, mortgage warehouse purchase loans outstanding totaled $164,790 and $164,694, respectively. Commercial real estate loans are subject to underwriting standards and processes similar to commercial loans. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts, and the repayment of these loans is generally largely dependent on the successful operation of the property or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. The properties securing the Company’s commercial real estate portfolio are diverse in terms of type and geographic location. Management monitors the diversification of the portfolio on a quarterly basis by type and geographic location. Management also tracks the level of owner occupied property versus non owner occupied property. At June 30, 2018, the portfolio consisted of approximately 33% of owner occupied property. Land and commercial land development loans are underwritten using feasibility studies, independent appraisal reviews and financial analysis of the developers or property owners. Generally, borrowers must have a proven track record of success. Commercial construction loans are generally based upon estimates of cost and value of the completed project. These estimates may not be accurate. Commercial construction loans often involve the disbursement of substantial funds with the repayment dependent on the success of the ultimate project. Sources of repayment for these loans may be pre-committed permanent financing or sale of the developed property. The loans in this portfolio are geographically diverse and due to the increased risk are monitored closely by management and the board of directors on a quarterly basis. Residential real estate and single family interim construction loans are underwritten primarily based on borrowers’ credit scores, documented income and minimum collateral values. Relatively small loan amounts are spread across many individual borrowers, which minimizes risk in the residential portfolio. In addition, management evaluates trends in past dues and current economic factors on a regular basis. Agricultural loans are collateralized by real estate and/or agricultural-related assets. Agricultural real estate loans are primarily comprised of loans for the purchase of farmland. Loan-to-value ratios on loans secured by farmland generally do not exceed 80% and have amortization periods limited to twenty years. Agricultural non-real estate loans are generally comprised of term loans to fund the purchase of equipment, livestock and seasonal operating lines to grain farmers to plant and harvest corn and soybeans. Specific underwriting standards have been established for agricultural-related loans including the establishment of projections for each operating year based on industry developed estimates of farm input costs and expected commodity yields and prices. Operating lines are typically written for one year and secured by the crop and other farm assets as considered necessary. Agricultural loans carry significant credit risks as they involve larger balances concentrated with single borrowers or groups of related borrowers. In addition, repayment of such loans depends on the successful operation or management of the farm property securing the loan or for which an operating loan is utilized. Farming operations may be affected by adverse weather conditions such as drought, hail or floods that can severely limit crop yields. Consumer loans represent less than 1% of the outstanding total loan portfolio. Collateral consists primarily of automobiles and other personal assets. Credit score analysis is used to supplement the underwriting process. Most of the Company’s lending activity occurs within the State of Texas, primarily in the north, central and southeast Texas regions. With the acquisition of Carlile, the Company expanded into the State of Colorado, specifically along the Front Range area. As of June 30, 2018, loans in the Colorado region represented about 5% of the total portfolio. A large percentage of the Company’s portfolio consists of commercial and residential real estate loans. As of June 30, 2018 and December 31, 2017, there were no concentrations of loans related to a single industry in excess of 10% of total loans. The allowance for loan losses is an amount that management believes will be adequate to absorb estimated losses relating to specifically identified loans, as well as probable credit losses inherent in the balance of the loan portfolio. The allowance is derived from the following two components: 1) allowances established on individual impaired loans, which are based on a review of the individual characteristics of each loan, including the customer’s ability to repay the loan, the underlying collateral values, and the industry the customer operates, and 2) allowances based on actual historical loss experience for the last three years for similar types of loans in the Company’s loan portfolio adjusted for primarily changes in the lending policies and procedures; collection, charge-off and recovery practices; nature and volume of the loan portfolio; change in value of underlying collateral; volume and severity of nonperforming loans; existence and effect of any concentrations of credit and the level of such concentrations and current, national and local economic and business conditions. This second component also includes an unallocated allowance to cover uncertainties that could affect management’s estimate of probable losses. The unallocated allowance reflects the imprecision inherent in the underlying assumptions used in the methodologies for estimating this component. The Company’s management continually evaluates the allowance for loan losses determined from the allowances established on individual loans and the amounts determined from historical loss percentages adjusted for the qualitative factors above. Should any of the factors considered by management change, the Company’s estimate of loan losses could also change and would affect the level of future provision expense. While the calculation of the allowance for loan losses utilizes management’s best judgment and all the information available, the adequacy of the allowance for loan losses is dependent on a variety of factors beyond the Company’s control, including, among other things, the performance of the entire loan portfolio, the economy, changes in interest rates and the view of regulatory authorities towards loan classifications. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Bank’s allowance for loan losses, and may require the Bank to make additions to the allowance based on their judgment about information available to them at the time of their examinations. Loans requiring an allocated loan loss provision are generally identified at the servicing officer level based on review of weekly past due reports and/or the loan officer’s communication with borrowers. In addition, past due loans are discussed at weekly officer loan committee meetings to determine if classification is warranted. The Company’s credit department has implemented an internal risk based loan review process to identity potential internally classified loans that supplements the annual independent external loan review. The external review generally covers all loans greater than $4,125 annually. These reviews include analysis of borrower’s financial condition, payment histories and collateral values to determine if a loan should be internally classified. Generally, once classified, an impaired loan analysis is completed by the credit department to determine if the loan is impaired and the amount of allocated allowance required. The Texas and Colorado economies, specifically the Company’s lending area of north, central and southeast Texas and the Colorado Front Range area, continued to be strong in the second quarter of 2018. The Texas economy is the second largest in the nation, out-pacing the U.S. economy in job creation and employment growth. Overall, the forecast is strong with continued growth in the manufacturing and service sectors and rising activity in the energy sector. While the current economic outlook remains optimistic, future and long-term concerns continue to include the tightening labor markets, decreased housing affordability, energy price volatility and trade uncertainty. The risk of loss associated with all segments of the portfolio could increase due to these factors. The economy and other risk factors are minimized by the Company’s underwriting standards, which include the following principles: 1) financial strength of the borrower including strong earnings, high net worth, significant liquidity and acceptable debt to worth ratio, 2) managerial business competence, 3) ability to repay, 4) loan to value, 5) projected cash flow and 6) guarantor financial statements as applicable. The following is a summary of the activity in the allowance for loan losses by loan class for the three and six months ended June 30, 2018 and 2017:
The following table details the amount of the allowance for loan losses and recorded investment in loans by class as of June 30, 2018 and December 31, 2017:
Nonperforming loans by loan class (excluding loans acquired with deteriorated credit quality) at June 30, 2018 and December 31, 2017, are summarized as follows:
The accrual of interest is discontinued on a loan when management believes after considering collection efforts and other factors that the borrower's financial condition is such that collection of interest is doubtful. All interest accrued but not collected for loans that are placed on nonaccrual status or charged-off is reversed against interest income. Cash collections on nonaccrual loans are generally credited to the loan receivable balance, and no interest income is recognized on those loans until the principal balance has been collected. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Impaired loans are those loans where it is probable that all amounts due according to contractual terms of the loan agreement will not be collected. The Company has identified these loans through its normal loan review procedures. Impaired loans are measured based on 1) the present value of expected future cash flows discounted at the loans effective interest rate; 2) the loan's observable market price; or 3) the fair value of collateral if the loan is collateral dependent. Substantially all of the Company’s impaired loans are measured at the fair value of the collateral. In limited cases, the Company may use the other methods to determine the level of impairment of a loan if such loan is not collateral dependent. All commercial, real estate, agricultural loans and troubled debt restructurings are considered for individual impairment analysis. Smaller balance consumer loans are collectively evaluated for impairment. Impaired loans by loan class (excluding loans acquired with deteriorated credit quality) at June 30, 2018 and December 31, 2017, are summarized as follows:
Certain impaired loans have adequate collateral and do not require a related allowance for loan loss. The Company will charge-off that portion of any loan which management considers a loss. Commercial and real estate loans are generally considered for charge-off when exposure beyond collateral coverage is apparent and when no further collection of the loss portion is anticipated based on the borrower’s financial condition. The restructuring of a loan is considered a “troubled debt restructuring” if both 1) the borrower is experiencing financial difficulties and 2) the creditor has granted a concession. Concessions may include interest rate reductions or below market interest rates, principal forgiveness, extending amortization and other actions intended to minimize potential losses. A “troubled debt restructured” loan is identified as impaired and measured for credit impairment as of each reporting period in accordance with the guidance in Accounting Standards Codification (ASC) 310-10-35. Modifications primarily relate to extending the amortization periods of the loans and interest rate concessions. The majority of these loans were identified as impaired prior to restructuring; therefore, the modifications did not materially impact the Company’s determination of the allowance for loan losses. The recorded investment in troubled debt restructurings, including those on nonaccrual, was $4,603 and $3,028 as of June 30, 2018 and December 31, 2017, respectively. Following is a summary of loans modified under troubled debt restructurings during the three and six months ended June 30, 2018 and 2017:
At June 30, 2018 and 2017, there were no loans modified under troubled debt restructurings during the previous twelve month period that subsequently defaulted during the three and six months ended June 30, 2018 and 2017, respectively. At June 30, 2018 and 2017, the Company had no commitments to lend additional funds to any borrowers with loans whose terms have been modified under troubled debt restructurings. Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. The following table presents information regarding the aging of past due loans by loan class as of June 30, 2018 and December 31, 2017:
The Company’s internal classified report is segregated into the following categories: 1) Pass/Watch, 2) Special Mention, 3) Substandard and 4) Doubtful. The loans placed in the Pass/Watch category reflect the Company’s opinion that the loans reflect potential weakness that requires monitoring on a more frequent basis. The loans in the Special Mention category reflect the Company’s opinion that the credit contains weaknesses which represent a greater degree of risk and warrant extra attention. These loans are reviewed monthly by officers and senior management to determine if a change in category is warranted. The loans placed in the Substandard category are considered to be potentially inadequately protected by the current debt service capacity of the borrower and/or the pledged collateral. These credits, even if apparently protected by collateral value, have shown weakness related to adverse financial, managerial, economic, market or political conditions, which may jeopardize repayment of principal and interest. There is possibility that some future loss could be sustained by the Company if such weakness is not corrected. The Doubtful category includes loans that are in default or principal exposure is probable. Substandard and Doubtful loans are individually evaluated to determine if they should be classified as impaired and an allowance is allocated if deemed necessary under ASC 310-10. The loans that are not impaired are included with the remaining “pass” credits in determining the portion of the allowance for loan loss based on historical loss experience and other qualitative factors. The portfolio is segmented into categories including: commercial loans, consumer loans, commercial real estate loans, residential real estate loans and agricultural loans. The adjusted historical loss percentage is applied to each category. Each category is then added together to determine the allowance allocated under ASC 450-20. A summary of loans by credit quality indicator by class as of June 30, 2018 and December 31, 2017, is as follows:
The Company has acquired certain loans which experienced credit deterioration since origination (purchased credit impaired (PCI) loans). The Company has included PCI loans in the above grading tables. The following provides additional detail on the grades applied to those loans at June 30, 2018 and December 31, 2017:
PCI loans may remain on accrual status to the extent the company can reasonably estimate the amount and timing of expected future cash flows. At June 30, 2018 and December 31, 2017, non-accrual PCI loans were $10,494 and $7,889, respectively. Accretion on PCI loans is based on estimated future cash flows, regardless of contractual maturity. The following table summarizes the outstanding balance and related carrying amount of purchased credit impaired loans by acquired bank as of the acquisition date for the acquisitions occurring in 2018 and 2017:
*Amounts represent provisional estimates and are subject to final acquisition accounting adjustments. The carrying amount of all acquired PCI loans included in the consolidated balance sheet and the related outstanding balance at June 30, 2018 and December 31, 2017 were as follows:
There was no allocation established in the allowance for loan losses relating to PCI loans at June 30, 2018 or December 31, 2017. The changes in accretable yield during the six months ended June 30, 2018 and 2017 in regard to loans transferred at acquisition for which it was probable that all contractually required payments would not be collected are presented in the table below.
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Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Financial Instruments with Off-Balance Sheet Risk The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. The commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheet. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual amount of this instrument. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. At June 30, 2018 and December 31, 2017, the approximate amounts of these financial instruments were as follows:
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained if deemed necessary by the Company upon extension of credit is based on management’s credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, farm crops, property, plant and equipment and income-producing commercial properties. Letters of credit are written conditional commitments used by the Company to guarantee the performance of a customer to a third party. The Company’s policies generally require that letter of credit arrangements contain security and debt covenants similar to those contained in loan arrangements. In the event the customer does not perform in accordance with the terms of the agreement with the third party, the Company would be required to fund the commitment. The maximum potential amount of future payments the Company could be required to make is represented by the contractual amount shown in the table above. If the commitment is funded, the Company would be entitled to seek recovery from the customer. As of June 30, 2018 and December 31, 2017, no amounts have been recorded as liabilities for the Company’s potential obligations under these guarantees. Litigation The Company is involved in certain legal actions arising from normal business activities. Management believes that the outcome of such proceedings will not materially affect the financial position, results of operations or cash flows of the Company. A legal proceeding that the Company believes could become material is described below. Independent Bank is a party to a legal proceeding inherited by Independent Bank in connection with its acquisition of BOH Holdings, Inc. and its subsidiary, Bank of Houston (BOH). The plaintiffs in the case are alleging that Independent Bank aided and abetted or participated in a fraudulent scheme. Independent Bank is pursuing insurance coverage for these claims, including reimbursement for defense costs. The Company believes the claims made in this lawsuit are without merit and is vigorously defending the lawsuit. The Company is unable to predict when the matter will be resolved, the ultimate outcome or potential costs or damages to be incurred. Please see Part II, Item 1. for more details on this lawsuit. Lease Commitments The Company leases certain branch facilities and other facilities. Rent expense related to these leases amounted to $824 and $1,555 for the three and six months ended June 30, 2018, respectively, and $899 and $1,419 for the three and six months ended June 30, 2017, respectively. |
Income Taxes |
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes Income tax expense for the three and six months ended June 30, 2018 and 2017 was as follows:
Effective January 1, 2018, the corporate U.S. statutory federal income tax rate was reduced from 35% to 21% under the Tax Cuts and Jobs Act. The Company completed its accounting under ASC 740 in December 2017 for all material deferred tax assets and liabilities with provisional amounts recorded for immaterial items. No adjustments were made to provisional amounts during the period ended June 30, 2018 and none are anticipated during the one year SEC Staff Accounting Bulletin 118 measurement period. The effective tax rates differ from the statutory federal tax rate for 2018 and 2017 of 21% and 35%, respectively, largely due to tax exempt interest income earned on certain investment securities and loans, the nontaxable earnings on bank owned life insurance, and excess tax benefits on restricted stock vestings. In addition, the effective tax rate differs over the respective periods due to nondeductible acquisition expenses incurred during the three months ended June 30, 2018 and 2017. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The fair value of an asset or liability is the price that would be received to sell that asset or paid to transfer that liability in an orderly transaction occurring in the principal market (or most advantageous market in the absence of a principal market) for such asset or liability. In estimating fair value, the Company utilizes valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. Such valuation techniques are consistently applied. Inputs to valuation techniques include the assumptions that market participants would use in pricing an asset or liability. ASC Topic 820, Fair Value Measurements and Disclosures, establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows: Level 1 Inputs – Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 Inputs – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means. Level 3 Inputs – Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities. The following table represents assets reported on the consolidated balance sheets at their fair value on a recurring basis as of June 30, 2018 and December 31, 2017 by level within the ASC Topic 820 fair value measurement hierarchy:
There were no transfers between level categorizations and no changes in valuation methodologies for the periods presented. A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. Securities classified as available for sale are reported at fair value utilizing Level 1 and Level 2 inputs. Securities are classified within Level 1 when quoted market prices are available in an active market. Inputs include securities that have quoted prices in active markets for identical assets. For securities utilizing Level 2 inputs, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury and other yield curves, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the security’s terms and conditions, among other things. In accordance with ASC Topic 820, certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, the assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). The following table presents the assets carried on the consolidated balance sheet by caption and by level in the fair value hierarchy at June 30, 2018 and December 31, 2017, for which a nonrecurring change in fair value has been recorded:
Impaired loans (loans which are not expected to repay all principal and interest amounts due in accordance with the original contractual terms) are measured at an observable market price (if available) or at the fair value of the loan’s collateral (if collateral dependent). Fair value of the loan’s collateral is determined by appraisals or independent valuation, which is then adjusted for the estimated costs related to liquidation of the collateral. Management’s ongoing review of appraisal information may result in additional discounts or adjustments to valuation based upon more recent market sales activity or more current appraisal information derived from properties of similar type and/or locale. Therefore, the Company has categorized its impaired loans as Level 3. Other real estate is measured at fair value on a nonrecurring basis (upon initial recognition or subsequent impairment). Other real estate is classified within Level 3 of the valuation hierarchy. When transferred from the loan portfolio, other real estate is adjusted to fair value less estimated selling costs and is subsequently carried at the lower of carrying value or fair value less estimated selling costs. The fair value is determined using an external appraisal process, discounted based on internal criteria. In addition, mortgage loans held for sale are required to be measured at the lower of cost or fair value. The fair value of mortgage loans held for sale is based upon binding quotes or bids from third party investors. As of June 30, 2018 and December 31, 2017, all mortgage loans held for sale were recorded at cost. The methods and assumptions used by the Company in estimating fair values of financial instruments as disclosed herein in accordance with ASC Topic 825, Financial Instruments, as amended by ASU 2016-01 requiring public entities to use the exit price notion effective January 1, 2018, other than for those measured at fair value on a recurring and nonrecurring basis discussed above, are as follows: Cash and cash equivalents: The carrying amounts of cash and cash equivalents approximate their fair value. Certificates of deposit held in other banks: The fair value of certificates of deposit held in other banks is based upon current rates in the market. Loans held for sale: The fair value of loans held for sale is determined based upon commitments on hand from investors. Loans: Pursuant to the adoption of ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, for loan values reported for the 2018 period, a discounted cash flow model is used to estimate the fair value of the loans. The discounted cash flow approach models the credit losses directly in the projected cash flows, applying various assumptions regarding credit, interest, and prepayment risks for the loans based on loan types, payment types and fixed or variable classifications. Loans reported prior to 2018 were valued as follows: For variable-rate loans that reprice frequently and have no significant changes in credit risk, fair values are based on carrying values. Fair values for certain mortgage loans (for example, one-to-four family residential), commercial real estate and commercial loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Federal Home Loan Bank of Dallas and other restricted stock: The carrying value of restricted securities such as stock in the Federal Home Loan Bank of Dallas and Independent Bankers Financial Corporation approximates fair value. Deposits: The fair values disclosed for demand deposits are, by definition, equal to the amount payable on demand at the reporting date (that is their carrying amounts). The carrying amounts of variable-rate certificates of deposit (CDs) approximate their fair values at the reporting date. Fair values for fixed-rate CDs are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits. Federal Home Loan Bank advances, line of credit and federal funds purchased: The fair value of advances maturing within 90 days approximates carrying value. Fair value of other advances is based on the Company’s current borrowing rate for similar arrangements. Other borrowings: The carrying value of repurchase agreements approximates fair value due to the short term nature. The fair value of private subordinated debentures are based upon prevailing rates on similar debt in the market place. The subordinated debentures that are publicly traded are valued based on indicative bid prices based upon market pricing observations in the current market. Junior subordinated debentures: The fair value of junior subordinated debentures is estimated using discounted cash flow analyses based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. Accrued interest: The carrying amounts of accrued interest approximate their fair values. Off-balance sheet instruments: Fair values for off-balance sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties' credit standing. The fair value of commitments is not material. The carrying amount, estimated fair value and the level of the fair value hierarchy of the Company’s financial instruments were as follows at June 30, 2018 and December 31, 2017:
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Stock Awards and Stock Warrants |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Awards and Stock Warrants | Stock Awards and Stock Warrants The Company grants common stock awards to certain employees of the Company. The common stock issued prior to 2013 vests five years from the date the award is granted and the related compensation expense is recognized over the vesting period. In connection with the Company's initial public offering in April 2013, the Board of Directors adopted the 2013 Equity Incentive Plan. Under this plan, the Compensation Committee may grant awards to certain employees of the Company in the form of restricted stock, restricted stock rights, restricted stock units, qualified and nonqualified stock options, performance-based share awards and other equity-based awards. In May 2018, the shareholders of the Company voted to amend the plan to increase the reserved shares of common stock to be awarded by the Company’s compensation committee by 1,500,000 for a total of 2,300,000 reserved shares. The shares currently issued under the 2013 Plan are restricted stock awards and will vest evenly over the required employment period, generally ranging from three to five years. Shares granted under a previous plan prior to 2012 and those in and subsequent to 2013 under the 2013 Equity Incentive Plan were issued at the date of grant and receive dividends. Shares issued under a revised plan in 2012 are not outstanding shares of the Company until they vest and do not receive dividends. All stock awards issued under expired plans prior to 2013 are fully vested. During the six months ended June 30, 2017, 24,160 shares that were issued under the 2012 Plan vested during the period. The following table summarizes the activity in nonvested shares for the six months ended June 30, 2018 and 2017:
Compensation expense related to these awards is recorded based on the fair value of the award at the date of grant and totaled $1,543 and $2,955 for the three and six months ended June 30, 2018, respectively, and $1,196 and $2,166 for the three and six months ended June 30, 2017, respectively. Compensation expense is recorded in salaries and employee benefits in the accompanying consolidated statements of income. At June 30, 2018, future compensation expense is estimated to be $13,542 and will be recognized over a remaining weighted average period of 3.31 years. The fair value of common stock awards that vested during the six months ended June 30, 2018 and 2017 was $7,539 and $7,995, respectively. The Company recorded $264 and $613 in excess tax benefits on vested restricted stock to income tax expense for the three and six months ended June 30, 2018, respectively, and $520 and $1,244 for the three and six months ended June 30, 2017, respectively. At June 30, 2018, the future vesting schedule of the nonvested shares is as follows:
The Company has warrants outstanding representing the right to purchase 120,869 shares of Company stock at $17.19 per share to certain Company directors and shareholders. The warrants were issued in return for the shareholders' agreement to repurchase the subordinated debt outstanding to an unaffiliated bank in the event of Company default. The warrants were recorded as equity awards at fair value and were amortized over the term of the debt. The subordinated debt was paid off by the Company in 2013. The warrants expire in December 2018. During the six months ended June 30, 2018, warrants to purchase 26,472 shares of common stock were exercised and have been issued by the Company. |
Regulatory Matters |
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Regulated Operations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulatory Matters | Regulatory Matters Under banking law, there are legal restrictions limiting the amount of dividends the Bank can declare. Approval of the regulatory authorities is required if the effect of dividends declared would cause the regulatory capital of the Bank to fall below specified minimum levels. For state banks, subject to regulatory capital requirements, payment of dividends is generally allowed to the extent of net profits. The Company (on a consolidated basis) and the Bank are subject to various regulatory capital requirements administered by federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. The Company is subject to the Basel III regulatory capital framework (the "Basel III Capital Rules"). Starting in January 2016, the implementation of the capital conservation buffer was effective for the Company starting at the 0.625% level and increasing 0.625% each year thereafter, until it reaches 2.5% on January 1, 2019. The capital conservation buffer is designed to absorb losses during periods of economic stress and requires increased capital levels for the purpose of capital distributions and other payments. Failure to meet the full amount of the buffer will result in restrictions on the Company's ability to make capital distributions, including dividend payments and stock repurchases and to pay discretionary bonuses to executive officers. When fully phased in on January 1, 2019, the Basel III Capital Rules will require the Company and Bank to maintain (i) a minimum ratio of Common Equity Tier 1 capital to risk-weighted assets of at least 4.5%, plus the 2.5% capital conservation buffer (7.0% upon full implementation), (ii) a minimum ratio of Tier 1 capital to risk-weighted assets of at least 6.0%, plus the 2.5% capital conservation buffer (8.5% upon full implementation), (iii) a minimum ratio of Total capital (that is, Tier 1 plus Tier 2) to risk-weighted assets of at least 8.0%, plus the 2.5% capital conservation buffer (10.5% upon full implementation) and (iv) a minimum leverage ratio of 4.0%, calculated as the ratio of Tier 1 capital to average quarterly assets. Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the table below) of total, CET1 and Tier 1 capital (as defined in the regulations) to risk weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined). Management believes, as of June 30, 2018 and December 31, 2017, the Company and the Bank meet all capital adequacy requirements to which they are subject, including the capital buffer requirement. As of June 30, 2018 and December 31, 2017, the Bank’s capital ratios exceeded those levels necessary to be categorized as “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as “well capitalized," the Bank must maintain minimum total risk based, CET1, Tier 1 risk based and Tier 1 leverage ratios as set forth in the table. There are no conditions or events that management believes have changed the Bank’s category. The actual capital amounts and ratios of the Company and Bank as of June 30, 2018 and December 31, 2017, are presented in the following table:
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Business Combinations (Notes) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations | Business Combinations Guaranty Bancorp On May 22, 2018, the Company announced that it entered into a definitive agreement with Guaranty Bancorp (GBNK) and its subsidiary, Guaranty Bank and Trust Company (Guaranty Bank), which operates its main office in Denver Colorado and has 32 branches located along the Colorado Front Range. Pursuant to the agreement, GBNK will merge with and into the Company in an all-stock transaction. Upon completion of the merger, Guaranty Bank will be merged with and into the Bank. Under the terms of the merger agreement, shareholders of GBNK will receive 0.45 shares of the Company's common stock for each share of GBNK common stock. The merger has been approved by the Boards of Directors of both companies and is expected to close during the fourth quarter of 2018, although delays may occur. The transaction is subject to certain conditions, including the approval by shareholders of the Company, GBNK and customary regulatory approvals. Integrity Bancshares, Inc. On June 1, 2018, the Company acquired 100% of the outstanding stock of Integrity Bancshares, Inc. and its subsidiary, Integrity Bank, SSB, Houston, Texas (Integrity) with four branches located in Houston, TX. The Company issued 2,071,981 shares of Company stock and paid $31,016 in cash for the outstanding shares and options of Integrity common stock. The Company recognized a provisional amount of goodwill of $100,120, which is calculated as the excess of both the consideration exchanged and liabilities assumed compared to the fair market value of identifiable assets acquired. The fair value of consideration exchanged related to the Company's stock was calculated based upon the closing market price of the Company's stock as of June 1, 2018. The goodwill in this acquisition resulted from a combination of expected synergies and expansion in the Houston market. None of the goodwill recognized is expected to be deductible for income tax purposes. Provisional estimates for loans and core deposit intangible have been recorded for the acquisition as independent valuations have not been finalized. The Company does not expect any significant differences from estimated values upon completion of the valuations. The Company has incurred expenses related to the acquisition of approximately $1,101 and $1,296 for the three and six months ended June 30, 2018, respectively, which are included in acquisition expense in the consolidated statements of income. The Company incurred expenses of $360 during the year ended December 31, 2017. In addition, for the six months ended June 30, 2018, the Company paid offering costs totaling $209 which were recorded as a reduction to stock issuance proceeds through additional paid in capital. Estimated fair values of the assets acquired and liabilities assumed in the transaction as of the closing date are as follows:
The acquisition is not considered significant to the Company's financial statements and therefore, pro-forma financial data is not included. |
Subsequent Events |
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Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Declaration of Dividends On July 25, 2018, the Company declared a quarterly cash dividend in the amount of $0.14 per share of common stock to the stockholders of record on August 6, 2018. The dividend will be paid on August 16, 2018. |
Summary of Significant Accounting Policies (Policies) |
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Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation: The accompanying consolidated financial statements include the accounts of IBG, its wholly-owned subsidiaries, the Bank, IBG Adriatica Holdings, Inc. (Adriatica) and Carlile Capital, LLC and the Bank’s wholly-owned subsidiaries, IBG Real Estate Holdings, Inc., IBG Real Estate Holdings II, Inc., IBG Aircraft Company III, Preston Grand, Inc., CFRH II, LLC, McKinney Avenue Holdings, Inc. and its wholly owned subsidiary, McKinney Avenue Holdings SPE 1, Inc. Adriatica, CFRH II, LLC, McKinney Avenue Holdings, Inc. and its subsidiary are currently not active entities. On June 1, 2018, the Company acquired Integrity Bancshares, Inc. (Integrity) and its wholly owned subsidiary, Integrity Bank, SSB, Houston, Texas. Integrity has been merged into the Company and dissolved and Integrity Bank has been merged with the Bank as of acquisition date. See Note 10, Business Combinations for more details of the Integrity acquisition. All material intercompany transactions and balances have been eliminated in consolidation. In addition, the Company wholly-owns IB Trust I (Trust I), IB Trust II (Trust II), IB Trust III (Trust III), IB Centex Trust I (Centex Trust I), Community Group Statutory Trust I (CGI Trust I), Northstar Statutory Trust II (Northstar Trust II) and Northstar Statutory Trust III (Northstar Trust III). The Trusts were formed to issue trust preferred securities and do not meet the criteria for consolidation. The consolidated interim financial statements are unaudited, but include all adjustments, which, in the opinion of management, are necessary for a fair presentation of the results of the periods presented. All such adjustments were of a normal and recurring nature. These financial statements should be read in conjunction with the financial statements and the notes thereto in the Company's Annual Report of Form10-K for the year ended December 31, 2017. The consolidated statement of condition at December 31, 2017 had been derived from the audited financial statements as of that date, but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. |
Segment Reporting | Segment Reporting: The Company has one reportable segment. The Company’s chief operating decision-maker uses consolidated results to make operating and strategic decisions. |
Subsequent Events | Subsequent events: Companies are required to evaluate events and transactions that occur after the balance sheet date but before the date the financial statements are issued. They must recognize in the financial statements the effect of all events or transactions that provide additional evidence of conditions that existed at the balance sheet date, including the estimates inherent in the financial statement preparation process. Entities shall not recognize the impact of events or transactions that provide evidence about conditions that did not exist at the balance sheet date but arose after that date. The Company has evaluated subsequent events through the date of filing these financial statements with the Securities and Exchange Commission (SEC) and noted no subsequent events requiring financial statement recognition or disclosure, except as disclosed in Note 11. |
Earnings Per Share | Earnings per share: Basic earnings per common share are net income available to common shareholders divided by the weighted average number of common shares outstanding during the period. The unvested share-based payment awards that contain rights to non forfeitable dividends are considered participating securities for this calculation. Diluted earnings per common share include the dilutive effect of additional potential common shares issuable under stock warrants. The participating nonvested common stock was not included in dilutive shares as it was anti-dilutive for the three and six months ended June 30, 2018 and 2017. Proceeds from the assumed exercise of dilutive stock warrants are assumed to be used to repurchase common stock at the average market price. |
Allowance for Loan Losses | The allowance is derived from the following two components: 1) allowances established on individual impaired loans, which are based on a review of the individual characteristics of each loan, including the customer’s ability to repay the loan, the underlying collateral values, and the industry the customer operates, and 2) allowances based on actual historical loss experience for the last three years for similar types of loans in the Company’s loan portfolio adjusted for primarily changes in the lending policies and procedures; collection, charge-off and recovery practices; nature and volume of the loan portfolio; change in value of underlying collateral; volume and severity of nonperforming loans; existence and effect of any concentrations of credit and the level of such concentrations and current, national and local economic and business conditions. This second component also includes an unallocated allowance to cover uncertainties that could affect management’s estimate of probable losses. The unallocated allowance reflects the imprecision inherent in the underlying assumptions used in the methodologies for estimating this component. The Company’s management continually evaluates the allowance for loan losses determined from the allowances established on individual loans and the amounts determined from historical loss percentages adjusted for the qualitative factors above. Should any of the factors considered by management change, the Company’s estimate of loan losses could also change and would affect the level of future provision expense. While the calculation of the allowance for loan losses utilizes management’s best judgment and all the information available, the adequacy of the allowance for loan losses is dependent on a variety of factors beyond the Company’s control, including, among other things, the performance of the entire loan portfolio, the economy, changes in interest rates and the view of regulatory authorities towards loan classifications. |
Nonaccrual Loan and Lease Status | The accrual of interest is discontinued on a loan when management believes after considering collection efforts and other factors that the borrower's financial condition is such that collection of interest is doubtful. All interest accrued but not collected for loans that are placed on nonaccrual status or charged-off is reversed against interest income. Cash collections on nonaccrual loans are generally credited to the loan receivable balance, and no interest income is recognized on those loans until the principal balance has been collected. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. |
Impaired Loan and Lease Receivable | Impaired loans are those loans where it is probable that all amounts due according to contractual terms of the loan agreement will not be collected. The Company has identified these loans through its normal loan review procedures. Impaired loans are measured based on 1) the present value of expected future cash flows discounted at the loans effective interest rate; 2) the loan's observable market price; or 3) the fair value of collateral if the loan is collateral dependent. Substantially all of the Company’s impaired loans are measured at the fair value of the collateral. In limited cases, the Company may use the other methods to determine the level of impairment of a loan if such loan is not collateral dependent. |
Loan Charge off Amounts | The Company will charge-off that portion of any loan which management considers a loss. Commercial and real estate loans are generally considered for charge-off when exposure beyond collateral coverage is apparent and when no further collection of the loss portion is anticipated based on the borrower’s financial condition. |
Troubled Debt Restructuring | The restructuring of a loan is considered a “troubled debt restructuring” if both 1) the borrower is experiencing financial difficulties and 2) the creditor has granted a concession. Concessions may include interest rate reductions or below market interest rates, principal forgiveness, extending amortization and other actions intended to minimize potential losses. A “troubled debt restructured” loan is identified as impaired and measured for credit impairment as of each reporting period in accordance with the guidance in Accounting Standards Codification (ASC) 310-10-35. |
Loans Past Due | Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. |
Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earning Per Share | The following table presents a reconciliation of net income available to common shareholders and the number of shares used in the calculation of basic and diluted earnings per common share.
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Statement of Cash Flows (Tables) |
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Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Supplemental Cash Flow Information | Other supplemental cash flow information is presented below:
Supplemental schedule of noncash investing activities from acquisitions is as follows:
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Securities Available for Sale (Tables) |
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Amortized Cost of Securities and Approximate Fair Values | The amortized cost of securities and their approximate fair values at June 30, 2018 and December 31, 2017, are as follows:
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Proceeds from Sale of Available for Sale Securities | Proceeds from sale of securities available for sale and gross gains and gross losses for the three and six months ended June 30, 2018 and 2017 were as follows:
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Amortized Cost and Estimated Fair Value of Securities Available for Sale by Contractual Maturity | The amortized cost and estimated fair value of securities available for sale at June 30, 2018, by contractual maturity, are shown below. Maturities of pass-through certificates will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
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Summary of Unrealized Losses and Fair Value Securities in Continuous Unrealized Loss Position | The number of securities, unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of June 30, 2018 and December 31, 2017, are summarized as follows:
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Loans, Net and Allowance for Loan Losses (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compositions of Loans | Loans, net, at June 30, 2018 and December 31, 2017, consisted of the following:
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Summary of Activity in Allowance for Loan Losses by Loan Class | The following is a summary of the activity in the allowance for loan losses by loan class for the three and six months ended June 30, 2018 and 2017:
The following table details the amount of the allowance for loan losses and recorded investment in loans by class as of June 30, 2018 and December 31, 2017:
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Summary of Nonperforming Loans by Loan Class | Nonperforming loans by loan class (excluding loans acquired with deteriorated credit quality) at June 30, 2018 and December 31, 2017, are summarized as follows:
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Impaired Loans by Loan Class | Impaired loans by loan class (excluding loans acquired with deteriorated credit quality) at June 30, 2018 and December 31, 2017, are summarized as follows:
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Troubled Debt Restructurings on Financing Receivables | Following is a summary of loans modified under troubled debt restructurings during the three and six months ended June 30, 2018 and 2017:
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Aging of Past Due Loans by Loan Class | The following table presents information regarding the aging of past due loans by loan class as of June 30, 2018 and December 31, 2017:
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Summary of Loans by Credit Quality Indicator by Class | The following provides additional detail on the grades applied to those loans at June 30, 2018 and December 31, 2017:
A summary of loans by credit quality indicator by class as of June 30, 2018 and December 31, 2017, is as follows:
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Outstanding Balance and Related Carrying Amount of Purchased Impaired Loans | The following table summarizes the outstanding balance and related carrying amount of purchased credit impaired loans by acquired bank as of the acquisition date for the acquisitions occurring in 2018 and 2017:
*Amounts represent provisional estimates and are subject to final acquisition accounting adjustments. The carrying amount of all acquired PCI loans included in the consolidated balance sheet and the related outstanding balance at June 30, 2018 and December 31, 2017 were as follows:
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Accretable Yield Rollforward | The changes in accretable yield during the six months ended June 30, 2018 and 2017 in regard to loans transferred at acquisition for which it was probable that all contractually required payments would not be collected are presented in the table below.
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Commitments and Contingencies (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | At June 30, 2018 and December 31, 2017, the approximate amounts of these financial instruments were as follows:
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Income Taxes (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Income Tax Expense | Income tax expense for the three and six months ended June 30, 2018 and 2017 was as follows:
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Fair Value Measurements (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets at Fair Value on Recurring Basis | The following table represents assets reported on the consolidated balance sheets at their fair value on a recurring basis as of June 30, 2018 and December 31, 2017 by level within the ASC Topic 820 fair value measurement hierarchy:
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Assets and Liabilities at Fair Value on Nonrecurring Basis | The following table presents the assets carried on the consolidated balance sheet by caption and by level in the fair value hierarchy at June 30, 2018 and December 31, 2017, for which a nonrecurring change in fair value has been recorded:
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Carrying Amount and Estimated Fair Value of Financial Instruments | The carrying amount, estimated fair value and the level of the fair value hierarchy of the Company’s financial instruments were as follows at June 30, 2018 and December 31, 2017:
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Stock Awards and Stock Warrants (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nonvested Shares Activity | The following table summarizes the activity in nonvested shares for the six months ended June 30, 2018 and 2017:
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Schedule of Vesting of Restricted Stock Award | At June 30, 2018, the future vesting schedule of the nonvested shares is as follows:
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Regulatory Matters (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulated Operations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Compliance with Regulatory Capital Requirements | The actual capital amounts and ratios of the Company and Bank as of June 30, 2018 and December 31, 2017, are presented in the following table:
|
Business Combinations (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated Fair Values of Assets Acquired and Liabilities Assumed | Estimated fair values of the assets acquired and liabilities assumed in the transaction as of the closing date are as follows:
|
Summary of Significant Accounting Policies - Additional Information (Details) |
6 Months Ended |
---|---|
Jun. 30, 2018
segment
| |
Accounting Policies [Abstract] | |
Number of reportable segments | 1 |
Summary of Significant Accounting Policies - EPS (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Basic earnings per share: | ||||
Net income | $ 29,635 | $ 18,134 | $ 58,599 | $ 33,805 |
Less: Undistributed earnings allocated to participating securities | 221 | 134 | 465 | 301 |
Less: Dividends paid on participating securities | 35 | 24 | 68 | 48 |
Net income available to common shareholders | $ 29,379 | $ 17,976 | $ 58,066 | $ 33,456 |
Weighted-average basic shares outstanding (shares) | 28,814,759 | 27,541,007 | 28,434,002 | 23,128,653 |
Basic earnings per share (usd per share) | $ 1.02 | $ 0.65 | $ 2.04 | $ 1.45 |
Diluted earnings per share: | ||||
Add dilutive stock warrants (shares) | 92,392 | 104,901 | 92,187 | 106,050 |
Total weighted-average diluted shares outstanding (shares) | 28,907,151 | 27,645,908 | 28,526,189 | 23,234,703 |
Diluted earnings per share (usd per share) | $ 1.02 | $ 0.65 | $ 2.04 | $ 1.44 |
Anti-dilutive participating securities (shares) | 63,003 | 92,658 | 111,538 | 109,465 |
Statement of Cash Flows - Other Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Cash transactions: | ||
Interest expense paid | $ 31,410 | $ 17,891 |
Income taxes paid | 9,009 | 14,511 |
Noncash transactions: | ||
Transfers of loans to other real estate owned | 0 | 750 |
Securities purchased, not yet settled | $ 0 | $ 33,270 |
Securities Available for Sale - Additional Information (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Available-for-sale Securities [Abstract] | ||
Carrying value of securities pledged | $ 262,040 | $ 238,344 |
Securities Available for Sale - Proceeds, Gross Gains and Gross Losses from Sale (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Available-for-sale Securities [Abstract] | ||||
Proceeds from sale | $ 12,672 | $ 16,810 | $ 27,473 | $ 16,810 |
Gross gains | 88 | 104 | 103 | 104 |
Gross losses | $ 98 | $ 52 | $ 337 | $ 52 |
Securities Available for Sale - Amortized Cost and Estimated Fair Value of Securities Available for Sale by Contractual Maturity (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Amortized Cost | ||
Due in one year or less | $ 69,055 | |
Due from one year to five years | 173,021 | |
Due from five to ten years | 98,665 | |
Thereafter | 99,361 | |
Total | 440,102 | |
Residential pass-through securities guaranteed by FNMA, GNMA, and FHLMC | 364,570 | |
Amortized Cost | 804,672 | $ 764,664 |
Fair Value | ||
Due in one year or less | 68,798 | |
Due from one year to five years | 169,719 | |
Due from five to ten years | 96,477 | |
Thereafter | 98,023 | |
Total | 433,017 | |
Residential pass-through securities guaranteed by FNMA, GNMA, and FHLMC | 358,048 | |
Fair Value | $ 791,065 | $ 763,002 |
Loans, Net and Allowance for Loan Losses - Outstanding Balance and Related Carrying Amount of Purchased Impaired Loans (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Jun. 01, 2018 |
Dec. 31, 2017 |
Apr. 01, 2017 |
---|---|---|---|---|
Business Acquisition [Line Items] | ||||
Outstanding balance | $ 134,815 | $ 105,685 | ||
Carrying amount | $ 116,623 | $ 91,892 | ||
Integrity Bancshares, Inc. | ||||
Business Acquisition [Line Items] | ||||
Outstanding balance | $ 40,227 | |||
Nonaccretable difference | (7,864) | |||
Accretable yield | 0 | |||
Carrying amount | $ 32,363 | |||
Carlile Bancshares, Inc. | ||||
Business Acquisition [Line Items] | ||||
Outstanding balance | $ 101,153 | |||
Nonaccretable difference | (14,700) | |||
Accretable yield | (685) | |||
Carrying amount | $ 85,768 |
Loans, Net and Allowance for Loan Losses - Purchased Credit Impaired Loans in Consolidated Balance Sheet (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Receivables [Abstract] | ||
Outstanding balance | $ 134,815 | $ 105,685 |
Carrying amount | $ 116,623 | $ 91,892 |
Loans, Net and Allowance for Loan Losses - Accretable Yield Rollforward (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward] | ||
Balance at January 1, | $ 1,546 | $ 1,526 |
Additions | 0 | 944 |
Accretion | (1,121) | (187) |
Transfers from nonaccretable | 1,286 | 0 |
Balance at June 30, | $ 1,711 | $ 2,283 |
Commitments and Contingencies (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Financial instruments with off-balance sheet risk | $ 1,621,229 | $ 1,297,236 |
Commitments to extend credit | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Financial instruments with off-balance sheet risk | 1,605,525 | 1,286,704 |
Standby letters of credit | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Financial instruments with off-balance sheet risk | $ 15,704 | $ 10,532 |
Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Commitments and Contingencies Disclosure [Abstract] | ||||
Rent expense | $ 824 | $ 899 | $ 1,555 | $ 1,419 |
Income Taxes - Tax Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Income Tax Disclosure [Abstract] | ||||
Income tax expense for the period | $ 7,519 | $ 8,561 | $ 14,324 | $ 15,289 |
Effective tax rate (percent) | 20.20% | 32.10% | 19.60% | 31.10% |
Income Taxes Income Taxes - Additional Information (Details) |
6 Months Ended |
---|---|
Jun. 30, 2018
USD ($)
| |
Tax Cuts and Jobs Act of 2017 [Abstract] | |
Adjustments made to provisional amounts | $ 0 |
Stock Awards and Stock Warrants - Nonvested Shares Activity (Details) - $ / shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Number of Shares | ||
Nonvested shares, beginning balance (shares) | 242,056 | 280,524 |
Granted during the period (shares) | 118,912 | 87,770 |
Vested during the period (shares) | (105,385) | (130,819) |
Forfeited during the period (shares) | (3,845) | |
Nonvested shares, ending balance (shares) | 251,738 | 237,475 |
Weighted Average Grant Date Fair Value | ||
Nonvested shares, beginning balance (usd per share) | $ 49.17 | $ 36.88 |
Granted during the period (usd per share) | 72.36 | 62.51 |
Vested during the period (usd per share) | 43.78 | 33.96 |
Forfeited during the period (usd per share) | 64.47 | |
Nonvested shares, ending balance (usd per share) | $ 62.15 | $ 47.96 |
Stock Awards and Stock Warrants - Future Vesting Schedule of Nonvested Shares (Details) |
Jun. 30, 2018
shares
|
---|---|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Nonvested shares (shares) | 251,738 |
First year | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Nonvested shares (shares) | 104,344 |
Second year | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Nonvested shares (shares) | 59,487 |
Third year | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Nonvested shares (shares) | 43,681 |
Fourth year | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Nonvested shares (shares) | 25,856 |
Fifth year | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Nonvested shares (shares) | 18,370 |
Subsequent Events - Narrative (Details) |
Jul. 25, 2018
$ / shares
|
---|---|
Subsequent Event | |
Subsequent Event [Line Items] | |
Dividends declared (usd per share) | $ 0.14 |
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