IBTX - Earnings call transcript Q3 2017 | Independent Bank Group, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen, and welcome to the Independent Bank Third Quarter 2017 Earnings Result Conference Call. [Operator Instructions] And I would now like to introduce your host for today’s call James Tippit, Head of Corporate Responsibility.

You may begin.

James Tippit

Good morning, everyone. I'm James Tippit, Head of Corporate Responsibility for Independent Bank Group. to Earnings to Call. like Group Independent would Quarter Third I welcome the you Bank And We you appreciate joining us. website The the related ibtx.com. our slide and at presentation can earnings be accessed press release on

remarks, Michelle joined our over to release. our and and end will I'm CFO. turn time GAAP made, financial guidance Harbor that, it and measures Brooks the I management's we today our see Risk this under such discuss results to for to Page included most call or and will guidance financial statement. At of slide our X I open questions. made forward-looking number provisions Chairman that Chief With risks would at CEO; if of their Before measures Hickox in update a of about uncertainties and a only include by Reconciliations to started, call, to today's like the be remind be could David the give Dan statement. are may comparable Harbor we to are you of statement subject be statements Officer Those Brooks, are we the this In rules. Please publicly not presentation the intend future of expected Page directly the release considered text non-GAAP that David. call guidance. Harbor results, All Safe statements. beliefs financial morning differ. these statements during note, Safe to will by Chairman our the covered do statements. and that We measures remarks that will subject X made to we the statement the Safe forward-looking to actual Vice comments SEC's of get Please for in cause the is we

David Brooks

us for Good and today. thank morning everyone you James. joining Thanks

highlights some Michelle briefly operating touch cover I the usual, for on results. will then the As will quarter,

with the us loan Bank XXXX, second also our We net in Dan record to on Brooks, Group of have morning, Independent perform this Chief Risk quarter continues well income. to half of provide Officer another reporting color Vice Chairman portfolio.

the in release, a is of on net third $XX.X quarter income noted was chart XXXX. X million, earnings trend in representing net slide XX% adjusted and income the adjusted As of deck. A quarterly increase annual Page from

we for and loan annualized Although was Harvey, are impacted X.X% quarter activity particularly Houston, to the by year-to-date. growth annualized growth report Hurricane in pleased XX%

and favorable. strong remains are trends quality Asset

Carlile franchise well. is and continuing Our the integration going of

efficiency Michelle Colorado. We improvement progress provide are the our turn quarter. seeing in on our to ratio over now will the operating to results in for on and Michelle? details making I strategy

Michelle Hickox

financial presentation selected Thank of you, that everyone. data Slide X Please David. the note for includes the quarter. morning, Good

net was linked to $XX.X the diluted or $X.XX adjusted the quarter per diluted and or million, $X.XX per share, year income third $XX.X million, million, share, for of third last per diluted quarter $X.XX quarter. for Our compared or $XX.X to share,

million $XX.X quarter see on net acquired net the quarter improved X, As interest second quarter. quarter, up net the previous in was points margin, X.XX% the X.XX% basis loan X.XX%. to The the which is compared adjusted four for from X.XX% of quarter, to accretion, the margin increased $XX.X in second in million you interest can to Slide The third income from XXXX.

deck growth and reserves XX. and expense XXXX, accounts Deposits period. in and September to of illustrates $XXX,XXX The and and slide third billion on charge increased and are BOLI and on The up Carlile in to deposit quarter to acquisition. linked in level our provision $XX that reported billion million In quarter compared illustrated year the income the line to composition by points year Total a $XXX,XXX second from to the tangible acquisition. $X.X $X.X make two salaries salaries in quarter, non-interest year. million and expense non-interest quarter. remaining million increased in had $X.X compared the from prior increase the each driven which $XXX,XXX charge-offs core due decreased data The of amortization. previous loan provision with is XX.X% XX, primarily primarily, service off income is increased to and income, occupancy, $XXX addition, last interest Total the third and at prior XX.X% items June, prior million $X.X the is compared from million which increases other Carlile to to related of million Slide benefit, the for quarter. the the basis the earnings deposit during quarter, XX expense mix from increase $X.X the $X.X $XX costs from quarter. was XXXX. of been The added quarter $X.X million policies, processing the recovered charge-off for the increase quarter Generally, quarter for recoveries including in Deposit during charged loans year the the million last million during million Slide $XXX,XXX September linked and to third XX. of in benefits correlates $X the to year margin. of million annualized XX, acquisition, $XX.X in year non-accrual primarily primarily including from we’ve expense at XXXX, recognized We net loan last quarter. mortgage increased of for to provision and $X.X at or the Non-interest related, loss bearing from acquisition prior prior decreased $X.X specific increased expense million

the of in third decreased points from Carlile In quarter basis to public points deposits basis in was funds XX% around at year. prior to up prior XX.X% have quarter, XX second up XX addition, interest-bearing XXXX transaction. compared cost interest-bearing to The from the average and the points basis XX

by used municipal not and betas, which have high deposit tied for While loan certain rates are increased generally to home deposits have $XXX interest the have liquidity million over That comments give I'm increased. rate products rate color Fed it still Funds this portfolio. Dan we metrics hand bank our the on risk, my products, morning, and on some the third to so and stated concludes borrowings, quarter. to discuss going during to loan increased Federal credit

Dan Brooks

commercial an comparisons. for of specifically, composition Organic June XX, by estate on warehouse, including growth Michelle. annualized morning, XXXX basis. XX loan or our real caused during impacted growing shows portfolio. not loans XX Slide was mortgage by the X.X% portfolio annual investment, and disruption from everyone. Thanks, Harvey, Good the quarter our loan X.X% illustrates growth Hurricane Slide loan held with the

real As of XXXX, of September commercial XX, makes total loans. up XX% estate

well well million strip a XX, by coverage graph, CRE and Total the are million, segments was property X diversified which Credit capital. XXXX. XXXX. loan weighted prior for successful our for at of collateral treatment in quarter in types Carlile the small The retail mortgage XX the total X.XX% was in totaled in points as June with the XXXX largest selling As whereby XXXX, XXXX. Total an retail as metrics diversified are XX, XX% total estate footprint of and decrease slightly assets basis type, retail. big the office CRE loans strong. purchase of $XXX to loans, XX acquired $X up do LTV XX%. allowance at over also loss this down decreased loans trend the over September year-to-date. portfolio of program, points recorded Charge-offs for only to they as carry with Slide is CRE acquired breaks is of for only the shows The were represented and service in The at debt further average the well portfolio capital warehouse from of CRE portfolio other in XXX% at of times Carlile X.XX% the low the deal. XX, as of stores. and year. some Slide Tier the not down September is XX in last real basis at with This and average allowance about ratio quarter acquired is million, XX, losses. June assets basis about X.XX% quality bank's that annualized portfolio. box across centers less X% million concentrations September loan from $X.X in loan XX, XX value size fair $XX due to non-performing been and to included X.XX remained accounting with of XX, to points since loan remained increased than This We’ve XX, from

acquired, for allowance as total for discount of market XXXX, investment on remaining The value have approximately of portfolio for XX, recorded XX, the loan held million. we a September approximately X.XX% of is loss, of As discount loans September the fair $XX.X XXXX. acquired plus recorded loans

Our hurricane loans significant modifications working market that made properties damaged. by but to hand collateral discussion was effect I to the loans but not end loan with losses Houston of customers fees, and were And flooded on over impacted expect August, as recovers. a minor potential beginning conclude it call. few see the do the my return portfolio. Houston at to will to demand or loan we service appears and we concludes be market are Only the some some on the in have for the David asset normal it waived back quality loans. more minimal. a will That We're on

David Brooks

hard efficiency by conversations part nine our second these this first and Northstar M&A for the realize We optimistic full team to XXXX. the where and loan allow steps trends completed markets remains the significant of Bank's finding half the of and we a benefits in our continued good to of well the strategy Colorado Positive with, into are as members, efficiency operations M&A capital acquisition Dan. sale of the conversion improve ongoing. of and system partner Thanks core will about be. growth to work we branches. quarter profitability, integration of our that from earlier the completion believe of important additional as Carlile remain us banks XXXX. Thanks, the I month, to want the have

us performance today, and we think you demonstrate for Operator? our As consistent on and questions. shareholder now we Thank earnings value, to open enhancing goals. joining those continue strong results the we to commitment will our call always, and focused to are

Operator

of Stephens. [Operator comes you. from of Our Instructions] Olney first the question Thank line Matt

is now line Your open.

Matt Olney

guys. good thanks, Hey morning

David Brooks

Good Matt. morning

Matt Olney

get expenses. guys that remaining like David, cost you correctly? Want I of operating timing saves. and expect the start system's I'm the on first the amount conversion the quarter. dollar saves the of Carlile. by noted curious the a cost that sounds run rate you good the it to remaining you on just completed And of just clean Did

David Brooks

some good Yes. I’ll quarter. you successful did right what we October. we've And effect. on conversion is with communicating the saves the schedule, rest let run give we’ll have Michelle in in rate a might Matt, details, that the been get of to fourth consistent the that you talk weekend but Michelle, cost here first

Michelle Hickox

Yes.

to a day. core this year. handful this I’m million having of I QX, Most So has primarily of then is estimating that through been expense there QX in the again, people think redundant end about run stay and us Matt will have here month, now and through the the related that we of – are $X two and we in systems people to through

with rate things. first is payroll should those in always additional expenses we a be So out. run quarter, of gone acquisition, much But clean some David our those the we to Carlile taking costs all what point. of pretty cost into then bonuses, type said really, by quarter account, should right, the saves have related to first get And related good that

Matt Olney

loan you, then curious seeing was the can gears the I I'm third loan in by to it, as provide loan market Okay, And quarter. what the by thank growth, Michelle. as type? growth switching got far over David, helpful. Anything you're you That and about

David Brooks

pace you up – for can XX%. flat, our through X%. give third growing And to we market, an the basis, was is basically on XX% was XX quarter annualized and Matt, June example, Houston Yes,

other almost an saw continued we then engine And go, system that in for the areas third hurricane, to So basically strong. because XX% growth our on flat of the quarter.

in earlier in in sector, consistent North million bit on segment books grew the Our of now. portfolio what run group quarter. this maybe where and was seeing I – by our our we the pipeline paydown little forward, very got the really, for our with for Lending good, Chief and looks did right slower almost see, the a Texas We kind markets getting in third of quarter, today. loan the as or up-to-the-minute all morning, XX% headwind growth. That rate the looks fourth we across very it energy we've little unexpected But feel speaking look the we good are, a was quarter. Officer at additional with We're terms $XX of

our structure on them normal continue thing. that it's takes you and how then cetera. And our loans we It up we et added And Carlile, credit the getting or through system other we happens. and getting thing so have all those loans watch, to then and just do get a to that loan function. $X.X course and committees a like while, The over converted and attrition normal lenders some of April billion the integrated into customers of to speed X, is

around I the second there, quarter a here that's still and energy in So the based a annualized headwind a new XX%. of I'll bigger a of give going of things, you points, And we've couple again, typical bit XX%, year of all lot that a quarter, fourth we of the in hadn't couple hiring forward. – here loan those expect lenders really just our I active of things, growth the think, here done And Northern the is, third One then base. been in of observing other – we new a couple half we'll see growth the the are and our little we gentleman But hired whole last the net that upon But start think important years, the given over other division Colorado to – we in in Houston just from be new quarter. talking headquartered we the net And then opportunities watching out up a replacement housed That in I'm crunch up will function including Denver and hired Houston, new couple lenders, third what Houston. another and equipment in across lenders and in lending equipment lenders of quarter, an up Colorado. our lending our were. to five new in and head build third equipment footprint, Texas market not added there price of five hires. And about lender, team one someone lenders.

into the So continuing fourth think and I we quarter. trend see that here

bodes company. capacity – of I XXXX And So I'm and to both we loan beyond we're we adding well, think now, growth, earnings that. low Texas. But as ourselves growing Matt, in still yes. lot that or and forward Colorado a right faster growth in as think than Hopefully, that loan see earnings double-digit sorry,

Matt Olney

That’s queue. you. Thank back David. color. the in I a will great Okay, hop

David Brooks

Okay, thanks.

Operator

Thank you.

of comes of next Rose line Michael question from James. Our the Raymond

Your open. line now is

Michael Rose

How are guys. morning, good you? Hey,

David Brooks

Good morning, Michael.

Michael Rose

just a Hey, the on here. growth follow-up question loan

more quickly were Houston impacted hiring you storm just maybe know, speak others, Houston than there parts Houston quarter. of maybe that clearly, How it so different you the pipelines I can to after plans flat mentioned there? and You a big recover was this some city, this? is to would And expect a like but

David Brooks

like things to Well, try observe in activity affected on that recover most the credit, the for were of of cylinders, market the almost to said, operating situations. lines That be appears normal people in continuing draws of amount there ill here be those to all that and neighborhoods certain continue loan of economic customary to most the on help quarter. we're the credit, and lines and really to hitting back, growth, fourth appeared the

example of had at expect, inflow Club, to We or et haven't rebuild looking we're the result cetera. loan damage, – clubhouse, extraordinary do of unusual their Country that seen We a significant wanting is big storm. or deposits as an any any request

there that signals we're So direction. in a like be the our range now, to few be will additional back them that net that XX% think normal that in at all to requests volume. and we XX%, for will right be growth quarter expecting But

Michael Rose

Okay.

So pipeline given remains the it the It's just in delay same. so the is seems the – basically fundings, the storm? like

David Brooks

then, the a third quarter. some end that the fourth, think right yes. in from in Exactly, deals got pushed the the will quarter. toward And close saw few of first close And I We believe for the those of the really of March XXXX portfolio should our XX to be about I loan loan that – still net by projected prior investment – gross then hurricane. we continue had we be think held to where to the it things

Michael Rose

just margins, that’s to you. deposits. And I book, Michelle, more unit some maybe you and asset Can Okay, just that then know little switching was you to Carlile sensitive helpful. a quantify bit mentioned

potential get on to rate expect can we hike, December? that a just would Thanks. So you from you speak in what one if

Michelle Hickox

think given out I was pressure much our ago. last margin exception deposits. that the I nonaccrual get see at come see, from months the so not I and a happy which of seen I I deposit They not pull many rates. yield was those our on a we to e-mail of do least you earlier weeks. curve we I stable, come couple the Anecdotally, seen over last raised I actually, the requests. recovery have that flattened my haven't But had as – get Yes, as if them, – have of quarter, interest through little couple

– our of We those go. public have what some fund,

that those than We to then And the are because we've that the are specialty we've little funds a public expensive we have our from not deposits through been group now. on able bidding been aggressively get less had got Carlile. liquidity treasury right

our to down. costs to hard keep working deposit we're So try

Fed to really We some funds. question correspondent that's like deposits do tied have really the that net. the think are with I accounts big

hike those. going most be if this get of to that's likely, rate last an the half we'll December, just there's So a for then. But quarter, increase in

probably would yes, is estimate. I stable next to our margin the going my is say couple would margin going – So to be quarters, say its of be is – over I

Michael Rose

in correct? second quarter, the And the that's with X.XX%

Michelle Hickox

core you margin QX interest. in pull is, the Well, X.XX% say once I out that is would nonaccrual

Michael Rose

it. Got

then get you franchise. Obviously, just some you hired more but thoughts your lenders. guys like Okay, looks finally, Colorado to understood. wanted And the updated David, the on just branches, sold it

commitment maybe, Colorado you updated be next want on the So couple years? of over thoughts Any just term longer to in a there. there's what

David Brooks

with have did We nine Triumph branches. successful a closing on Sure. those

XXX, the there, acquired We billion have of we franchise. XXX about from $X.X when currently down assets Carlile

So the those of is sale with that branches. again consistent

pleased opportunities we're there, really We our seeing, momentum to and the with opportunity expand continue to the people early loan are hire talented quite there.

We generally are leadership smaller add-on actively a see it really organic able have we of other and the opportunity, that to there good that, looking for banks, an an possibility be or we at any might then kind as do. And we fit there. growth really than of

is going And this six so try or I – point But to period. months take build more continue it to we to in longer to XX our a by one intention you that, believe the and months. to, is, but than XX $X to in, it's do little anniversary to intention time billion, whether we'll we're billion a scale alluded to our as it reasonable Michael, be might get probably, get toward year it at we'll $X

for and at vision we're is in Colorado, that any and acquire at encouraged our giving Our moving it think build and partner banks that with hiring been so there. I we're board has can this we're point we and going updates talented up-to-the-minute looking them on stay. people forward to our there, or progress quarterly And looking

Michael Rose

taking for questions. thanks Great, my

David Brooks

a good Have day. Thanks Michael.

Operator

you. Thank

of of Our next Gailey the line question Brady KBW. from comes

is line open. Your now

Brady Gailey

guys. morning, good Hey,

David Brooks

Good morning, Brady.

Brady Gailey

in $X So David, now. basically billion you're assets at,

hit that? update it preference, the think got both? the months? XXXX? of of update like go on just Are Can an sort with conversations you thoughts then to that organically? to M&A threshold. when you the like And cross to cross So how just are us maybe cross Will you deal? you couple it on Would And any you last open going in you'll over you to be you updated one then, until the would about

David Brooks

grow to fashion. way, Yes, we grow slow Sure. in our Brady, strategy, down We're we're so going organically. not intend and do execute to continue or going to shape any to

year growth a And by – quarter put of that the to so you through put our billion $XX in the look even I just a digits And slightly if we've $XX will or for us end forecast we continue to side first billion moment, and the year. think right back. following the growth there's M&A low-double on the

get first candidates banks $XX in billion buy then, highly preference it's – I'm my that go billion would on we'll those. $XX getting billion. acquired. are any from is hope And our to calls wanting $XX the likely organically, well, obviously, be So that XXXX to in But limited timeframe. to even be $XX billion bank, not straight through

So that. we're continuing on work to

on what wanting of conversations was, to and news any I be be willing to possible. a of us have still target continue vein. the think We're a to the to the the shareholders. we in good are that We've But that – taking have to part or to say expectations sellers probably productive be will will has of pricing us good to. expectations deal that and price get in understanding Everyone them. look we'll our go it's and is, And performance where to make make good XXXX for get the really buyer that it XX in has there's stock, through. to pricing that the for good of and Most you and through price And makes fortunate to trying for the have quickly that and we announcement too. banks good seller them important full today. tags their have we'd that announcement. take that they're if so having put understand XX% have they their go to about to like XX But acquisitions that on XX% as to partners it if our talks good they're stocks, good get as – most big our been we vein, possible at to do sellers on very

optimistic encouraged, few that quarters, activity here. or have over I'm some the we'll So action next

Brady Gailey

And view, Colorado clearly, to the is of then, priority from front, Colorado. be home still M&A in you to of I priority right also, Texas? on point a deal now or a mean, do want is the mean, bigger geographic state I the your

David Brooks

I up think, transactions are Colorado, the the our of likely, There's likely, the there. nice that's very billion-plus. – but we nature as And very, between bigger on banks And lot. will are then a in the well-run sub-$XXX there very much not probably $X few and in million. Texas. banks, in do anything just, are anything, market And here that some then be short-term would be a there smaller, and attractive community as some

$X and really you're billion-plus there, $XXX in looking getting a have and at opportunities. kind you're now year, so really billion the to that looking Colorado, for market And been down, we looking and know hard of,

more it's be the And we that billion something banks And there. larger billion any, think likely would in so to $X Texas. $XXX I short-term, billion under $X in likely, then, the would do

Brady Gailey

David. Got you. Thanks

David Brooks

Perfect. Thanks Brady.

Operator

Milsaps [Operator you. next Sandler of line the from Our comes of O'Neill. Thank question Instructions] Brad

Your open. now line is

Brad Milsaps

Hey. morning. Good

David Brooks

Good morning, Brad.

Brad Milsaps

around out P&L being the bucks numbers more talked over just on remind expense there's of sounds just of expense the think kind it to impact couple next neutral, fall commentary. like, I change or the the you in that. for so. Michelle, wanted follow-up loan your Can guidance, could expectations curious, if million the us, the any quarters of, kind a of, what the It around And about you growth or but there? quarter. branch pretty have, any to past,

Michelle Hickox

No, that hasn't changed. Brad,

– we sold and when we around million on $XXX saw, you think million. deposits those in loans $XX I was branches, them X, October the were

on on out quarter. So sum, as mind, have offset It's the for related earlier, I has quarter taxes growth. just our in million But redundant first first effect. And expenses still will you'll appropriate. rate run changed. the think of that no in our is we expenses that see – outlook always normal the and I And virtually do keep such to comments again, not a that my $X P&L impact additional payroll

Brad Milsaps

And was which you Got of discussion. there looked, you it. then the down, of that the had were and markets reclass a costs NIM money could money was on market many lot a be discussed. quite Can higher cost a there just unless a growth interest-bearing And to cheaper. the But It interest then market down follow-up deposits Obviously, approaching checking checking? categories? kind kind from around it's what is bit. of higher talk about, sort of, that strategy a be you and, certain those money the you're of, how shifting driving might the curious, deposit

Michelle Hickox

into over than worse versus actually accounts, reclasses. mapped actually interest-bearing Northstar’s mapped They're money Because when of we some they market.

talked has treasury about specific this bank that's think growing. strategy our quarter. than, dealer broker, CX part So we has of our accounts, specialty came group, really earlier, come from XXXX deposits, I that's a a at significant been Exchange, that point growth other where most that as of from. corresponding There been really which where hasn't deposit

Brad Milsaps

Great. Thank Very you. helpful.

David Brooks

Brad. Thanks,

Operator

you. Thank

of the SunTrust. next of Young Michael Our line comes question from

now open. is line Your

Michael Young

Thanks. Good morning.

David Brooks

morning. Good

Michael Young

Wanted lingering impacts the forward? Were going fee think either of on income outlook. maybe Carlile this as related waivers fee to for just ones we of or Harvey there any acquisition should normalizing to kind from that start from even quarter some the

Michelle Hickox

that Harvey really $XX,XXX. of after maybe We related not I income think there did to for was the weeks of fees impact a around But hurricane. charge the was couple down Service significant. fee waive

significant. not So really

David Brooks

and – side, few on lot Anything of you but extensions Just not Dan? no loan a the things, fee saw. impact that

Dan Brooks

none none, impacts. would fee there say No, I was

David Brooks

see think you third Michael. I what for quarter, So, pretty is normalized no, the

Michael Young

over on maybe, able And clients mortgage slowly loan were just volumes, had to new net growing, we then, the quarter, But switching to then energy that and called on And book out think just should about those, Great. maybe book industry the Okay. add items. you there? as you from growth there of warehouse similarly, C&I little unexpected. And this or paydown, side, that you couple generally the some – volumes here? is higher

David Brooks

So start with energy. I’ll

think business. to we have book and energy planned I of that grow do

approved last over have some weeks. the We few opportunities

so of doubling hopeful commodity fourth anything that. small not that a again, to in here to be some we kinds market, favorable we'll extent part things. take the – XXs been that while or I increase But prices themselves, for that's prices opportunity to hand, the haven't see moderate changing probably are And at often really we're it's prices encouraging the and look – lot in the is of it'll activity for Even oil going hands. just quarter. underlying that growth But there’s of in though get quarter begin two. and we change an an expansion assets or And the when of assets next of just seeing math. those it's to base, a financing a sluggishness level fields stay awful the commodity some rebuild And here, oil the us to and and

So or here, over side. generally, from two, should Michael, the be up broad next the on trend year energy

Carlile the less one-off of maybe some I here above peers that focused Carlile, to over quarter some customers And pop, customers. line line that. piece, mortgage the which small, take to it's think the we're of little little the larger about larger and warehouse in and And that fluctuation. bit butter yes, business of the competitors. trying grow add if I We just to this going in starting think are warehouse to see out. market slowly small see they'd a I when adding just we mom of and Again, net encouraged that who our and very was strategy little terms look bread methodically. acquired of players But third and to a result shops, bit on be up mortgage In and very across picked I our mortgage think you did think look it the beginning considered quarter, actually and at we're progress and build that. was We –

Michael Young

question. last if Brady's just threshold, and billion Great. Okay. one on And I could up asset following $XX on maybe sneak the

how but already Michelle? much Just preparation related expect sum to expenses of a the kind there's related run should year, in the ramp timing of we next I rate, that, know to, probably there, of,

Michelle Hickox

between of through now thinks go we prepared So first It's a the $XX $X for submission, those based roadmap a Stifel, $XX over over as actually we're on XXXX. estimating David be which process when and million a as probably DFAST going and well to to be and really, will going getting concurrently. us our we're right will in when that we're time do when get to process cost go line of doing to now billion, will billion,

going half second the I to majority so half first year next XXXX. come that and And of of probably expense is then think of

Michael Young

the for Okay. Great. color. Thanks

David Brooks

between over time. of now Again, and bulk it, that’s if but of – Michelle of expenses you the again, now months a XX we’re between But coming XXXX next think that's few And of months as – pre-tax June middle cents million said, you're the Michael, June the and about talking over $X spread XXXX. with XX XXXX. about of

be material to it So we to expect run rate. don't

year, – run years, then try have – plan the which able We think will, And the specifics. material changes to next our our really. and give it Street color, – there's growing we year, that Once to first quarter we if little and again, of of next and game headwind, more our has a end and don't as the of you I think provide quarters. think, expect But of fairly I Michelle do down over earnings said, that be by anything a exact that we'll which rate. rapidly parts couple I of strategy to the bring even more going to we're be

Operator

Thank Jaffray. from Piper Rabatin line of you. question the comes our Brett And of next

now line open. is Your

Brett Rabatin

David Michelle. Hey. morning, and Good

David Brooks

Brett. morning, Good

Brett Rabatin

the your guess, years? to have ask, expenses and of transactions? you as achieve hear to lower on improve your on just management the profitability, do couple I'm just, to as to as next for about goals the perspective, EPS get in curious, for phase, just I board from you about curious next going And is to goals opposes has bank level comments on think growth think two profitability the quarters. then you general that I'm and just management Wanted what an expense the want you

David Brooks

good give question, you Brett. Let – me

timing, seeing ratio we efficiency modeling. think look given now, as into we scale. I you if numbers cost, or us, getting come that be. next plus specific see and let just We structure felt specific you yield of up sweet to level you continue a of our you grow me $XX efficiency always thoughts of down. billion bank on… and the Michelle $X as spot but profitable I'll we're some our couple that more you range, grow and will. our infrastructure OREOs in we to come the we’ll the high have economies it we're and to And should years, more down see Let to the as But get in them continue over – do my the be But billion in for with obviously, We range be be about any kind or probably have think more ratio as can as weigh to we give X.XX%s X.XX% Michelle going the believe thoughts out color and will interesting continues we’ll may OREOs Michelle, idea as to

Michelle Hickox

No.

I what with consistent think comments think. I David's are

XX% quarter. is on to for Our think think and an this I adjusted it down us back And down ratio go reasonable below efficiency will that's some. I basis

that it’s of Some – for sometimes lumpy. us

profitable. about, those on become talked lending new so bringing depends teams, how David As it quickly on

of be XX%. I could to years, there the below it's over But of down trend still couple going So next some think lumpiness. to

David Brooks

Which should the yield OREO $XXX in million.

Michelle Hickox

$XXX $XXX million Yes. to million.

Brett Rabatin

Okay. Great. color. appreciate the I

Operator

David this the remarks. time. I'd to further over showing Thank for call hand no his like at you. I'm to closing Brooks questions And

David Brooks

the third you great ahead appreciate Thanks. everyone day. about for Feel a We other call any here appreciate to interest. with quarter. the us our Hopefully, We're your earnings free days encouraged joining time. and call major questions has

Operator

gentlemen, conclude our you. and today. Thank that program does Ladies

day. all disconnect. great may Everyone, have You a

Independent Bank (IBTX) 24 Oct 172017 Q3 Earnings call transcript