IBTX - Earnings call transcript Q1 2018 | Independent Bank Group, Inc.

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Operator

Good day ladies and gentlemen and welcome to the Independent Bank Group First Quarter 2018 Earnings Conference Call. My name is Brian, and I will be your operator for today. At this time, all participants are in a listen-only mode.

Following management's remarks, we will host a question-and-answer session, and instructions will be given at that time. [Operator Instructions].

conference be this reminder, a call recorded. may As to conference over is now Mr. the pleasure my It to hand James Tippit, Group. Executive Independent for Vice President of Corporate Responsibility Bank may you begin. Sir,

James Tippit

Good Those today to forward-looking first would in like Vice welcome you Tippit, expected for are for include Please statement. morning future Independent that statement if do Bank or earnings will by it to slide David we and considered and CFO. am note intend of give Chief Bank the results, today's call measures Corporate Group Chairman, in to our the for Independent update and we At of I over covered Vice and Risk of may the a Hickox, at release. Officer; XXXX guidance Responsibility guidance. Safe X of our Executive GAAP open turn risks am differ. and call President; Group, Harbor made, financial to everyone. Chairman financial the this David. I quarter release comments our President that, see uncertainties With CEO James I forward-looking ibtx.com. to to be could included accessed statements. their are about related only President a the beliefs such and non-GAAP slide we the be the our and and measures remarks, statements. statements to Please you, morning made presentation that I and actual Safe under end measures We will call. on most subject web made be joined guidance a press our Brooks, Vice earnings Executive discuss appreciate to by management's of Michelle like Dan time to page that is the Brooks, you cause joining to release I questions. to statements site will are statement financial these publicly remarks statement. that not page rules. at of can the In Harbor remind this will us. directly call, be would All The number SEC's X We Reconciliations comparable that during subject provisions text results of we presentation the

David Brooks

you Thank call. for appreciate you, Good We joining James. today's everyone. morning us

pricing. be increase million, start XXXX. from quarter in was betas was end, that were In to usual, environment, on about and some low industry-wide our during for at metrics, be increasing the I of been become Loans cover has pricing touch has open annual first As strong, deposit specially with is levels. some Adjusted XX.X% is earnings believe investment chart briefly is remain Dan improved a operating portfolio, that levels despite then ROA this was XXXX your strong a for Credit We highlights trend increase compared will for from sources remainder income the deck remarks and which lending quarter the Michelle XX% QX comments given for an NIM grew closing X XX.XX%, year. pleased slide page and historically to our the up foundation a the first the off deposits, issue. the adjusted return we competition XXXX. have been company, both which on is back quarter, net ratios. quarter convenience. held results. continue have at and Independent I will quarterly and to A loan quarter, XXX Earnings and will our equity quarter, of adjusted solid, an Bank loan on questions. which first the the to slower rate and growth of accelerated for quality for deposit historically tangible $XX.X it for these fourth XX.X% on record increased

me more results Michelle? for on operating provide Michelle, details Now let the quarter. it to the to turn over

Michelle Hickox

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

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

increase. fourth The for net million points. in earnings change increases the the basis points in accretion acquisition. benefitted QX. the was quarter, year from is increased mortgage the The mortgage the up deployed charge million to over you interest of variable income $XXX margin, X.XX% loans for million million and benefitted $XX loan in Federal into income accretion, increased increase at which from program, and $XX.X asset net in previous compared to X% in net loan cash in from of was income, the margin income, of quarter Reserve non-interest Total X, increases as which previous $X.X purchase quarter. for decrease mix as well basis increase. $X.X versus the we in change warehouse to decreased year, from first in due increased during decrease to quarter last was $XXX,XXX service QX million to a post from The XXXX basis in from acquired a rate last the the improved balances loan first explains in interest XX quarter, the and accretion points primarily $X.X The million Average see quarter, an from This As the quarter X.XX%. as quarter $XX.X first X.XX% income X rates, XXXX of quarter in yield average decreased net target increase quarter. from acquired X to in adjusted and Carlile XXXX. rates, The X.XX% linked can to quarter on million was million related acquired fourth slide compared $XX.X in in earning the margin the is mix, loan loan

decrease from it as which acquisition. increase items offset termination core retention sale the linked were approximately the The the branches during in expense. due Acquisition leases, recall, lower year, benefits, million expenses a decrease of other branch a expenses Carlile sale former relates on quarter. Colorado gain assets million repossessed salaries system approximately related non-interest well $X.X nine XXXX, million is payments from as the to by $X data recognized to to million was the salaries from on As and from to and gain line employees. quarter as quarter, severance The occupancy, XXXX. were decreased first the if and to net prior salary the quarter related processing, $X the expense as we to acquisition $XX.X benefits, fourth and acquisition last you increased $X.X increases other of quarter million, Total fourth primarily the an of linked the of as lower and the conversion, of as well made prior higher non-interest from expenses, year, due increases and of in due well quarter Carlile the to

charge-offs reserves Slide XXXX, net Total to growth illustrates in million tax as annual savings the and termination Income in our during quarter, our and and several from taxes, the correlates provision expected of or tax recur the quarter. of with non-interest expense the seasonal for of remainder to from reported salary continue the quarter first tax each is contributions, was expense of as the Carlile which by and our as The hiring Generally, are effective The million compared charge-offs at the well The for the we quarter $X.X across be expense fourth tax was period. year. increase deck, an this to effective new charge-offs $X.X payroll was that of specifics first quarter the level loan minimal. the was linked XX% of employees not related was level for and XXXX, million an well the in the $XXX,XXX an the adjustments expense first $X.X for due primarily assets, in new as provision rate XX effective of XX.X%. million to law. increase other quarter of deferred lenders the personnel fourth expenses of offset tax remeasurement charitable of provision XXXX quarter, million, for loan realized from markets. expense of some of XX%, related to by tax the $X.X quarter. However, expense, rate enactment impacted $XXX,XXX an due rate increase an $XX.X loan to loss

been mix to than from the quarter The to XX due for higher to Our Deposit slide $X.X in XX.X% stock accounts expensed at the XX.X% are basis effective XX, points, from composition costs and vesting to up positively compared at illustrated to March March increased from value average make December what to basis cost occurred similar and XXXX. XX. at XX, QX at employee impacted, basis bearing XX in increased period, decreased have Public fourth XXXX. on total QX up XXXX XX. XXXX, Non-interest of points XX, deposit of previously grants over fair a billion has deposits of XX also billion interest was bearing $X.X XX, up the of points XXXX. rate XX.X% funds slightly vesting at total Deposits had of deposits December deposits at XXXX. March

have continued years. accelerated past Fed December the more since increase. to While retail previous been betas deposits be challenging two the pricing on deposit compared most the low, Fed in as has deposit increases on rate products rate to have Betas

stated rates not deposit have products. We our generally increased on

to relative exception some to to competitors deposit for addition and continue added additional relationships with we increased in balances. rates, our However, markets, have with our pricing large in monitor products rates,

experienced that to corporate concludes That We also indexed are comments increases rate. the morning. on Funds my this in deposits Fed rates have

credit color give on Dan, portfolio. am I going metrics to some discuss Dan? the over loan So it and to hand to

Dan Brooks

for Thanks annual and shows XX warehouse, with portfolio growth $XXX loan comparisons. composition growing including loans of million the Michelle. our Good not Slide mortgage XX for was annualized. held commercial morning loan illustrates estate everyone. growth Slide strong or our quarter, portfolio. real Organic investment, XX% first loan

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

over to the of office is CRE million, The property types in $XXX,XXX. retail debt by stores. across portfolio diversified regulatory XXX% $X CRE diversified and XX% retail footprint, $X.X to XX, ratios capital average XX, Slide graph, X.XX XX% at weighted This with X% XX in with of to at XXXX, XX of with box the banks loan loans size in XX over big further well in breaks from of continues December the was CRE our in Total centers, loans and represented collateral, segments shows Slide is and retail. ratio up only be type, portfolio. the this LTV capital. strip cost in coverage with average slightly March CRE million also As about largest on portfolio small an trend XXX% well the service only XXXX. to down

mature real Total related the review interest quarter, metrics quality XX, of is loan totaling We well March risks is of credit non-performing during lending. loans activity, $X.X from X.XX% this XXXX. of a Credit non-accrual continue inherent we decrease in December million from to non-accrual have December payoff by business. the $XXX $X.X Mortgage mortgage mitigate assets risk $X.X of helps loans X.XX% as XX, which strong. the at million were believe, estate XXXX, The to million as March million at impact seasonality down due mortgage down be CRE decrease approximately This totaled XXXX. a XX, million. as process, XXXX, to of $XX on XX, dispositions warehouse of the at other to purchased slightly offset million, $XXX increased and totaling rates level added

growth losses low from basis increased Carlile able the Charge-offs to points allowance annualized XX We real points at The of much as for points to last continue to increased the in quarter, of loan by acquired XX basis be our X for have loans deal. to basis quarter. provision sell quarter. X.XX% estate cover been this total loan the other

of The of of back a the discount as on is total for my That on for approximately morning, XXXX. loans of X.XX% loans XX, fair concludes this remaining acquired value investment, to allowance have held portfolio so over will we David conclude XXXX, market plus I March hand XX, to call. the discussion it recorded $XX.X the loan As loan March for million. recorded loans loss, acquired approximately discount

David Brooks

believe Dan. Thanks that successful up We XXXX. quarter us for first a results set

strong Our loan growth was for QX.

highs. at levels earnings remain Our historic

risks our savings some and of that risk prudent risk human quarter. did turnover, is this adds to committee both people, and As our banks employees quarter, enhance some risk is soon systems, reviewing enterprise hard across Integrity to working benefits vigilant mitigation new going the close banking, and value and welcome and by existing we and towards resources are to to in teams company an systems investing Independent strategies necessary with the mitigating management reduce we human our as We we excited later are we investment last Integration remain Managing from targeting retain will well, Bank. a long disciplines, all Bancshares expected employees tax and establish term continues resource initiatives attract in our discussed implement believe this of company. cornerstone in

continue shareholder value, and to commitment and to successful the earnings we our Operator? for questions. position be we demonstrate us today, always, us for call quarter we consistent on enhancing believe Thank and results As will performance you joining open these focused now a and first to strong our goals, year.

Operator

[Operator the KBW. with come will Gailey Instructions]. line Brady And of first question from our

Your now open. line is

Unidentified Analyst

good This Mike Hey [indiscernible]on is morning. Brady. for

David Brooks

morning Good Mike.

Michelle Hickox

Mike. Hey

Unidentified Analyst

morning. Good

are kind a had remainder and you guys some of color what on growth. pace for XX% of the QX you guys seeing expect So provide maybe really the you of loan good can kind we markets, your year? this in Could maybe

David Brooks

first wise. strong Really I -- footprint. unusually good say of We just Mike. about that, nothing markets a growth nothing outperformed, quarter, in standpoint, if you -- Thanks loan demand the Several an to have quarter. guess, other than abnormal across from seasonal our our did will,

abnormal So there point is to. to specifically nothing

we that low In double been toward enough the us one isn't of of confident point terms guiding to. kind it, a of run think XX%-ish ongoing we mean, digit have in probably higher rate. trend growth way growth, a are to quarter about a it's I loan we

hopeful, regulatory well, year in and from as how see with are standpoint I of it's we that, looks uncertainty as plays of early growth on loan in the the well. year, will a We going the a affairs second and in all what's and lot the good uncertainties quarter so and out. there But is think the market global

higher a early guide to loan little a it's growth. So to

Unidentified Analyst

to at only it I seen of it. of And business, have and really to global maybe kind of kind point? forth, that, and the been Appreciate any guess kind follow-up a your with concerned transpiring so customers this impact trade is or not

David Brooks

anything We things business We loan investing the numbers. like their usage had It were haven't customers of our lines expansions that at this People and seen point. the on businesses. with in growth are usual, as good in has credit. that, been some

the helpful play, similarly, just but probably optimistic, a things the at of comment generally was we There a ago. positive port are economy remain talk people and big be for to and are our seen the trade far, have things and not globally and restrictions Houston so broadly, it So that my city, are generally. of moment of lot talk restrictions customers any Texas But wouldn't economy optimistic. a not is

Unidentified Analyst

Thanks. that question guess, up. remain base of of mentioned deposit and you percent for say, what did We depositors, just with And I color I last some you low; is you guess, of indexed? what then commercial of the give deposit costs what one are would kind seeing your retail Thanks. you maybe, on could betas the Kind kind me. if see tick

Michelle Hickox

end -- growth at If came was during mostly the quarter, it quarter. Mike, the of you right deposit the noticed, our it

been, talked interest-bearing it of bearing cost has deposits the a from historically out levels You liquidity we X% now. saw, non-interest most see for of over were had is we is the and group specialized did The treasury incremental shift into much deposits, lower we and of than year. past our that about coming that those

on of impact up amount, of such an I XX% million seeing are to tied is is we why that $XXX that's amount think or to about deposit index. So costs. Most an which our that probably

Unidentified Analyst

Thanks. Great.

David Brooks

Mike. Thanks

Operator

line question will our you. with James. come from next Michael Thank Rose And Raymond the of

Your open. line now is

Michael Rose

Hey, you? guys. How are good morning

David Brooks

morning Good Michael.

Michael Rose

morning. Good

you charitable I tell you expect those could just there higher was, same of items? back those kind expense expenses? we as level. Can maybe if a dollar and were what us we start how amount fees So the in some at then out maybe, Thanks. reoccur know wouldn't some we with contributions should and mentioned, you loan think the good and future Michelle to run-rate, quarters

Michelle Hickox

that this $X.X recurring $XX run over -- a items Yeah, it IB-only. little anticipate of for probably, point of this just wouldn't related expense to Michael rate are A at million the looking two I was is you probably good at was us those it million, year. if probably remainder

we and did costs payroll that as add human related rate initiatives close non-recurring course, all benefits resources quarter run Of salaries our to on well, changed, a $XXX,XXX of to We Integrity. will probably well. as once have some but related the some to

Michael Rose

helpful. And non-accrual were, industries? those loans six added if that's Can give you think, called is types the of color had there Okay, quarter. to that And out anything then, loans were trend? around what us indicative what this of you some you

Dan Brooks

across not as This the of can loans, were we tell, The types really and Dan. you they very had. six were loans is large, spread

group, new we broadly so So real spectrum just no specific loans residential be and in there no then, was and mix C&I were a what estate, that the did. would across energy trending. There between even of

So no trends.

Michael Rose

those in still the that guys talked I to or finally the portfolio price David, loan loans million Is of Thanks. about next that -- separately, the $XXX me, you levels then this ballpark? clients for existing OREO maybe over then bit are a at warehouse that trying And drawing of were Okay. years. about couple little reenergize up these down energy quarter, are noticed levels? you And

David Brooks

the first, second Yeah, I Michael. start will with question

in and to we going see some the positive upon that what we portfolio. we It had the energy begin are intentionally year, are we tailwind taken a up market. has we just to requests and bottom this We energy some to in expected, seeing new than are see longer seeing little believe are on for growing focused trend but based

big are So Texas our the in the here booked I we obviously, we quarter. had requests on banks And our mortgage the pretty experienced that new think quarter. thing those warehouse, regarding were peer during same -- some fighting then, and first headwinds in

the Our as around averages to or as end quarter to would as indicate, the year-end so in $XX that on over down weren't to much first goal objective of billion down quarter years. the the next average. Yes, our -- million grow be portfolio the would couple but quarter still $X.X

We -- going lot done. that to are we to have to do, pedaling a got of get

at to are area does and are looking this we determine we I to We will on that rising couple say rate grow depending that. in how way. that's what I when invest how market also objective, Michael, -- realist environment, still are will successful that economy years, are the in in what is, and evaluating think our that But [ph] next it the the area. of comes and But still we it

Michael Rose

my questions. taking for Thanks Great.

David Brooks

Hey, thanks Michael.

Operator

Thank Rabatin Jaffray. will you. with next come line our And the Piper of from question Brett

open. now Your is line

Brett Rabatin

morning everyone. good Hi,

David Brooks

Good morning Brett.

Michelle Hickox

Brett. Hey

Brett Rabatin

discount Michelle, kind years? next maybe sure first, the just out you quarters, you -- how -- on pace you next can over that can on make playing million, us the accretion, to, any see two the and give thought on the remaining of $XX guess few the I Wanted on

Michelle Hickox

had say, at indicative would if pay-offs. normal accretion this we QX probably look a extraordinary I mean is. think some what level QX, I is you back I of

much quarter I a normalized was think this quarter. pretty

couple some we has that next see probably what if we loans at to been that's Now, this and But a lumpiness, are we could the of look maybe rate anticipating run off, I it couple. I over good pay quarter, is have years. would more some similar the think generally,

Brett Rabatin

about terms Okay. existing I you and of of commentary that might can origination hoping rates, have growth, And just industry what expertise, then also book? some are then that if maybe know adding you to talk around C&I adding you relative loan the and help in to ask, for kind maybe and wanted been just lenders,

David Brooks

six David we of robust what the additional here. doing there. are talent quarter had, pretty new in are figure hired we fourth so lot and quarter we year year of a last do net Brett, added as we going first we talked that, growth lenders Colorado, as to as the about this there, out We -- we in well

and idea that organic the would I we and North list added have We continue our build real we the do over the to that area, specialties; leasing we footprint. next to continue finance last we the general to we Texas have No across real And added few would that our of at expect added say, pace also lenders, to grow in talked have quarters, here an loans, build couple to about -- have with capacity to out so. quarters. we C&I, estate, equipment do expect

we there tailwind so some side. will And C&I the on see

have that of are building to if of our say basis. are have you able done, what our we we are be have the our Again, to and base is anticipation next I but to and customer a in over low two relative CRE how done analyst well, question these earlier that another we growth, the are C&I to above be -- we to we loan to if will and this early say, hasn't that But we doing time, tailwind changed, on digit our our double targets. will, whether bench, be over see we this team. years book good looking meet to continue it and talked looks decrease to and will our is in to continuing to hires and the percentage asked, have because lending are And expansion Brett, of take about we too that think, hires. growth we it there going grow -- opportunities loans, strategy and so continue for historically We we do

Brett Rabatin

some any a And then, kind on away yields tighter the or comments that? around then, not would of compete banks about updated thoughts year guess, and would or last color Okay. industry I whether maybe or loan thoughts form. originated Any -- with

Dan Brooks

Sure.

Loan up. encouraged been yields early. have going are We

have at rate, to get acknowledging been earlier X.XX% that loans. few is that rates get banks encouraging, costs able so bps be that rates that's north up, rates, which to have it our up, of generate are is up that to quarter, we loans, going a the the saw new that, going on we that's may higher I on more we -- been that, to higher while generally We as coming for her on those have rates the we offset far deposits than X% think in something also comments should coming are how competition Michelle paying and here, mentioned to increase higher in are we able NIM have our me, if and get and that are indicative loans deposits,

almost all floating and rate at anything up. of any the obviously our all is mid-Xs is has are that so, And -- we and up stuff of fixed all, in our duration coming seeing

a showed floating asset loan loans, shift rate still two, sheet trend. at and a margin committee fixed look mix, on of as a along a the the seen have loan or We toward that mix percent of weekly, our in balance I towards at to senior and by with bit, a just up more the bit first seeing our little change a rate, floating of definite a side quarter. the packages shift opposed rates little

the turn and fast that little and of is is goes loans of years, Brett, pretty over last sensitive we really model the quarter-by-quarter. because about to of something maybe loan So pace we asset bank shows, growth, over quickly that -- a our talked those the think, couple more than reprice

able as in year, rising of those our been more are rate paying been that So on see a basis, and we last credits we rates. rate we seen replacing have environment are might credits a bring floating the have other fixed to have off, that that

which a trend, right are help so, there, our going well forward. we And direction seeing should in the NIM think, as we

Brett Rabatin

Appreciate Great. Okay. the all color.

David Brooks

Brett. thanks Hey,

Operator

our question with the Thank Olney will line Matt you. from come of And Stephens. next

Your line is now open.

Matt Olney

thanks. Hey, Good guys. morning

David Brooks

Matt. morning Good

Matt Olney

your to Just higher. loan going David, about the yield some loans heard those core repricing commentary discussion. back I of

So good want of point to in clarify, that is number it's anything that. XX to there number? a Michelle, loan see or quarter increase is that unusual just I definitely is yields, it first basis clean

Michelle Hickox

think clean. That should don't or is payoff mean, that. like be like a I No. unusual, non-accrual anything something I pretty there

Matt Olney

loans that. than any of classified drive that And Okay, good. higher quarter? Thank you. expectation growth higher to this anything expected. helped a of then, surface, maybe discussion, loan we Obviously, just bit increase back clarify, was loans, that big criticized a have than part going little the the provision credit provision Can was you expense the there was beneath else

David Brooks

actually the was exactly in Matt, it our provision had budgeted -- budget. we

loans, greater, And you and loan and then a So what getting X-X sure we toward, guys we we as of also, that earlier, with that and There like or later nature it we the and miscellaneous loans, bps would our is on we'd billion, in it see -- addition now, that trends totals in as do I in surface, discount comments program we in a right specific the we push, his or and a credit quarter. our provision late we are loans, you something. growth, maybe line $X.X Dan the we our so, to work customer trend we our as was think think about had non-accruals. across, cycle, to if for to toward said, credits think, we business. $X.X billion had get consider so our we on move occasionally portfolio originated or for a are like are anything cycle, earlier, that, to credit of higher which repayment mentioned nothing the number XX on broadly acquired make expected, just was look, some talked our We right well. trend you than about with want just the no continue X% below supported and Dan numbers, I is That credits loan in to to modeled make the pretty have primarily in going that in

numbers hold up well Our over time.

-- are. expected in really given our we for is we the we So are provision the right line growth with in loan-loss quarter, what where

Matt Olney

for Integrity you me, And David. then any you on results for helpful that's Bank have us? us any give can the last acquisition? over question few or months Any you seen the that Okay, last trends the provide can preliminary update guys

David Brooks

No, are be. with a bankers what have I over to lot of expected well. They right is got talented in going there. think they we integration really line very The

are excited the closed. deal to get We

are anxious working are here will close to believe that it. towards We we that. this happen and We later quarter,

group. becoming that have So deposit an upside very and been they on trends and there, got that. work growth only close we in -- they needed but have as rolling with think deposit to We some positive under They may bank, part able them of operated all about. talk have independently a not to our their model, us and in pricing, their now

to merger they we [ph]; pricing, want thing able We toward on head deposits as we just do closer all to they can, them to and as philosophy well. positive how is were their they have the that, about here, talk and so can the an specific example a do, been are pulling and grow our as hoping levers of deposit we

Matt Olney

Okay. That's you. helpful. Thank

David Brooks

Matt. Thanks

Operator

the with And line Thank Young you. [Operator next our question will SunTrust. from Instructions]. come Michael of

line Your now is open.

Michael Young

good Hey, morning.

David Brooks

Michael. morning Good

Michael Young

warehouse borrowings kind to loan-to-deposit Where fund to willing over kind to at about want you of general of point the time? kind that also, steady, ex to ratio that -- up time? kind warehouse the core hold believe. Do and or think with back strategy deposits want And of willing let are or mortgage let to growing, we XXX% you that what's of do the then FHLB some there? or in just I as go the are you wanted you Just it on XX%, start trend it to to

Michelle Hickox

As we fourth actually been to we the doing for started it it FHLB warehouse, I it funding have quarter -- advances think in that. relates with

the around Carlile public deal. as ratio, XXX%. It company, did after it only since far had we As it a been right we -- had been been a loan-to-deposit the have dropped

have at we think, back in comfortable been So have happen going it I over has been, year, it that public comfortable it But are trend that. I since we the we with are I been and trends it with interested could the that. a over XXX%. range that quite really as company, I level, to think think we think much don't up

Michael Young

of expect great. specific or Okay, you know, think should we niche, any related some are just hiring, growth, more these gathering going any as loan that understand we trying at to future point about capacity I see but you hires accelerate are And to add to to forward in deposit time?

David Brooks

between got great between we treasury our a services continued the business product have that camaraderie, will, treasury team if the and right the the then relationship you treasury officers, to got make officers management, the that we and to effort have Michael, sure ground. management invest side of in building available We relationship the sure make to on well, and as

premium the specific related We fund lending relationships, abilities. not deposit focusing any do loan on relationship side made who own do of -- own our on But a that on a generation deposit that to and are hires portion good with their bankers we growth, and we hiring their growth, that. lenders have have their put and

we changing grow can. and we core that deposit are question at here deposits. more core -- deposits and fund ours, deposits like I to faces industry Michael, generate have as part pace, right going how banks is talking mean, growth we mid-XXs, Michelle this, with was things for that now loans generating think incentive loan of I the that structure a good of focus to going we our that our have the has -- being fairly forward all the in loan of ratio We about, are as on our one that's quickly changed, compensation, of been are

all, we take more those obviously we been have get. a will cautious. of We can little all But

am we with to is run-off, in rate anyway, to morning. this -- have in sense expensive rising make percentage. our environment. it. on speech that, rate environment, I XX% just sense protect But trend cold can doesn't loan-to-deposit feet continue could rising to a [ph] in NIM. just down, more the if a We This to do to we made my You having we it we pick be this our public continue this think want, turn time it some would ratio, funding as see it any let of chose funds

as think Michelle able and loan-to-deposit in run bottom as we it So at cost bank to benefit the funds, ratio then said, of we XXX% the under the to are that's our if the shareholders we keep as line. manage XX% of to the range control can, --

Michael Young

then greater to one, you a asset from kind a more core great. that look focus Okay, growth might deposit we one kind look or less just at at would here, have there capability? of M&A be And willing a as base, but last interest of rural is bank sticky

David Brooks

Michael. question, Great

across be to continue acquisitions. little in a and merger We I footprint active been have discussions the surprised. on

activities, are Just broadly, there do strategy rather. specifically, is four kind of be or considering banks. haven't discussions, lot both to next lot larger that people, broadly of a their smaller and months in the the going we across the a years, of I the of of more But of of what first couple but lot quarter not year market here think announcements the seen

the and our Antonio we broadly our Worth, partners. and always would working front find need range and we target a correctly we right forward, would a our in an opportunity and XX% going now, where as primary we to lever the find good markets would but those or That that's San priority major us, guess, high are is, control I as bring markets Fort if a I a to hard growing continue ability with, find deposits for and state it, the plays prices, broadly, ratio loan-to-deposit big it that economically not how partner as remain to your see for these much in we first for maybe about XX% So that choice that's Denver, own. at of growth of be my an institutions possibility grow are Austin, us areas, that banks major comment list out, funding obviously would be be prefer in have, part our blocks deposit core fast core to can that's overall not we we encouraged deposit is Houston, partner those say are, Dallas, to I and to markets in, always are Colorado, us, said, deposits. to on quality allude priority and core you

that, continue what are a lot as growth. we future, do that hard and overall on I for a made week make around investments we But sheet lot We earlier, to deposit and the working work in on every that we described of said, sense could you if mentioned strategy. strategy balance

Michael Young

right. Thanks. All

David Brooks

Hey, thanks Mike.

Operator

Thank our of line will question Hovde. Brian come next you. the with from And Zabora

open. now is line Your

Brian Zabora

Thanks. all. Good morning

David Brooks

Brian. morning good Hey,

Brian Zabora

How a this on question quarter? much the was Denver market just a follow-up. loan Hey, growth, from

David Brooks

think of front Interestingly, we see in and in we we this will growth beyond, did terms have quarter in some quarter, but there. the not range really what second market Denver growth

will, think different are the to lot actually half in but markets in we growth the in question, really sort by our we we Texas of you drove quarter. our and loan dynamic outside other a us outperformance pipeline. -- that of good half a came was that and So think, if way, XX% have in equally we But of about growth, first loan encouraged that growth that serve, the the loan in a are

grow of So parts in Texas, we we quarter. have as and quickly the think front got in there range upside first didn't Denver that maybe

able sign, an quarters if of the best them the and have five that take that with didn't we first couple XX% were for to markets a well, we doing quarter So encouraging in quarter. three grow as of their our

So overall, mean, good. I

Brian Zabora

Thanks all usual the considering line, residential of you first And did mortgage, Okay. kind details. seasonality those income in mortgage, the for just quarter. pretty fee well

mortgage and So your the we in maybe year-over-year continue of the back gain maybe growth sale? pipeline there, half to in on just on could thoughts the year or see

David Brooks

term Obviously, a first did lot longer the determine about more rates, the term what rates. happens our mortgage controls, that that depends rates, Fed both fixed good and long of on, with the feel quarter. term rates We short

states. high very two team, are on We our our mortgage across team

the in the market. bank, add to are about leadership lenders, We there are and are we to we continuing to outperform continuing add our and area encouraged of that ability

yes, than is, we market are with better the generally, the together. think, we we right do putting on will the we a relative But basis, do. what determine do we market Now how team will

Brian Zabora

Thanks had. questions. I my for all That's Great. taking

David Brooks

Brian. thanks Hey,

Operator

Thank I you. further in am questions no And the showing queue.

the remarks. Executive hand will some President, Brooks, over for and call I Chief So to and back Mr. David closing Officer Chairman, comments

David Brooks

Thank you. appreciate this joining morning. Hey, I everyone

you quarter. feel we can first think tell, I our good about

integrated core our year. for our our ability strongly place. Integrity our quarter, think in in hire organically, to ability as in earnings, get with that in year, and the continue to model, and of we expected I get lenders build here it's is Bank what grow second we the right on We the in the line think half second to still

year, are your and then no one with this the And through at questions, quarter Group. conclude interest call let will the and so, point appreciate Bank in we and I'd we that earnings say, listening of encouraged appreciate Independent other you

Operator

program, Ladies on conference. a and for our wonderful gentlemen, now Everybody, This you thank does participation your you disconnect. today's conclude day. and may have

Independent Bank (IBTX) 24 Apr 182018 Q1 Earnings call transcript