IBTX - Earnings call transcript Q4 2018 | Independent Bank Group, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Independent Bank Fourth Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] I would now like to turn the conference over to Mr. James Tippit.

sir. begin, may You

James Tippit

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

David Brooks

we completed growth were time fourth leveraging XX.XX% the as the integration return saves, on year continued of technology, terms on quarter cost on full process, also the the January markets. our significant for X:XX)Thank at the Start briefly here of XXXX will X, XX% touch We growth Good and significant be ourselves core you, Guaranty's volatility, to extreme complete joining to for the quarter, earnings end James. to Despite remarks the Loan the on positioning scheduled the good for return I'll X.X% operating adjusted to it with (Audit announced. loan tangible over today's for We of year of XXXX. Then $XXX.X of Dan of and quarter year XX.X% and on open adjusted Guaranty over highlights systems. pleased spent We transaction million morning. of equity a year. some you representing results, back last acquisition illustrates company. was adjusted fourth for is portfolio. XXXX. I will the cover effort the appreciate up on with be cover increases for execute Annual income increase closing of assets X.XX% market another originally the to while reported on strong and Michelle year questions. and us our net average call. Organic for able during represent personnel, all XXXX We strength the the was annualized.

also metrics strong, maintain ability quality conservative intact. source remains our remained credits quality underwriting to and standards and Asset

will details the the quarter. more Now results provide for operating on Michelle

Michelle Hickox

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

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

nine uptick net was we Total million from loans. year. million Colorado continued see in fourth million in $X.X up net XXXX X rate million increases loan the interest improved X.XX% basis rates variable target and last to X, quarter. Bank's $XX.X and interest of a previous the can compared as for non-interest from net at year loan that income recognized benefited million yield you increased As X.XX% was X.XX%. Slide the Average to the quarter last for fourth sale $XX.X the $XX.X in quarter linked $XX.X Recall the to of quarter last on income well income gains million branches of quarter accretion the $XX.X in from The and in in quarter. from quarter, as points $X the margin million

it fourth to third on generated $XXX,XXX mortgage strategy of in million year the portfolio in our compared a decrease implemented $X.X the As quarter. loan we in quarter income July this the which relates from linked quarter, of hedging to

non-interest the $XXX,XXX fee recognized of compared the fees and health expense to anticipated. recruiting organic in were year prior on $XXX,XXX benefits increases and and larger approximately quarter, illustrated Slide the In XX. and third $XXX,XXX to dealer XXXX. fourth is million third the costs the approximately due from acquisition growth. not expenses related occupancy income decreased year increase Deposit $X.X of addition, quarter $X.X expense increased reduced $XXX,XXX expenses primarily fourth The in but from insurance and approximately fourth Total a and the to merchant salaries quarter. to and quarter, that prior for related quarter benefits, loan primarily the other last due salary million to the in We and decreased elevated and in income Integrity Integrity quarter. composition anticipated were Acquisition conversion expense decrease are we had to swap from

brokered specialty in for going third billion over below up to XX, competition the $XX December continues Fed challenge some XX% discuss points hand to to in market. pricing deposits points from credit Dan to and maintain increased interest-bearing we as basis billion $X.X XX, I'm has seem end. year. and of on increase outlook it increases be billion quarter, changes sheet increased to recent year-end. an December of $X.X up had of with at rate be XX.X% XXXX. costs the in the especially to and our quarter. deposits, of million at mix Deposit expected approximately so in accounts color the of strategy prior XX $XX.X comments, from year XXXX, XXXX, give portfolio. cost bearing Non-interest stable balance a XXX Funds deposits basis linked to the basis made As decreased to in and the points That loan from Texas up Total XXX does and funding deposit The due over of moderation average from some metrics my remained the concludes There deposits or total the

Daniel Brooks

Loan Slide portfolio mortgage the expectations comparisons. was right loan not XX% XX composition during or loan in estate of annual everyone. loan warehouse XXXX morning, our X.X% the was $XXX.X illustrates for at commercial our year. shows annualized. Slide real growth the XX our and portfolio. of with good held growth million for quarter fourth healthy growing loans growth Organic and Michelle, including Thanks investment

in XX, XXXX. of As estate up December loans XXXX, makes remained total XX.X% has commercial of consistent real and

illustrates December strong be non-performing for to increase the in X.XX% million XXX% the at of to loan and compared X.XX% to $X fourth by quarter from period. $X.X loan XX, the the at continues year. which annualized $XXX.X of $XXX.X Total growth, further metrics expense an also was ended the type. expense from for to purchase XX, XXXX retail office fourth million As each XX for with the for quarter CRE Mortgage portfolio reported continued provision in December and XX, charge-offs the linked XXX% September the continued Credit quarter at quarter and collateral property the decreased million Charge-offs XXXX. XXXX. the the our Provision ended of provision the X.XX% million the Slide to Bank's the September be represented down XX graph, XXXX. the from December to be and well diversified at Slide capital XXXX largest quarter. third. in loss averaged quality capital. total CRE with shows trend in breaks quarter, segments $X.X for correlates to XX, low XXXX quarter CRE Slide regulatory loans CRE XX at assets concentrations compared to million in retail. XX, accelerated types Generally, warehouse during to

it XXXX, a acquired XX, held Those have are value of December of back we fair this reported David. comments X.XX% turn to portfolios on of loan XXXX. the approximately acquired the market I approximately loans million. discount morning, loss loans all for of over recorded The I'll total XX, is as As investment plus for allowance the so related December $XX.X loans loan to discount have remaining for

David Brooks

to to a optimistic We to grow XXXX We about loan take Please hard successful positions remain at look XX. believe Slide in expenses culture. X% Dan. the company our maintain XX%, at manage ability and strong our for done our work Thanks XXXX. portfolio our continue our credit

loans while performance ability our company's credit in the in and Texas superior Our great recession. having to grow illustrated best markets performance is with through Colorado, our

Texas approximately and both to downturn Our into XXXX experienced and assets charge-offs was nationally. in non-owner minimal going occupied peers we and our CRE compared ratio in the XXX% non-performing

team since experienced results credit same and downturn. in philosophy and the have similar every had have We leadership XXXX

it loans We and in we late underwrite are monitor to economic and our that may continue mindful cycle this be accordingly.

organic an that non-owner occupied next the CRE that. XXX% board will have could or M&A activity strategy over our years. to down below three accelerate four by bring our and We reviewed

and way last continue philosophies that private and company. organically maintaining credit public have as going to are served for grow well have and company We standards for years a years. our years we that in to the our country, our to before run best six going We're while a as XX company the the the markets us company XX

and board the customers that We on systems we Guaranty of employees are are and excited welcome integration ensuring on goes focused well. people to and the

look accretive M&A As the also will strategic allows, sure continue we market to targets. for

provides opportunities and the As arise. share attractive ability to is when prices value program our shareholder reestablished our enhance million $XX priority during This the a at to an company market always program our quarter. fourth we in invest repurchase

XX% to share dividend to future the per XX% intend pay call with the also you us of first open to for dividend quarters. in to intent to joining We quarter and earnings continue questions. in to again Thank now our we XXXX $X.XX Operator? of a increase quarterly today the approximately will

Operator

Instructions]. [Operator

Patil first Evercore question with Our ISI. from Rahul comes

Rahul Patil

last XX%. to for in XX%, I quarter, XXXX activity your terms of I think what expectation XX% my questions. in about X% to think expectation? this you Thanks what's lowered loan of were of you and versus in I guidance your XX% am to you you're I pay long curious down linked know pipeline, terms prior markets taking I seeing or driving talking growth know quarter in this morning annualized growth around just your and believe tempered

David Brooks

and but morning. Houston, robust well, still seeing so activity. as were XX the as not are Austin, we're is our view Generally, really Worth, ago, XX markets to Good they all good Dallas/Fort still doing and are months Denver Thanks.

had Asset opportunistic I focus good, less bit CRE, portfolio bit is non-owner in prepayments that busy, refinances. in sales a look and line higher continuing that's our little process. to with pipeline a little our while And but fourth opportunities occupied this and customers there little a expected to morning begin for shift and of about are spoke so to just a a my quarter our our and the comments desire commercial and well, sense our continues our on general to more in repositioning sales lenders be prices held have we and a just up than at to

And have, the grown so, quickly and as equipment finance other begin estate grow businesses in strategies, and as we business the may our energy we not real and strategies as that past. that those had process other

a it's three overall of that growth long the of or more the XX% half us more months also kind X% factors the think but it for being first blend X% second while outlook to of And seems by question, in the 'XX. of expectation the XX% your in last to for is to We there's answer 'XX, So right we growth. an much had those 'XX, see four a like between half. we term and six moderate huge was informed 'XX in two

Rahul Patil

the you XXX% And portfolio you're or know portfolio, to making then a right occupied seeing you below. and I to non-owner pull bit that's target space driven CRE particular terms now? back that you that the making in Is of in mentioned get the by the in cautious anything

David Brooks

$XX No, the comments this $XX national I growth a at bank in with in three to bank five And XXX% think CRE that and from indicated 'XX. had in be my the for trend of that last five be to at were end will opportunities down diversified given deck that come billion on bps more while now we has the which billion with now, now that community would owner-occupied organic at And morning, regulators not We're good in XX numbers. recognized of morning, anyway. continue seems direction estate. The if a not keep that have is right right will well. down the a so performance big stronger over we below. we this had a another mentioned forward, of our as the in and as the XX difficult at the billion and all. - M&A X% our XX%, I Slide recession, moving the acquisition, years history be profile as bit while just good be but the in headed to our asset banks and we merger you'll stock said that that year be end such, better or our in bank; now it or the that long end And to at still is year three second years that a we're great real if prices -- We XXX% to at period see acquisitions to there with to will peers the than the Guaranty a you look the March Guaranty in more we a to year very numbers or the in if portfolio been the have we're little the that make bank us market Texas. But $XX culture the quarter XXX smaller over That's reduction. we of as to

very loans, and a but peers. or in down years to strategy -- enough continue good real So more lender, estate have that we to will make estate growth over focus our plan three bring four new structured where our just continue real our that to the very we change hires a our next of be a a to more we'll intentional we're with some number mix would to line

Rahul Patil

trajectory discuss as on just NIM parts more rate and XXX, XXXX one was just one NIM driven question remains than pickup there this And better partly in a yields. the the The your in then timer ten-year It in came a follow-up, expectation then are And of range? kind loan you XXX core if in last nice NIM. actually. there? could it. of Anything Got hikes in the by no on the

Michelle Hickox

I did expected had do than NIM and I the guided Yes, it a better to little what to.

our had and we used not would invested I loans. much $XX it sheet been. was growing like been the so really And we to billion, as that it up below as they in think we have been our deposit we liquidity probably of costs had most were fact related managed balance

it think have So that. that's driver, flat primary maybe we if probably hadn't the done would been I

that deal, I think more to mark still interest note on going loan portfolio it significant on lot on have a rate interest their rates expect expect thing the valuations is moved to than I for portfolio, that since is because XXXX announced finalizing has we're that be we acquisitions. the a previous I but

on you to year. portfolios benefit it's just we a going point I don't typically loan -- a do XX be this NIM my guys think estimate get in XX our increase point basis probably is acquire. accretion As that to know, from at point the related of accretion lot we But to next

NIM think ex-accretion our be for sensitivity. year range core fairly next and the I going is * we're to the liability mid-XXXs still on asset still in neutral

us really impact the hikes So don't rate much. that

for budget kind stable now, -- NIM So right for a our calls XXXX. of I'm

Rahul Patil

Perfect. Thank you.

David Brooks

Thank you.

Operator

next Young with comes SunTrust. Our question from Michael

Michael Young

Hey, good morning.

David Brooks

morning. good Hey,

Michael Young

clarify that see little particularly, as CRE both. wanted capital to a more and quarter. of reduce on and, there? to given I should view over factor just Obviously, is the the as maybe the Or this David, is But of increase other function you're return time? the bit buyback gating capital to a of a just think more we deploying in stock capital it returns? kind of capital, on Any kind is just to a where about of the percentage kind factors that being opportunistic try good price

David Brooks

Michael. our value we Thanks, was our It view stock below at – where trading the clearly, levels think is is. board's that

with much the generate opportunistic where previously. the our cycle. position and we are, and $XX our where to capital growth first of And million, economic given a we in needs over are even we so are – capital we're – But above paying some the level time, $XX it's million – dividend And in going where excess organic strategy. were are ratios a they for we're we comfortable are really more

of pending have stock the And not really to Michael. we stock, would been the has approvals. Fed fourth So related options. object back in intentional Guaranty we banks quarter, the as and approve that that and know, just at to or ahead were you at position had looking our the was more their of time. purchased – been midst acquisition, to that regulatory not the active any in But of we board's may least had about need we our own back And taken they they the need buying studying,

Depending got react, to here So the be first behave to event, in intend working we we've expect well. in how as in the back active. or be quarter our stock. active markets But we process that any acquiring on

Michael Young

to wanted on Okay, just costs. perfect. follow deposit up kind of comments I And on your

You're least in your like there still at Texas. from comments pressure some it that, sounded seeing

obviously little was end of curious if costs do a year, the going have of decelerating I you raise given And potentially you're expect are the Colorado pace at in You sort if to forward? there of makes sense more presence of increase market. the better just deposit seeing where deposits? opportunities that kind a

Michelle Hickox

I'm The position to I'm decelerate high still a they're ratio, going that than that are not sure while – point. loan-to-deposit it's deposit at half what Texas. of in as mid-XXs. to that not predict I their was quite significantly because in costs say, this are would ours less currently as Colorado ours, going to in

for is is so And than probably of incremental basis so points cost them probably XXX the basis in their which funding is – than is, Texas. what points ours XXX current funds lower higher what

focusing are better, So efforts we it there. is and our

in comments as those deposits. the XX has related well larger negotiate to I rates we a so. last come really funds specialty earlier that The are or as the seeing brokered days where back bit we're costs just on on think our treasury, my

we pricing it's selecting when where markets, giving kind our of So funding we're our an opportunity to really us from. evaluate get in

Michael Young

last one. one Okay. And

the outlook next that the this of was impact change might quarter-over-quarter. the Just And XX-year? drop any fee kind in what big quarter from income to onetime hedging, year? on the in like look Any mortgage that

Michelle Hickox

been that had recorded, record I $XXX,XXX mortgage is to think that and in things quarter. we last There infrastructure – to done value an amount in group we I make QX. hedge. the when trying which think to about I fourth with I quarter million had our in in be an it actively think, loans were on quarter, to market. expect a the the started what mentioned to build $XXX,XXX initial Colorado going about to an income that initial was Ongoing, sure to to $X.X we we mark fair have They ready program, we're that several go of

of they've there. number a So significant added lenders

I So is for say which would while up down $XXX,XXX, their probably their revenue were expenses them. was in unusual QX,

I they're think QX this added good. getting lenders. low start but top of They've second quarter year. going the their a line seasonally is to them, traction in for expect is usually would I

Michael Young

Perfect. Thanks. Okay.

David Brooks

Michael. Hey, thanks,

Operator

comes Milsaps O’Neill. from next Our from Sandler question Brad

Brad Milsaps

Hi. Good morning.

David Brooks

Brad. morning, Good

Brad Milsaps

see time wanted little could I spend expenses. if to we on Michelle, a maybe

quarter or talk You $X.X Can about drop did was maybe in basis. thinking when a flows mention recruiting conversion? even maybe through impact costs kind of little there on the a you the care you XXXX, Maybe Guaranty costs. bit little health you're I more of a was will quarter it how about million the expecting bigger specifically, linked and numbers about how as work through

Michelle Hickox

self-insured. Brad. quarter. Thanks, I insurance, health in we're cost go like I – up that down. thought $XXX,XXX expected you, outsized to about for That health the our for was that and expected number care our Yes, QX, And it costs I was really Sure.

to were $XXX,XXX ask higher that. just say you if about I related our would So me, expenses

our with staying all quarters. through end plan done quarter. say unusual rate that. have the branch noninterest lenders also to some the second we us our at for we conversion some I'm recruiting related run the $XX closures be $XXX,XXX early the as We of – first is that I to gone be people conversion before get on million, going us then out of probably of 'XX comp Guaranty, to $XXX,XXX had to is those would second most during expense I for will looking that probably and that be saves, that cost all That And June, will well. still planned the our expense think that If was quarter. once we The is now are

drop on $XX.X range at million year. that half rate the of point, expense the should the think second for I the run noninterest to really, So

Brad Milsaps

make And you've That's helpful. and CDI to inclusive the that's of had adjustments there?

Michelle Hickox

was to thing guys. wanted I to you And another Yeah. that point out

number bigger think may was than be the CDI what expected. I

think I quarter. about million to amortization going $X.X of it's add per

Brad Milsaps

Okay. have. already you with thought, the I $X.X million,

Michelle Hickox

right. Right. That’s

Brad Milsaps

Okay.

Okay. to that about the thinking maybe about in Got period still is you, mid- at sort of have then you And time? high-XXs, it. of kind the efficiency, talked over you of of longer bank terms of guys ultimately, think can run kind a area

Michelle Hickox

we're I think think expect the to we by still I that efficiency at, ratio what down get to looking end of this year XX%. about

Brad Milsaps

very Okay. Thank you much.

David Brooks

thanks, Brad. Hey,

Michelle Hickox

Brad Thanks,

Operator

comes next Our Brett from from Piper question Rabatin Jaffray.

Brett Rabatin

Hey, morning. good

David Brooks

Brett. Good morning.

Brett Rabatin

ask, goal the just I is strong energy? talk that's XQ? growth. And going seen thoughts in some of 'XX? to a that in portfolio just And about you the And have on of you've you're David, maybe that seeing just stronger wanted growth moving I what maybe one to segments then any we a have have back know Can energy in loan up. banks quarter of got pretty

David Brooks

them hired, team to some a onboarded. seeing. we're got got Dan off We a bit comment onboarded, they making I a are, them and start. in Michelle, little Yeah. of we've about what good Brett, quarter. think, fourth the We've But let I'll costs. the

committee but you're about things some or you market loans well. have what talk energy the just We in seeing as front. continuing paydowns been oil But loan see to booking Dan, and on might

Daniel Brooks

We're Thank continuing David. quality you, looks. certainly see to

– in in hired As were started David mentioned, December. that hired team we the

opportunity we'd in more move an some, their just there XXXX. with be that really to will I up was this point. expect relationships, there going getting we'll in they're Whereas XXXX. So needle it at XXXX, traction see think But in

Brett Rabatin

Denver be? And relative growth. you're as their more to maybe what done to about take feel about getting you what and might improve curious deal know around kind to just terms started growth closed, I you're loan they've just – And how get a what 'XX. Okay. And of you've in as outlook talk wanted opportunities and Guaranty color this then to I minute. just wanted I for they seeing path the you in their do, what of was year, the just

Daniel Brooks

the been extremely Again, in over an team. to have significant grow time able through say, growth. to ability terms relationships book talented should sizes Colorado continue off They pay larger we that have extremely Dan. This is The they in an have there talented to group. team I some of will continued they've grow grow said, additional based had then on I people do Guaranty deals on will on David room there. and there's run us limits have hold portfolio that the and there. of the give just an really to relationships think continues the as we to strong, market opportunity based to some that And so of organic be ground

David Brooks

thoughts relationships. an they'll at think see been have able didn't area It's be market. energy. new it customers, they'll an our bringing that's one I have energy construction was with opportunities wallet as to larger been to in share, opportunities, the Brett, mean, not energy about strengthen as that – exploit we've Bank. on some had energy where of relationships those well some their And a strong estate that And of It's addition Dan's active. area. this in in they And investors. team increasing we've Guaranty emphasized relationships, I area been in but Texas It in loans will, with you And had some has if grow continue Also, to relationships conservative that – in Guaranty historical into real do then we before. the the area to the comments that they was to

in which going to with XX%, company, for the grow I anyone we're year, line what So but feel be X% to is think about XX% our don't their growing Again, this encouraged. ability to XX%. I expectation is good think we is

Brett Rabatin

follow-up. Okay. Great. housekeeping Maybe one just last

nonoriginated really energy You SNCs or sure pieces. there's Outside book, just asset have good no of I'm that like anything guys looks making quality. the

kind are company. guys usually growth of You in-house an

David Brooks

Right. Yes.

as Brett, cooking of you history, our own know, long a kind eating have of We generally.

So and lending. our small That we in – was books. loans, a book our Guaranty presence had said, we in them leveraged keep on

market. that we have a active And team that They so in job experienced where they a have market. there do does had that book in not been great an

of up it's good. are Their been the had so day, acquisition. portfolio. of a in And the really than piece end that record at the we And Guaranty less picking our of total loan track X%

Brett Rabatin

Okay. color. the Great. all appreciate I

David Brooks

Yeah, thanks, Brett.

Operator

question KBW. Brady with Our comes from next Gailey

Brady Gailey

guys. Hi, good morning,

David Brooks

Hi, good morning, Brad.

Brady Gailey

just Durbin we're right. thinking sure make So about to

think and Is to all know I still XQ the in be would million a $X.X that past, the right in said roughly XXXX. annually, Durbin the start about it number way impact? think that'll you I

David Brooks

Yes.

to million $X.X think $X I Michelle? million.

Michelle Hickox

changed. Yes. have hasn't another That hasn't it But year. to really we're glad – our pushed estimate really on out that

Brady Gailey

Well – the then imminent. and definitely. just on Yeah, David, M&A

get I past I said, on think focus think done, hey, state M&A about you once home for the right guys? we you'll we'll be in you Is efforts your still XXXX? really do to back will And the active M&A – you that Guaranty Texas. in remember you've way in think your

David Brooks

sellers we'll think half to of our for while XX banks There yes, this there, an and consider in what relationships clear X acquire. where months, be be has outstanding to Texas acted next focus in over be we on second an but year want number years. we that Colorado our to But And billion. opportunities. $X has and think way home our Colorado relationships of here kind focus banks in X in to them or the we're been been clear as largely we as want – is major time Guaranty upon. good of And forward. that where favorable is X said, we in very Brady, it that the markets and $X our a are continuing would been sweet where opportunity opportunities, just I – threshold XX to to a think into the XXXX, moving It's #X Michelle and have for build here billion are state then it, too. with of to to executing in And now, our in interested with companies the in range we markets clear XX on I a below look on are that on opportunities Dan been think in We The those smaller priority. it, smaller But are there have the first Well, look team in going banks yes. Texas, XX we've that Texas. that are be community

Brady Gailey

Thanks, it. got Okay, guys.

David Brooks

Brady. Anything else? Thanks,

Operator

Rose next comes question Michael of James. from Raymond Our

Michael Rose

Hey, are guys, How morning. you? good

David Brooks

morning, Mike. Chicago? cold in little A Good

Michael Rose

worse. Yeah, Texas I down brutal, getting it need to get to soon.

and Guaranty So integrating a I know trust I of to But to wanted maybe just guys obviously, in the fee that. issues. as outlook I business forward? term the had long wanted to you've building income. are to I And and mid- earlier franchise back stages, see clearly what that business, you circle combined they But businesses? we mean to for some those it? know SBA. near-term out There's what move about could any the growing talked on is And Thanks. updates

David Brooks

Yes.

brand PCM, country. have business efforts anybody I income. Private Capital think the job that of a trust does in management Management, an that's management where growth our real are Guaranty, talked the the The in we've fee focusing generate platform growing done their about, wealth competitive on businesses with under good outstanding really business wealth

engaged to And is that Guaranty not Texas Texas. the had mortgage robust folks Our we've likewise, bring then to had in very about the been that, business. that here integrate a in. retail We've plan operation

quarter our about of also mortgage original the already the the ran and was was, we've presence part hiring business that projection think expenses building of retail retail ahead I in fourth the in that Colorado. of

we're those about up encouraged but there. of expenses on opportunity our quarter, the here some so And the in books showed fourth

taking to wealth you as can income some side mortgage key platform revenue the on Texas how taking that about the Colorado we of say. and especially to synergies fee out our experience are this and So management to thoughts platform

Michael Rose

low been term, of historically you longer single- guys high to a fees kind So total revenue. double-digit have to

higher As that you target? sort concentration grow down, get bigger the that longer-term And and CRE, from have you do loan aspirations to diversify bring of to there term? intermediate- is book longer any as away percentage you an

David Brooks

Michael, level, our a – as There there to sheet to I high income. is, desire from say, fee is we balance diversify grow our would a

we – set on haven't growing the at think we looking we because need and have other success specific opportunities to management not targets. mortgage before business have some the We we and growing executing wealth

X the even you're to maybe be not something I going 'XX 'XX. say, up have going to and to build So to that going just out. dramatically years X, it's in next going over show would see we're something It's to be

specific have don't that. we any So on guidance targets or

Michael Rose

And just year? rate this tax follow-up one the helpful. The one. last tax a Thanks. then maybe Okay, quick for Michelle, just any for rate, for expectations

Michelle Hickox

that was of rate. a It's the But in half the different XX% it on of average year and vest should was than out in any it think think because little – it was little the stock sub-XX% the way higher a in rate, be quarter, I can't for first the year. the reason probably the tax that but works I fourth 'XX. typically it our of grants it think would really I tax

Michael Rose

Okay. Great. Thanks questions. for taking my

David Brooks

thanks. Great, Mike.

Operator

Matt with from Stephens Olney comes question Inc. Our

Matt Olney

guys. morning, good Hey,

David Brooks

morning, Good Matt.

Matt Olney

the a In you balance smaller. sheet bit little remarks, the that was prepared mentioned

plan threshold. manage deal re-lever Guaranty to trying Or to sheet will balance own? asset from its your essentially the $XX do You're balance these below Do sheet the you on the billion that levels? up to

Michelle Hickox

for our at moved in really the of of week ran we think But billion moved our January. levels seeder's year. strategies Matt. of below liquidity we below our first were program. off advances, targets the for our about the by We just kind end normal using I some X deposits to books kind the some $XX used were was The we FHLB that back treasury off days, right

Matt Olney

it. Got

then And credit. to going Okay. back

nonaccrual. general loans share You mentioned just can housing with commentary in the you are X Any Texas on us? single-family the construction market single-family

Daniel Brooks

in loan, That of Outside the It to serve, was that and week January. Dallas. was resolution that a put Dan. very continues particular in that sold pending was be December, in Houston loan $X.X strong in about first one the million is we market was it. of there that each this Austin, Matt, nonaccrual markets on

off. it So since paid has

the to reasonable. continue a the be and that sales continues periods continue market be prices good hold to to active, Just indication

closely, that that watch in we So but we've not seen in deterioration any Texas.

David R. Brooks

Denver? Or

Daniel Brooks

Or Denver, right.

Matt Olney

helpful. you, That’s Okay. Thank guys.

David Brooks

Matt. thanks, Hey,

Operator

showing questions And at any further I’m this time. not

David Brooks

quarter of our intact, views positive would Fourth power be had our earnings about to plan will then was everyone's are Thanks. and to to. the very it and planned And be. fourth the not and as on half. XXXX, we're merger for that you of view Guaranty But as hoped or look interest quarters in strong I with able quite I the in third deliver as to we Well, appreciate call. everyone's to alluded XXXX. first be we'll And appreciate out results we acquisition interest. about the those our seeing road year. execute forward well and the we Michelle the conclude – it on that this

Operator

and this presentation. does today's gentlemen, Ladies conclude

have You may wonderful disconnect, and a now day.

Independent Bank (IBTX) 29 Jan 192018 Q4 Earnings call transcript