Earnings call transcript Q4 2022

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Operator

Greetings and welcome to the Independent Bank Group’s Fourth Quarter 2022 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Ankita Puri, Executive Vice President and Chief Legal Officer for Independent Bank Group. Thank you.

You may begin.

Ankita Puri

to Bank welcome XXXX fourth and call. earnings morning the Group Independent quarter Good joining us. you appreciate We The press on our related be website can earnings at release and ir.ifinancials.com. presentation investor accessed

today are statements. Page discuss subject Please about be beliefs such that risks to in of the we subject update a that remind and statement these by I cause to of that the statements see to future call, at assume X our forward-looking call for Safe differ. considered is publicly covered for several to expected would statements text remarks to or is release. results included we statement. and like give Harbor to measures made results, are Those no note In of in statement. that to made guidance statements. may presentation the slide could forward-looking you release, Harbor All actual uncertainties X made management's provisions measures Please include intend the financial the financial Safe during rules. Page guidance. the SEC's comparable our that measures time the most statement if comments are will this We to GAAP and financial obligation guidance directly under Reconciliations we non-GAAP be today's of

our Vice their the At Brooks; open morning our Langdale. remarks, questions. Executive Dan by David Chairman Chairman, this to will joined Brooks, our Chief call David I'm of Officer, Chief and and end the Paul Financial Officer,

turn will it David. I With to that, over

David Brooks

results In quality. million and adjusted healthy the full Reflecting through nature of credit earnings everyone share and our net excellent XXXX, of that Good call. of cycle income Ankita. you, thanks earnings reported for our and model $XXX.X pleased morning, year we're growth, joining on business per loan illustrate $X.XX. adjusted strong of we Thank XXXX, the

markets strongest by of in our and economic We fundamentals Texas in and nation's both the encouraged we are X remain Colorado.

million income $X.XX. net For share the reported $XX.X fourth adjusted quarter, per earnings adjusted of and we of

business we a loan markets, quarter, of fixed were the consistent In organization over time, remain resilient while the Though costs near-term the provide reduction During rate we slow. we to across book remain quarter achieve expense repricing downs as for on credit payoffs headwind, the income to a that growth quality targeted simultaneously deposit our objective, focus as our tailwind pay uncertain deliberate sustained discipline. position the should our able and metrics. maintaining rates entered economic an continued elevated pursuit even undertook with to achieving better Notably, environment. of across initiatives expense interest

expenses conservatively will history the and cycle. macroeconomic our continue to conferring XXXX. The consistent strategic strategically bank into perform of focus We is long-standing discipline the positioning with on on on early challenges to focus managing throughout

with our announced our for Board these consistent our declared also of aggregate returns $XXX an owner-led our that stock reauthorized plan of of shareholders. XXXX. amount for yesterday $X.XX a actions capital per consistent We and dividend million providing believe share We repurchase mentality of to are Directors

With now to discuss I'll call to the financials. the that over overview, Paul turn

Paul Langdale

and Thanks, everyone. David morning, good

onetime $X.XX and expense XXXX per year in line I'll adjusted million per $X.XX embedded adjusted or quarter discuss the during $XX.X income momentarily. fourth was was or net million There items full income non-interest share. mentioned, David $XXX.X share net several the As quarter that were

million. quarter before to million from interest provision $XXX.X the decreased prior or Net X.X% by $X.X income

as of costs increase interest in the While $XX.X repricing days of provide This costs of income payoffs. loans in the tailwind Payoffs drove consistent interest to fourth reaches combined income the prior expected points normal million the deposit versus rate maturing paydowns in from increase peak interest a should production growth was after replace bulk well in by and the slowed QX. are the income as QX by quarter as and pronounced XXX in million repricing rates year. but net the with loans raised loan quarter costs income quarter quarter, XXX FOMC funding driven new sustained terminal rate. as increased the over FOMC the even last funded modestly paydowns $XX.X basis the The amortization, continue interest to floating to linked net expected versus during increased the differential by to funding shortly more the

the in average the fourth compared XX NII XX funds hold net in from points X.XX% basis basis accretion quarter, flat on quarter, include of XXX in increase was and points in FOMC's of interest-bearing expect fixed peak of the an third yield was The end overall points. cost the XXXX fourth of all of this deposits blot, XX quarter, basis was rate basis liabilities the line quarter through quarter, third the as core points the XXX our fourth toward all an of points basis rate total in the points repricing income, dot X.XX% basis points. of consistent Our increase XXX a fourth first quarter. up throughout funds quarter basis an up XX loan even in XX basis from The subsequently cost third quarter, PPP the yield, the In the we year X.XX% in year-end. to Fed a The in quarter, points. from the assumptions assets NII should scenario, rate increase dynamics to interest-earning near-term modeling Fed in from the sustained present for third costs X.XX% in deposit the to challenge. The benefit with jumped

managing maintaining shows, Slide intense Fed we continue headwind to to Deposit a of function in near Still, to slight balances. specialty peak. deposit and continue interest-bearing near-term is the over to Deposits needs of as mostly competition funding in Year-to-date defense XX remain balances current the balance playing strategically nimble rate term remains both until a and liquidity noninterest-bearing our As a to will should term, we successful we the in continue branch in been shift rate have medium the the environment. book, offense reached. terminal interest are in core deposit NII verticals book tailwind after loan terminal as a fluctuation incremental serve despite costs our and is be funds likely rate to sheet. growth opportunistic near deposit even balances

model being credit quarter CECL in to and losses assumes the equal This looking changes for the of net model for material lower was the as budgeting represents forecast X% held no else and macroeconomic mortgage $X.X factors. revenue we was about other growth. income. which other as driven mortgage by the by are million million and Non-interest -- Provision warehouse industry compared the businesses quarter that ahead, for our across to loan well provision from $X.X fourth mostly net due lower lower all income volumes to decreased mortgage third

income first levels. For remain the fee current at expect we flat to quarter, mortgage

the charges technology $X.X quarter. targeted Adjusted is listing a Of termination million approximately non-interest and accelerated projects certain expense non-interest was $XX.X well expense to correspondent reduction undertaken this, and the the during to down the banking the to quarter. stock of was of million related from the $X.X expense for excludes million as fourth approximately onetime related million related linked severance to fourth relationship. $XX.X which assets of $XXX,XXX initiatives Adjusted write-off as is discontinued related quarter

reduction The initiatives flat run expense us expense XXXX. fourth holding quarter's will through our of goal achieve rate help quarterly the

to remain realize focused coming year, we new we we expense on the over As savings enter the and line managing additional the explore quarters. opportunities strategically will

XX levels regulatory TCE increased all minimums. consolidated have remain capital well above quarter. over Slide well-capitalized These including slightly are ratios, capital levels ratio, the comments time. from linked And shows the capital I All today. the

Dan. that, the with over to call turn So I'll

Daniel Brooks

$XX.X from billion quarter. or the billion investment Thanks, excluding in the quarter. mortgage million the PPP Paul. $XXX and in held Loans annualized loans quarter, fourth for totaled growth, X.X% up $XX.X for increased Loan linked warehouse to

with type has same was past us continue both and New the production quarter that product discipline during the economic by we guided distributed, to well and underwrite geographically cycles. through

warehouse interest times mortgage quarter. fourth prior in and million broadly the resulted volumes have Average million loans quarter, down mortgage industry. purchase and more across lower the $XXX.X the shorter hold to increases in demand, in decreased rate decreased Volatility $XXX.X from

levels end. X.XX% total annualized Our basis with the of large several expectation is totaled early XXXX. decreased at flat quarter during real was million remain notable assets current quality for million Total during Credit nonperforming at estate to with points through just resolution X improvement metrics $XX.X this charge-offs a saw quarter. owned Other at achieving Net flat business quarter. or the assets final minimal losses. quarter to the commercial during credits $XX.X

of strength situation. we borrowers in against of vigilant markets strength navigate stressing portfolio so, a to by the enter bolstered remain we as be and very our remain confident to the Colorado. environment in the emerging evolving current Texas our strong of continues Even and rates as our in the underlying the ever history book XXXX. higher our Currently, well continually macroeconomic the the we are underwriting loan Our and of mindful ability underwriting risks multi-decade impacts economy of of for and as we

are morning. the portfolio comments related to this the all These I have loan

So back David. over with to I'll it turn that,

David Brooks

Dan. Thanks,

been across of the we see to pleased we very markets sustained long-time for encouraged business XXXX, As demand, have by enter FOMC Texas even performance base, Colorado growth. high-quality the continue resilience This be and disciplined from strategic terminal we focus our of our and to customers strength the our management and borrower approaches pursuit combined and through-cycle demand rate. of continued expected sustained expense on our helps fuel as the our with healthy

Our to high-performance, value company shareholders to each day. our purpose-driven dedicated by customers priority our running deliver a to serving and communities remains

taking call Operator? now time us join open for again to the today. to We'll Thanks questions.

Operator

[Operator Sandler. line comes Brad Our of with Milsaps question the from Instructions] first Piper

Brad Milsaps

interest Maybe, the with margin to start Paul, I and net income. wanted

how offered of guys you color of of thinking a kind there it. are about kind lot You on

compression based as through wanted the about kind better to have? back is sense the asset you? trend year there the half trajectory thinking up NII that bigger of reprice maybe you're of of Just to picture, rate is do the of the on And see 'XX. NII maybe start margin you you how a of and of in most fixed get move chance Just you NIM begin think to behind of some the kind a maybe you significant could

Paul Langdale

Brad. That's about right way exactly think the to it,

defense into fourth incremental were deposit As quarter, really the the to trying we we play and offense in went book.

liquidity contingent though really So bit XXXX. noninterest-bearing to in deposit if we going balances, there preserving remix to branch grow on successful were options we focused a those knew from XX Page at doing even of ensuring deck, in were and interest-bearing. our would our you slide that we were into look able be We

So the that basis as we bottom dramatic quarter. those then NIM directionality we in expect it we couple levels us the at inflection look NIM in points for some should of the fixed flat should year. first to just And for quarter out the to in down as XXXX, of lift see through dynamics current rate repricing the quarter accelerating second significant offer third a through

Brad Milsaps

maybe follow-up, And seeing reprice fixed in loans of you are rate. as loans on to to those my those where terms just and the rate new repricing, loan

percent guided of or may a terms out to are I demand Dan, of Just new potential loan where X-ish David think the loan get kind of in And sense rates impacting those X-, wanted to of growth. maybe there you've pickup. be type sort how

Just -- are rates kind out those there? curious appetite what impacting of how

David Brooks

that about the this in now seeing Brad, the I'll The rates David. current the purpose environment. on slow. economy. from is Fed Sure. of expect will upper will mid-Xs, we're And level, a likely in their accomplish high we Xs talk come slowing

kind of here. growth as slow XXXX in we bit that So overall head thinking will that's a into loan our

that you're One to flows challenges cash Xs I'll alluding upper to and low might speak think and the the one Xs continues and here, of if be on one-off the are or or Xs loans if let there borrowers Dan but pose things to it mid-Xs rolling and challenges certain then this will for of the Fed I things. the in

I'll it. Dan to aspect let the speak credit of

Daniel Brooks

front think that end I the I the on think really about against really, would it best defense way. Yes, this is risk. Conservative underwriting

we're in And a looking are and -- tests that's up it year rates. for have material shock credit But years underwriting, when and rolling stressing higher X for so even rates our now interest rate we year the impact ago in Xs on they're every in next maturing the put at maturity.

that few issues. look Our early we those at see has very been

have will and borrowers what conversation we we'll a it where in get credits always on. our of we'll be with few do the For required, early front

Operator

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

Brady Gailey

mean growth like what loan is for Are potentially this does slow for here, a mid-single-digit bit year? So of that XXXX? going level we to a more thinking if

David Brooks

seasonal a try it's forecast. Well, little as it's well to tricky to so

accelerate it little maybe for a what bit, had loans out around a here we're right, trying and mid-single range some will markets digit slowdown, that for don't good economy. today, magnitude pretty X% we it's again first over of the grow look, XXXX for economic I difficult are X% should And then expect, do the 'XX. here maybe gave know got bit, the the we Brady, quarter, it little what to demand lot insulation, third much. the if may the range. said plan expect of which about at slower there's still little, looks think on and end X%, quarter, people a nausea emphasis just with we the we'll and to happens based to in and and in out start a to over give and say figure still And their be in even probably a X% it pipeline first But as but is that a I but we've us possibilities We've good X%, looking how and little our is wide a entire just with of the becomes on guidance what in we a want overall year. of us quarter right I

Brady Gailey

And out expenses of right. decisions? decisions annualized base, those the bank? expense Okay. were on the were All the then was impact the how that made of what much taken Like

Paul Langdale

that So our really flat Brady, prerequisite holding this us run expense to guidance from rate. was a of meet expenses for

crucial to expect And FDIC off $XX XXXX. heading the that this think heading them to things expense in would some of going into if $XX.XX and increased terms about part of in expenses, remain was So to you XXXX, that million I a range. like [ph] million we're headwinds in of have assessment

Brady Gailey

you where -- continued do Okay. expense at you base? we in Or to And feel expect the this with changes are of any guys consider expenses point? kind should good

Paul Langdale

like uncertain I shaping what base about navigate, But obviously, to economic continue going to of footprint to we in expect we on an anything to we really mentioned, as fourth for across up did We're a look reduction wouldn't to environment, be the the we expenses. opportunities have quarter. basis. very programmatic David targeted and want is be mindful disciplined expense managing ongoing the as

Brady Gailey

expect All million at $XXX stocks $XXX million book of buybacks, active value, common X% of at do on kind high in tangible equity the the And so year? [ph] then the this range, be tangible $X.X you to right. million is that

David Brooks

for happen. what's markets balance you opportunistic to Capital lot to attractive look like opportunities than Brady, That's group. to stock banks with prices. watching held the the sheet all our still the our do a I'd a continue and in happens we'll Make peer the in of of precious. equity, see to that We be what with quite we're But number and is Xs. up, mentioned, our on upper going obviously, as has different tangible way that, at economy say and stock prices. depends, buy

handles capital on X and ratio. handles have You their tangible

think anxious be do away to opportunistic room we in this but environment we've we'll capital So give some not got either. and we're

Brady Gailey

would focused ratio get profitability guys on or Any ROE targeted whatever last the bank. have on like on, where All any color you or ROA of for profile on focused improving you're or for And to me what you color I ratios right. efficiency question metric just profitability know the is then been the are Independent?

David Brooks

question every answer in come. I and every know XXXX answer everything light guess, put again, question, we we I'll Sure. but is don't [indiscernible] we of about to

asked question from growth watching acting do that, and And I just to being side, what so our been of being a our have which to base and the But guys bank. all historically is, been last has you and everything nimble appreciated about you right coming is the discussion here it accordingly. credit quarter way we nimble high-performing expense

in right do I so -- it? That's think not category a about now you was you that going dime, what it Brady, -- to can't you how fit are to numbers a speak. wouldn't and but ship Your asked is, you on the turn answer exactly -- we it can't

believe at, we things have return traditionally been undertaking the of be been that us to So to we've we want metrics at. the we that that will kinds

be on won't to there our rates be year, this So the we from Brady, tangible to to think pressure assumptions year. and continued But be going the of and return numbers I deposit base XXXs equity ROAs able of year and common economic fourth in I this would the given generate our first given quarter, XXXs things. rising. that get be the there in should of up to and third our this the those quarter on when what's of mid-teens and expect quarter, kind come happen you are back to half We

where in and if be an So XXXs where to range and the to we would end you been XX% of XXXs return this we've on equity think but in ROA be that I back XX% the had tangible expect by traditionally year. the to and

Operator

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

Michael Rose

bit. the here is there to little ratio to go the color up but loan-to-deposit Slide wanted a I warehouse back XX. creeping appreciate Just the at

just side can deposit sources nonprimary Just incentive specific continue the you can of doing with ratio that a anything maybe to as more you're on on the you have initiatives balance I in some detail strategies? specifically But to in more push-pull funding us just loan-to-deposit update the And if of there's you deposit you that some the through place? kind of structure, you of walk funding. with needs know the change grow?

Paul Langdale

Sure. our doing in some core about had. deposit deposit Thanks that say deliberate question, I quarter book rate, relationships we for the we the and our fourth core of with were this, very in Michael. were we've that defending preventing runoff at and will successful

heading of said, if bank, and a for to them. we're sure in As terms an focused explicit very possible. the have of paying It's everyone teams That sure deposit all-hands-on-deck goals that relationship our keep keen the being taking that we pay deposits, ensuring making on with always XXXX. of costs customers to approach into it incentivized that to much care make we're the we side is we as house as on have we're deposit down our

heading that pressures deposit bit the as further abate take FHLB short significant book using on going the rate, the in the expectation terminal to XXXX. we'll points arenas, tenors deposits We the be keep be see some both deposit in into our opportunistic and in to brokered to have the and the of little both the be want quarter first in maximize we'll selectively capacity to, but is order down hits Fed especially we verticals cost able Our and other specialty as different a outlook rate we'll the curve the wholesale deposit obviously broker, for there. to we're the able the

Michael Rose

from the much maybe and out growth obviously, David, growth rates, separately, more X? a that given there get the maybe just looking higher keeping And helpful. intentionally truly the outlook, maybe are little be funding customers bit with it alternative of their does loan mentioned, it going And own a moving lot economy? just of you just is kind guide pulling same or to Or the Xs uncertainty may back rates your just in little X the on to growth? how just for for bit, the just up in the challenging That's as a tone things seem then going but about the Okay. is options

update, was the you know loans, on And looks double-digit the softer. I then you but a just just process back has It multiyear can of C&I us if stand separately, initiatives. been annualized some a if an looks energy you be this but growth like where to give little out bit

would just a know in there but I great. So color any be lot

David Brooks

of the may embedded they going the and -- I some is all Michael. amount them. economic may overall, Thanks, deal at you slowing believe, Yes. amount highest the we remember activity of help not the [ph]. question, as that remember is X% to already me have of well the income-producing in at flow slow. questions deals, But X% to level, so It at do yes,

a of and side to -- of and bit payoffs have sales drag. refinancings has there's be going The that assets that slowed. a of So been that's all the positive and

have don't the of last that we therefore, had So the we headwind payoff in years. couple

many generate to to as year. net X% have for X%, the X% won't that X%, we -- we So loans expect that mid-X%,

So a that's at high level. it

diversifying our We continue to balance be to sheet. committed

energy X% energy. We us. We the about about in mentioned book positive only You loans. We're for think of threw there. opportunities our loan that's overall great X% of seeing a --

let's heading diversify So that other that we forward. we is a an we'll look but not But hire it kind as easy loan." of team to this this intentionally here. gosh, not book looking easy uncertainties to not the your years embedded committed into this easy business your at the to cautious a of start other and to our a been one continue go, of are ahead, year and no go shareholders a as grow bunch making business. we're And we're as of loan year, our yes. easy owners we've snapping to an going as in or this to environment, XXth little company, -- XXth here and continue can for think button time around for "Oh, kind this But, yes, of there's XX that's long continue button to lines In running and answer as of And go as Michael, it's being it's fingers was lines area happen. bit and we comment,

lower our we're our our being well obviously, yes, philosophy core lower philosophy sizes avenues, credit management XXth not We're than are in that year. are those our things are And to credit hold -- averages, there can lines may loans or cycle. can business big you into the you banks you that's lot been point think Michael, some to get in where at go a historically. out we our of there and do book going to being really which that generally, bad take, that a haven't peer uniquely risk and change sizes thing this and in of And

not kinds our going and doing be to We're we're book loan going customers So be our our those risk. growing of continue our to things. watch with markets and to

Michael Rose

to Okay, just litigation Stanford it X I settled. Group great. going another in I'm know for are Southeast you Maybe in to which think going X the try. guys I me. you're bank don't involved but last the answer

February Just I set I'd any thought from trial think classes don't your for is is if I see I you try. wanted to Again, comment get X comments the of know there's XX. for any but update. a

David Brooks

well and specific that public as you specific in that read in case Thanks asked question, interest update Correct, litigation, There best our what's we a as Michael. for always I company shareholders, the comment to up you in said know. filings on disclosures moment on accordingly. details -- ago. we and about are and of you and our we'll continue our that on assess pending can as But this the normal don't

Operator

line question the Group. from Our with Hovde of Rabatin next Brett comes

Brett Rabatin

saw that, to that first there in pick the But fee, think circle think pivot, atrophy could to first be pass quarter. if bit. wanted there correspondent And fully decline mentioned maybe be maybe bucket then fee basically to fee to the the optimism opportunities due like for its if to to have we'll if market obviously, the income in you that if up for to felt other you could mortgage income. growth be just see. you to helping other run banking flat then -- related is And of additional course one, that And wanted see a you I if back has a any that? little see; wanted some I you will the in business. any lines also or

David Brooks

from of business at say our Paul Brett, some hitting me level, is for of But a a of question. high period let will right time. there Let linger that level, your now its prolonged comment a specifics, view the lows I'll on and high it's mortgage

numbers was acceleration view in that increase running environment we of will real in. volumes, forecasts. great We've that decision-making bake don't kind evidence we have think our in return 'XX But cost teams in or everyone So in base, in very included around it that until that both there's of and term. great to quarter assumptions, we our that if happened. good see of about of fourth and a we got allow to would last businesses we But don't our about to it's our be any those mortgage. be feel And some normal very year going year be long Obviously, longer. hard it any going our the for it a difficult in and maybe

things comment. specific let and correspondent I'll Paul about, the you of terms In asked

Paul Langdale

coming that that related relationship won't onetime remain Brett, a in just recur charge And expect the the relatively to was Yes, quarters. a correspondent over we them the severance as banking future income of stable other items, far fee quarters. to as

Brett Rabatin

keep of I'm it here. took wanted Okay. sounds you've I it around from if to funds what chunk the That's so you sounds cost it the right, commentary speak And flavor, -- maybe pain, kind to the big of understood of feel taken balance you've so how Is here? speak, fair to the the then to and on helpful. relative like to it like might I of the of so beta about speak, to thoughts getting terms maybe And think sure some make basis taken deposit and beta, like pain assessment you keep share of deposit of that slow feel we that going on of some relationships a on lion's the a should and in maybe from the sheet forward. increase any the cost funds deposits

Paul Langdale

We've we play that's base. of been in our customer ours. deliberate Sure, a core history a Brett. our focus consistent in been sure And defense that relationship bank, with making very as

going I to rate. until be hits continued pressure still on think near terminal the there's deposit Fed the costs term

Our Fed once rate, help see on of the significant expectation, should pressure abatement year. terminal deposit half that some the of the in though, us the is hits costs that back we

Brett Rabatin

Okay, fair Dan. then for maybe And question enough. a

there's much credits mentioned a it's couple of credit I worried you front look I portfolio lot in commercial are about a to it's kind to wanted just from real guys you'll about think your factor You the better think what what's worry about I peers. than in you the if get estate perspective loan of investors environment, the at loan of. rates, of a look And commercial about might concerned real else, estate, been maybe your maybe Slide, estate. for hear rents, maybe to at environment repricing around XX%, something think that and real terms of it's just environment? the not commercial the you portfolio own even Wanted historically has change if you're hear in big if it's loan but if the

Daniel Brooks

Yes, Brett, great question.

may a pressure you with activity way, of as say, in you that under industrial, stayed our couple under just in the type that occupancies but let lending pressure of years. a watching office I think the would say keeping Spec asset office, last space. I continue that are are And year. rule, think, those core principles I might here. it lot we've to general, a general, we been certain obvious this be there's from in seem away bit spec of say will as think would certainly people in it classes about you this me help and to and

the solid. think pretty be certainly It continue I rents to seems side. on multifamily

So could any concerns there downturn. about about to rate then I and in be there don't a happen think seeing. increases for are what our primary I general, just we're that continuing very the vigilant think we're portfolios mindful But, stressing in

the at we're good monitor we would you. can while last X the we standards that that's our general, guess think why And granular think and to would like. I we individual be. I which with very is that, feel over those that structure us I and as about for on same I any continuing credit as I limits good watching in And decades, look again, positions present underwritten what way think ask the exposure the portfolio book with we've our have

David Brooks

I And X% Yes. as this is At X level, would underwritten that Brett were -- years the a things about one Brett, we loans say rolling of these at interest to thought David. in rates. high

markets or last helped and in materially that that people, in the you're it's of the really rents professional the in have the X One markets, the has the office if whether we're years. or about thinking office multifamily demand of increased things in-migration our buildings, and

in that property through the in our markets. today and economic So the much flow years great almost will, our activity tide are cash market. and the we to of higher It property every has X that great risen, underwrote a high-quality just if goes ago with philosophy locations in you

months than as So that's these X began we credits. had feared better much maybe the making actually it process re-underwriting we ago

his have And Dan the and of hot great job we're great a markets done kind avoiding the team idea. So also of in.

industrial, has tens square the of millions by spec every everything, so feet. that kind delivery what's country of the just of and airport Amazon around And going on been with and and all given across been space has office warehouse, built that

a around a in And if that look, cautious as be slowdown. that some there significant an we're example. think we pain We have little could economic

on the not then, even overbuild not to bet farm, It's cautious you class. X good be great. have so to Multifamily to speak, is any just But here. submarkets these within have we So markets. strong asset

we of about. and are about things those talk kinds think the So

Operator

of comes line from Securities. Truist the question with Brandon King next Our

Brandon King

of more So in you longer there an your that in assumptions talk still rates about are confidence a environment yes, little higher for deposits? particular, your please we pause, competitors in could could and finding a will scratching still out in the environment peak soon where rate a lot the and after rate for long [indiscernible] be be deposit

Paul Langdale

previous Sure, the getting answer had in question, deliberate on Brandon. were mentioned what And to to back increases. we a front the rate I in of

not play terminal to as you noise mentioned, trying and trying waiting our for was for higher as and those the for very the X of were So making paid Fed our sure take we Fed core time had after is we that customers. the retain upwards we then clawing could we to decades. way our focused the against deposit that sure some relationships a hiking wanted rate who rate we've the make deposits hit and scratching that And hand-to-hand are to on combat did relationships, we competitors

and that us at higher-for-longer front we've expectation that, should rate, increases on Fed with to rates more alleviation see deposit those you environment mentioned. with we customers the So as terminal the once provide that deposit the pressure hit does on core hold continue of that generous that the for been some end

Brandon King

Okay. cost kind noninterest-bearing are from And kind also assuming interest-bearing of from -- as also DDA mix of here? are a that Or mix well? kind shift you you the assuming of that does non also noninterest-bearing stays to

Daniel Brooks

a not meaningful. forward but slight very expecting our We're mix it's forecasting shift in very

Brandon King

Okay.

as a you just going for then potentially get of current forward? far rate as kind see run still you efficient How on question And going headcount? how room do about you expense more evaluate forward? feel to And there do expenses, Okay. your the

David Brooks

to in going are Brandon, be plate on costs, think, XXXX. I Look, everyone's

have to et financial here our that. the at cost we're where then costs had the season business time time going infrastructure so costs institutions have things invest deposit their where where an our able And base. is in X been unique lever interest rates if now have slowdown, industry of to -- years a and to we're like that are we -- to going people a going has last But going the system out everyone revenues lines level, higher level PPP a have been only haven't and or out entering keeping building economic to to to and are from use cetera. X We've down, rate, be the through as liquidity

hard to ourselves what at able for XXXX. ours be we And fourth way in come to react what could the took our be nimble in look a to so position quarter and and trying to

in banks the here as second think will the out quarter. I similarly rates level other do

in our We've of is be. to businesses. invested where a think lot it right we headcount I need

great We going and we care markets had with have we've teams people grow of our going our in see it. customers. more to to take and as the do ever We're customers hire teams the our best need we'll out customer-facing we're to invest and

So think, into go looking and we as we're we right -- to I need 'XX. be good right now, where we're here but

Operator

comes from Instructions] with line Matt [Operator of Stephens Inc. next Olney question the Our

Matt Olney

back Want NII the the all to go I for to the on appreciate the funding. outlook and comments

Just appreciate offsetting why provide color into, said at On this mentioned headwinds? that more this the as book us offset benefits. would you you quickly the how XQ of on the tailwinds other to some turn? the funding half the back some could of side, Any you loan give trying think offsetting 'XX repricing be should headwinds some funding a would move you will [ph] I of

Paul Langdale

Sure, Matt. Thanks the question. for

provide in lot David CRE maturities of our outcomes payoffs economy picture a the is the fixed That is echo potential with loans. for obviously, for X-year of a paydown to that the macroeconomic David theme contractual will a rate, even bulk and there are the or XXXX. an we subdued being going tailwind environment to to those book influence payoff And -- those paydowns. have continue said, a in As trends. spoke broader to, And

fourth and the slow bit. a we we As see on quarter, little paydowns look payoffs back did

some that but that of a it slower QX is see we paydowns is more slowing broadly. typically of Some a of seasonally

a Our paydown a is perspective. XQ and to rates and see the blend on expectation some of go-forward basis from payoff XQ

as optimistic quarters. fixed contractual the continue those X over maturities rate happen we the to lift have that to of So repricing course next we a of the will X good are pretty from loans, especially

Matt Olney

And I appreciate macro achieve bank's spacing? facing operating of XXXX, reasonable achieving given that, about past, the to David, in leverage operating the to that you're in year. headwinds the is I leverage goal then industry you've a positive that goal every the Okay. Paul. guess, looking talked this the And still

David Brooks

taking structure today, We now. on it continue as our incrementally at a hard cost bank believe ours Paul it said, believe basis. is. an and given, And got look, we everything a like the our SPX cost. we'll for handle we We you to our contracts those improve. ongoing that very would do good look is. expect all Matt, ways know think things to We've again, to on all We're

increases guess, helpful, that. from mentioned, and and increases to pay are be the as pricing teams things creating increases obviously, Paul fight like things, to many we in of continue contractual like all I merit that we'll So as look for that That that. headwind. will things and we're and our there contracts And so FDIC to

the to you the operating So across a in we we positioning and improve continue of our of in it then to will, a company by commitment cost the reductions tried fourth but ours, hold some shareholders it's Matt get it's focus ahead if only ourselves quarter to the have continued, to But not line having here, to leverage the XXXX. company. of

Matt Olney

guess, And a Dan. I -- Okay. credit that, appreciate for then lastly, for question David. I

Would for appraised the nonaccrual to on purchases? comments that compared did any of a was in the the of loan the sale there loan appreciate have you quarter. think pricing appetite And I how loan fourth value? market

Daniel Brooks

SPX Yes. Good question.

those going It anyways. opportunity there, is estate also additional small is that. that relative would balance to credits, on And to you're off assets, depend there, which discount, the what good it, ones. very you're say those which at that you're Real would determine to but banks noted a the slight variables you move some sale. an trying when is may we if of on notes, again, done have C&I or point. energy we depending that to had the note looking have did right? other what the those tend say was of or the selling I Certain same percentage be and than we it's the that to ones, expected really at class we on As think have large looking in and have a really assets And credit, much for discount to an ones particular. things. one large was on saw nonperforming could thing loan, We of us depends And small out value for condition was the would be asset, others. on asset in the different of I it I a

Operator

the is a with follow-up next Group. from Our Rabatin line Hovde of question Brett

Brett Rabatin

of Just loans follow-up question. on that repricing one

that still to duration, I think $XXX real I an just I or if fourth quarter of for last have those the quarter, curious think has commercial had effective you happen million reprice. million was and was of that you kind originated portfolio numbers number? -- estate maybe X-years do and Paul, $XXX the a CRE

Paul Langdale

Those we're using. are that duration the assumptions

is would Fed's less. additional estimate Again, printed it far production seasonality that as in my was that it that the and was the was was QX. have number Brett repricing I of XX% an up of bulk head, forward some curve. of some the repayments in is slowing but higher about than don't of the QX concerned, As top I exact off as the

for be in QX. though, and of saw the forward what QX rate somewhat we rate expectation, future Our is fixed repricing to between blended the

Operator

to question-and-answer turn floor comments. back Brooks session. I'll Ladies final for the gentlemen, Mr. that and you. Thank our concludes

David Brooks

we're our appreciate the I feel active everyone and ahead. call the a positioned on on incrementally ability back to the take positioned well being think hope and everyone, enter versus Thanks, the being for operating I on day. our really leverage everyone and well today I excited today think continue happens to I challenges positive as forth. I to we great versus has Yes. company. for grow And XXXX, whatever we're and

Operator

today's conference. concludes Thank This you.

You may participation. you disconnect your Thank at lines your for time. this

Independent Bank (IBTX) 24 Jan 222022 Q4 Earnings call transcript