Earnings call transcript Q2 2023

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Operator

Thank you. I will now turn the call over to Ankita Puri, Executive Vice President and Chief Legal Officer.

Ankita Puri

Good morning and welcome to the Independent Bank Group Second Quarter 2023 Earnings Call. We appreciate you joining us. The related earnings press release and investor presentation can be accessed on our website at ir.ifinancial.com.

remind remarks to include today like statements. forward-looking would you made that may I subject and to cause are statements Those risks expected to actual uncertainties results differ. and could that Harbor statements covered to We forward-looking intend by such Safe statements. provisions be for in five of page presentation our text slide statement. release Safe or Please see Harbor the the page for of two the comments made statement. that during All today's to call are subject

the guidance statement give is if made, update note we guidance at about the results, publicly beliefs that assume time statement a we that is of and to no management's Please future obligation guidance.

discuss In release. this financial call, financial GAAP financial to we SEC's comparable of directly will be the non-GAAP these rules. measures most Reconciliations several under are our considered in the to measures measures included

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

to turn will I David. it that, With over

David Brooks

you, everyone Thank call and joining the Ankita. thanks today. for morning Good

adjusted $XX.X million per share. diluted totaled quarter earnings or $X.XX Second

by quarter, non-interest-bearing deposit interest-bearing the into deposits impacted expected term higher more was NII expected shifted costs as and alternatives. rate rose During the than

efforts our will advances of to our the quarter, Paul an and balance optimize uncertain repayment risk the basis in expanding company earnings availability loan-to-deposit help commencing and $XXX second our a As go-forward environment. our our holding sheet of million, XX%, we during reducing by strengthened by trajectory FHLB These credit. decrease discuss, ratio reducing on contingent line liquidity

our bolstered in to our a remain resilient. volume our origination we other quarter, pleased lines were rebound the that fee During fee income, while mortgage see

to efficient further focus we on non-interest the current expense gearing most addition, pursue adjusted environment. and reduced the our In discipline expenses for continue

excellent for non-performing points remains low As and quarter. of recoveries basis the quality with assets annualized three net discuss, credit Dan will

three supported to that trends While in stress by have of conservative our we decades. credit these continue any for watchful foundation we markets, the underwriting we be remain indicate strong over that signs of maintained

the Capital XX.XX%, well quarter total XX.XX% Tier a quarter at as end. ratios a of X.XX% of capital ratio and X of ratio in TCE position a healthy ratio a ended with capital

I'll that few to on turn Paul give financials. overview, over a with the more it to details And

Paul Langdale

Thanks compared $XX.X net everyone. to and or David good GAAP $X.XX for of income or quarter morning loss $XX.X net diluted per diluted the million share share a per was $X.XX million $XX.X million non Adjusted the diluted the share $X.XX quarter. per income GAAP million or $XX.X was quarter. per quarter linked the compared in linked share in or for $X.XX to net diluted

Net interest NII million half noninterest-bearing to deposits competitive primarily pressure. the as of interest-bearing higher year million $XXX.X was linked-quarter. on $XXX.X to during deposit products quarter was for second the with accelerated an remix in by as the rates income well alternatives impacted paid first of the interest-bearing compared due

interest-bearing balances, NIM noninterest-bearing loan accretion aforementioned not XX rates well corresponding increase paid the basis a in which deposits from second acquired by the were linked-quarter. as as quarter, asset on excluding the was remix yields. by for NIM points primarily impacted of was higher X.XX% earning offset down

liquidity I'll by balance carried impacted the negatively on quarter sheet also the events average the cash NIM that note higher following second balances spring. macro was of

the long indicated resumption the year NIM trough than persist that remainder dynamics near-term for and inflection fourth as the flat. of rates for in the anticipated, holds should the proved as and have positive quarter lower that upward trajectory an tailwinds Fed the While the NIM of

any meaningful where should In cuts us the rates benefits. scenario Fed give liability sensitivity our immediate

base meaningful during and than funding previously should to downward This a pressures helped evolved near-term second the anticipated, has in rate in indicate is the terminal the abating. quarter. forward by Fed's the slope higher deposit stabilization While be curve stabilization

paid total excluding rates, Uninsured depositors from XX.X% now funds, Additionally, the in quarter rates short-term limiting overwhelmingly XX.X% in declined additional bank the as costs to are the linked-quarter. uninsured competitive adjusted risk deposit peak. highly to for deposits, public second downside

to FHLB company advances as are in our than We currently down our higher cycle. this credit, at rate which pay of increasing borrowings continue line less deposits, borrowings also short-term such holding the broker expensive while and point

earning quarter took during risk us the capitalize feel and we increases positioned asset profile sheet, Overall, our strengthened actions reduced on have we the the second in to balance yields.

year, to while at fixed lift loans tailwind begin the provide renewal. lower were in contractual the NII higher at to scenario should meaningful of remainder from maturities in longer will maturities rate Fed a holds re-pricing for and the QX, end, that the This where see a terminal our should a To we loans the of consistent be rate. for of

at we are coming just are the above about while pleased on where Notably, with X.XX%, are loan on production just steady new renewal rates yields books, X.XX%. the coming above holding books,

asset should higher earning loan yields. addition, expected bolster net In growth

was second is, held growth. expense net which model, could, CECL impacted we to the Provision dependent and by all This on the X% $XXX,XXX provision anticipate case the quarter, to course, equal base be of around a for continue of loan in of of macroeconomic changes being forecast. course, else

$X.X mortgage the in warehouse linked-quarter. fees. mortgage service million by driven retail of the $XX.X increase was income, an income primarily and versus charges This non-interest for million quarter, was increases fees, Adjusted increase

quarter, Adjusted from non-interest $XX.X $XX.X in expenses million totaled the million linked-quarter. for down the

pursue These organization continue environment. gear appropriately we the comments As today. for David discipline I noted, current and all the the have are expense to

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

Dan Brooks

warehouse increased the for held Paul. X.X% second million in annualized loans, investment, PPP quarter. and Thanks, mortgage $XX.X by or Core excluding loans

slower half mid borrowers sidelines to a the on was rate first quarter loan sitting due of the and during production the New environment. volatile

and footprint. the deal stabilized of our first of quarter, saw our been However, a as across rate an the at uptick faster year. pace to compared production increased, has July, environment the in we half towards end the borrower flow Through appetite loan the running

for year. volumes the Average the Rebound an $XXX mortgage of represents in or Looking ahead, gain purchase the in to in mortgage back net broadly origination we efforts loans remainder from and quarter. warehouse market margins quarter, the for business $XXX.X expect the warehouse to prior other scale also banks million stronger larger production were addition million growth volumes up mortgage see share uptick improved to as business. targeted back. begun this volumes exit as We've more incumbents pull in in

currently at quarter. three bank concern portfolio. remained totaled across trends quality recovery and any during see vigilant points not basis the XX just the assets Credit metrics that the always we assets had annualized while end, total a remain And of of during strong against area Overall net basis points quarter the loan asset are stable. quality risk, quarter. we emerging do Nonperforming

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

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

David Brooks

Thanks, Dan.

the enter half franchise. XXXX, our we As we of are second for encouraged outlook very the by

today, are and materializing the catalysts of number growth, stands in credit we discipline fees, form stronger on a in it stabilizing positive seeing NIM, consistency expenses. quality and As of resilience

emerging Paul of statement. sign the discussed, a As the positive is forward for curve stability also the income

expectation asset a the amount current for peaking and that larger year on repricing remainder yields. that spot basis and bolster will a Our of are growth earning activity of help the is costs funding

in reduction Therefore, we QX the and growth expect NII NIM inflection of QX. the during in

shepherding Colorado, the our and insulate broader positive all I'm we capital culture demographic Texas Our the providing underscored which customer service who are from exceptional and our buoyed by are our especially focused outlook macroeconomic them trends four keenly have by strength high-growth inflows sovereign leadership. that of encouraged incredible is continued across by and teams volatility. markets on across footprint of

line the Thank to now questions. you join for taking today. open time to We'll Operator? us

Operator

now Please question. Thank today from proceed our Gailey with your you. the you. Thank the conduct KBW. session. [Operator of comes question-and-answer line We'll with Brady Instructions] first And question

Brady Gailey

Good guys. Thanks. morning,

David Brooks

morning. Good

Brady Gailey

and and NIM loan you the some higher? XQ, I having of the then down margin. much on to I stability could talked get the know wanted repricing think net we but we've NIM how So grow about start once a Fed which the little we in just a still quarter pauses, growth, magnitude how interest then can about saw

Paul Langdale

the earning about as gross we're Brady, we that the the remainder expect $X growth as yields, at the billion. for now we the asset repricing least That of specifically, that well both to at expect of we as end looking net year includes So between and the the year. think production be

this As far David higher mentioned in our been quarter. opening statement so that production the has

The And as so imminent average higher lift confidence a was a have pertains it a though, quarter costs. end higher on basis is we of the spot we costs, the NIM off degree stability quarter. that for those than NIM asset yield in funding and have seen at to earning

of and inflection the and see to about funding control between costs, and So the now end positive asset we feel earning ability meaningful some yields get lift year. off our

Brady Gailey

what And at the the end? spot was quarter NIM

Paul Langdale

higher couple was. than of It the what just think, was, points I a average basis

Brady Gailey

Okay. know expenses be you different? quarter. How a will going expenses run or run came it forward? And about are a Is rate, then expenses thinking I little and little on are XQ focused the guys a rate lower very good you this

Paul Langdale

now the end of I think $XX and good year a is quarter, a expenses. guide million Brady, between the for

sure hard to so base, continue across hold that going we're and environment have Obviously, appropriately making for expect them discipline that expense far. we're We are current that area. the the we looking in to geared

Brady Gailey

do from XXX% see. is loan happy Are ratio which for finally XX%, moved or see the you to to continue you want that to go then And with me, to deposit to good XX%, lower?

Paul Langdale

built us happy gives next and some funding some optionality we base, for managing XXXX. us managing into flexibility as into and costs, stands, look as also in that XX% We're balance across quarters the sheet those the with funding two Brady, it that the

Brady Gailey

guys. Thanks, Great. Okay.

Paul Langdale

Brady. Thanks Yes.

Operator

line proceed Our question. with of Please next question is your Securities. with the King Brandon Truist from

Brandon King

questions. my Good for morning. Thanks taking

David Brooks

morning, Good Brandon.

Paul Langdale

Good morning, Brandon.

Brandon King

Yes.

I increase type to year? or get higher? be a was NIM yields the wanted potentially basis see XX for guidance half the back what of the want quarter-over-quarter, the expectation a I and and sense as Are that the similar repricing So far points you as to could just loan to were sequentially. of of loan on looking up pack get

Paul Langdale

the of us asset we that expect that where grow half hike significant have loan yields. that than I think faster we're in did earning in that year the relative in increase don't The we back first another costs a the give yields things is two expecting deposit they on will to quarters. in confidence

rate really the in Wednesday, tailwind floating the a of asset going benefit to for production if the yield. fourth get quarters Fed to will gross third addition and this moves that to the earning we higher be So, is

David Brooks

good going that Yes. to early of quarter be a deals Brandon, approved log as We've our in seen year. nice pickup pipeline. It's spending a as are We've a got real loan here, funding. in the

books in over, us Paul gives lot still billion coming momentum those And of $X last we really of XXXX, assets a that the of to the that of gives -- over continues obviously the said, accelerate so higher-yielding as think, that with half on us these year, the XXXX loans into to are expect times. of produce maturing that during and loans which amount amount and we the in

and increasing on feel XXXX. tailwind like benefit we this really we'll So goes get year the as get an in

Brandon King

Got expecting quantify versus the it. half And you year of the amount what occurred maturities this in you're half? the of in could second first

Paul Langdale

of in level we of the in the second twice maturities had about year half. than the half the first It's

Brandon King

to going Okay. are loan that borrowings, this just that broker other stronger of growth or with that or production looking it you're the assume sources fund lastly, fair there funding expectation is and to you're any then growth? production, earning And with CDs asset fund the to

David Brooks

our Our some in ramps grow fund be do the We'll the Brandon, half some the think at margin. on do then, we'll treasury yes, of we'll core year, able and how second progress to we But see expect core has deposits. that initiatives have the up. made to grow we rapidly new but deposits to team good

the our the great grow keeping and the Paul to core second and optionality very lot day, think a creating can margin. of short we funding deposits got But done source funding to the team find half. a of end we've his And have we in best job of at our the at of

Paul Langdale

with quarter. ability during interest-bearing We second our deposits the were to pleased, Brandon, branch grow

year. some us gives that this that of see to we'll third as fourth we look So, through that incremental confidence continue the traction and quarter

Brandon King

I’ll queue. Thanks. back in hop the

David Brooks

Brandon. Thanks

Operator

with next Michael with is line proceed the from question. Raymond Please The question of James. your Rose

Michael Rose

Thanks for questions. my Hey good everyone. morning taking

David Brooks

morning. Good

Michael Rose

Good morning.

it is growth, markets any You are paydowns. difference although guys a bit sounds production? of loan the between of it know market maybe do the strong maybe positive Thanks. and there what's which on seen Colorado why a Texas less more you've little you markets the kind But is of the kind -- increase is think kind sound And gains? I in bit perhaps good, more little from share markets? of

David Brooks

the No, really seems -- across investors continued our positive one Denver markets, the all strength we strength is to Michael, Range or borrowers, improve Worth, that that and reasons of our the the we're the good that Houston we more make the and a demand to of wealthy Dallas-Fort seeing to Colorado bank, Austin, loan the little has Front more sound in much looking families positive. optimism of we feelings bank, be investments businesses the are in

concerned. It first are and felt move, and like downturn some best talking into recession half, quite maybe with a deep lot we economic even in the go deep people all in people markets cautious. Fed's were kind the were people the about of A aggressive of

lot and into on lot our talked for broadly selling see real And changing just our borrowers waiting people of broadly, We estate, real that as deals. we footprint, across the buying encouraged, sense, of people I more that see sidelines a we optimistic, off officers opportunities. to assets the estate, a our had best feeling relationship sidelines cash now are we're hands, coming think, we've cash

think, book. economic that are markets always certainly asset about And uncertainty goes feel but it seeing that now stronger still there's our but terrific so our team by said, we're yes, ahead, our across our and borrowers as we're quarter -- we seems where we've really and every quality headed and positive

than generally the they quarter a more enter two into as third And we or quarter here so things were ago. just are positive

Michael Rose

gander That's expect? the this sounds to could kind a encouraging last of to positive at about had kind X% know we care bit of And rate guys than a year. point, growth talked little hear. a I you over the to annualized X% that three quarter, take more of It quarters what final

David Brooks

the for second the to more of hopeful point. We as there's quarter half good pace kind good place. to were for -- a at expecting we think that, half that's Michael, about a annualized the in did. We're we of a the I single-digit, little X% second the think think is year holding of but X% mid to I still grow number than this a upside second

Michael Rose

It then guys you were year-over-year down stronger, business competitor, the state one And XX% the of of warehouse competitors some you that Perfect. are guys Thanks. maybe opportunities probably expecting. on market bit just there's the I know think, side, smaller warehouse you average was in the your are a only a expecting Can pick? and many of about like just there balances. out us I business? flip some share talk about, in what larger little seems for also than for got

Daniel Brooks

the as the new given that were are case, Hey, there. take exit, noted you on is expect out be We able or that Michael, and this I'll trends to will to some come that see some there, Dan. quality as of one. continue scale clients we back banks the

to portfolio in well, change as In pick that some addition, speaks competition. up the in the that seen we've rates

average a Our go end been at be higher the on the rest -- going haven't second to a quarter year higher of rates and the year. little of the are bit for

Michael Rose

Perfect. me, broader question. And of just for maybe just kind a finally

peers, cost-saving ratio efficiency good little but guys the you obviously bit targeted a You been some and more little higher bank kind the and really the that's to between kind translate a of bit job are is But revenue think the efficiency as in to invest we we with headwinds of and expense perspective? a that running challenging couple a profitability franchise have an growth cuts, addressing continuing and done should how from versus next efforts backdrop. guys still years, of what could the about than about this of in ongoing balance kind think

David Brooks

-- Well, and the we thanks, thanks Michael. think compliment, for

going -- future That think, We current expenses growth to company. our environment. work the We're I we're continue positive the down said, here. -- have done, some we're fit a about good to getting to

that to forward. expect the going We be case

to expect customer-facing up XXXX, think an strong got But more the We lining and we're stable team really environment. a And environment growth way team across the we've I even appears growth for accelerate. it year company. be at looking to better, a

don't We us lot over of, And to a I two. market add that a year markets. think the we to needing see generate here kind so or high our single to double-digit, next growth in can across low great

point. Paul growth. a on got we've we -- really to done that, I and we've cautious as If that have really the so new some a my team strong got non-customer-facing well. expense about to -- do think team, be job have and allows going economy team we're terrific to his And -- quite the obviously,

really have been, they to looking renewal, of, And negotiate ways things. at at the company, every contract looking kind searching

And we're on have the seeing front. compensation that to ahead. -- we have that and in for But the some positive so days increasing all also our we're of some teams reality still going positive results

we're that million think be years. a previously. will not the we slower quarter growth But going realistic the expenses be than it three So had are $XX to next for been

Michael Rose

great taking all color, question. Thanks my David. That's for

David Brooks

Mike. lot, a Thanks

Operator

with with line Our Stephen next Sandler. Please the proceed your question question. is Scouten from of Piper

Stephen Scouten

the accurate, Hi, it the on so, -- there? going energy like, slide on energy the same reserve know X.X% quarter-over-quarter, dynamic that clarifying deck. versus like or question if looks looks good that's it XX one slide ACL number X.X% shows the it from energy I quarter. Maybe last declined; morning but It reserves if have Appreciate and Is shows looks time. quick what the what's don't this everyone. may is like

David Brooks

totally and I of energy review. our We the that over has over subject that is best-in-class calculation, have we we, release CECL The the through top-notch, such was remarks to category. time I and And the of quality as that book more noted went of think, its course, Thanks it's annual book, Yeah. years process. changed the asking, think C&I for earnings just normal Stephen. reflective described in

So and across. with And change energy, the amount of actually, believe the lining like with did, is that there's of this which it C&I, what we recent it reserves really are reduce But most change. way terms looks we that essentially, at timely came the in was held was up ultimately model in fact, it think in which C&I against accurate that of point. combined specifically a

Stephen Scouten

back, Okay. do opportunities loan pipeline the pertains given more second then how economy seeing, you you're you potential Perfect. cracks see How that competitors cautiousness CRE and the CRE as your that you to strength work how seeing does of market increase And growth, helpful. the potentially the growth quality as you given in around half in mean, it credit today, are strength Very push-pull because dynamics? I overall. pull conveyed the of environment in other viewing your and overall? the -- are

David Brooks

then have want we've little in don't years, then, the that. And but bit the dynamic banks our to a be of course, to on good make Yeah. for but done historically, don't are is as the market, some relationships recall the they be is again in opportunity the which advantage is I share may getting at mentioned some call going or of bulk or in it forward, a Most we're of customers continuing loans, again strong margin, that don't the in demand the our is particular, existing earlier, the borrowers that grown they've that to in do from opportunity either what that's as the take demand out be at then a appears to relationships, the profile continuing active to would as a some seeing of for the seeing, -- pipeline, market been and opportunity more margin, may long-time our we're want customers customers, there active on is CRE lot that banks decided of market what's markets there if opportunities. and forward, lot gains of of markets. be with many of high-quality loans of they calling our getting there bulk going not there Stephen, our make And I

Stephen Scouten

just thing then And last there. color me. maybe for Great Okay.

the the guess front. percentage stability what take. I'm a you every you at on stability quarter, this of like as guys interest-bearing you specifically the is next is the I On calculating it for bank, of out the point in and to gives are where XXX% the deposits obviously, mean, seeing be or think the confidence maybe and here might give beta bottom biggest know. I around deposit deposits? deposit those we that tension able funding non-interest-bearing as around that the height face all

Paul Langdale

XX very really. stabilization deposit the base been absolutely. Yes, the We've fortunate in days, to see non-interest-bearing last over

quarter So expect think of about fall after really don't XX% non-interest-bearing we expectation much our number the another that if you that deposit total may point, base is deposits, being end that. around at but contraction in

giving our look pretty interest-bearing confidence at rates highest specifically, of the really rates. at overnight all we're lot much deposits at we market are paid fact When depositors by the a uninsured of that

not deposit run a room in those up costs. interest-bearing of there's lot of So terms to

products the at competitively, cycle rate. this base as bulk where is the fairly deposit compensated priced the point our addition, we terminal In feel right in of we and we now our is have very hit like

in So base. that that nicely the stability us see deposit positions to

to it opportunistic the funding maintaining As funding pertains more we're, of on course, about broadly, just margins.

and which in will another sheet we with of that mindful the be that mindful at basis points points of funding X% spread quarter. We catch expectation down third we attempt note a credit, quarter. And that is our make then of third in make of advantage final that payment, curve supplement everywhere being to to, today, of payment that this can. I'll we the our to of balance the we're line third company paying is which taking also of for couple the But dislocations duration over holding our short different and

come of sheet total funding million end the third the balance $XXX relatively the that's of will by expensive quarter. in off that So

Stephen Scouten

all morning. the you it. Thank Got Very Okay. helpful. the color and time for this

David Brooks

Thanks, Stephen. the Appreciate call.

Operator

of from Stephens. with question. is question line Matt with next Olney your Our the Please proceed

Matt Olney

guys. thanks. Good morning, Hey,

David Brooks

morning, Matt. Good

Matt Olney

Good want I'm I the showing the average the the go loan were the back yields morning. yields to same loan you XQ around quarter and on make back improvement, sure the that the up topic XX to as half question here. bps fourth of of last to and expect page in compared year. year,

bps saying are loan of page half quarter. that Am be So you the than XX the greater I average right will in the be over improvement fourth well X% back by yield the the there? year? So we'll yields on loan

Paul Langdale

of of the floating -- as you costs, But loan our the portion deposit spot expansion expectation seeing improvement. helped relative will rate our It's That we on yields. we think the rate up. rate a Obviously, had lot push part we're that certainly first increases the with yields in that putting year book. rates we're fixed of about where greater loans, higher to expect in

handicap in to in the lift back will exact for seen increase of of the greater terms that what but back of be the in the hard half expect it's the half year. in So yields we've the we it the quarter second loan year,

Matt Olney

price five it fixed then risk and how these XX the improving, on -- years, risk do sounds Thanks of but more is probably that bad of the you isn't funds, right. typically that curve this? the Paul. or clarifying like given maturities, thinking I really yield yields more are guess more loan risk the not about All for And of Okay. rate the

Paul Langdale

of off typically in We the see market. price what we based

hasn't treasury correlated And the so so much mat with really X as and Prime. XX year it's it with correlated

funding expectation with of the see price pricing in alleviated ability in so remarks It's a half and that higher of in in half currently the loans to at some cheap pass specifically half back year, call, to rates where back. we're in loans through bulk going that serve we confident as the is the noted curve I costs and our allowed as feel we were us And that That's in banks the other side. pricing loan the stability about to some on our yields. increased first as which So production that's the relatively pulled year, marketplace. them, to tailwind the the opening pressure

Matt Olney

products Okay. some noninterest-bearing And color on appreciate like the And then days that -- stability of the grew seems the as good spot are there. you're of balances on it that. also kind the recently? XX deposits color you in as far the in seeing on most average on commentary gave Any deposits XQ? the I more deposit balances last time looks time any what

Paul Langdale

seen some our obviously that positive our advantage is specials, CD of which people branch have contributed We take to has growth. interest-bearing deposit

As you think we're that about getting. cheaper deposits than the are broker that, all in math, those

the So interest-bearing we're deposit happy the on to time side, have deposits side. that on in growth branch CD

so we'll from those some broker deposits are As or duration, branch of allow continue we -- obviously -- to run-off see deposits. in if we do to see short growth where utilization growth the there, we we'll then those

Matt Olney

now? any did that's -- I hear now you spot Okay. basis. funding And And are that think the that peaking I what right kind peaking on more costs on a of But where color said, Paul right?

Paul Langdale

exactly Yeah, Matt. right, that's

We above in around a X.XX%. at we so as seen I mentioned, that on basis. are We've Those gives funding some are the this June costs. NIM that are costs marginal NIM funding spot where us costs just was, was some point. stability really QX confidence peak as funding seeing the a And average hair our

Matt Olney

Okay.

taking for Thanks my guys. questions, Okay.

David Brooks

Thanks, Matt.

Operator

Brett with Hovde Please with line Instructions] question the Thank is your questions. proceed Group. of from Our [Operator next you. Rabatin

Brett Rabatin

Hey, morning. good

David Brooks

Brett. good Hey, morning,

Brett Rabatin

the the so what's piece doesn't you at filings, the to maybe book i.e., next the far, much loan it of year re-priced loan the the talk first bucket. you about the I year hasn't drag half so for to the one regulatory how or going indicates that I what's come five Thanks yet. look and re-pricing questions. from different wanted of the hasn't portfolio Can to year -- at into the have guys topic re-price about be When portfolio from in angle. a of loan that

Paul Langdale

be a real loan may mechanism typically a add maximum a loan, that specifically we it five years an Yeah, greater color that little absolutely, bit after we loan in five than when at years, origination. estate for to adjustable pricing commercial do And Brett. helpful have

So we estate our generally book commercial years expect five on total. in some level the adjustability of first in real

The key and for down paydowns. other had payoffs million. wouldn't standpoint. has pay $XX us, We paydowns and an real payoffs an We you obviously, commercial economic around see that do day, $X.X from million been to for with continue just loan expect yielding perhaps the example, that estate, was

that see progress front are transacting commercial real and do in more as So higher see assets price to you estate at a as well discovery, mentioned, start we volume. on David as

So see and four the meaningful time, cushion, to we at XXXX, the that over obviously that it is our any years, loan repriced as going quarters point over into over next doing production pertains But increase that to cushion cushion is our up. next where has book reliably expectation to on gross will spectrum. several three

balance that for have our of on big portion loan So We sheet our loan duration we book. But haven't a mortgages compared do in that's typically what especially not of it book. is a in the fixed a book, our lot CRE the small seen peers. to portion beyond of rate again,

David Brooks

half, XXXX. think much of Brett, had the of again, about and year we color that this repricing XXXX accelerates I earlier, in accelerate the the Paul that second said in half we might continues we'll have as twice first in type to in also, And as as -- dramatically add about of

next some will we and at what make to majority or it, more So if we the think, would to look question, I and your reprice guess, it, kind is or vast it higher of as fair portfolio the helpful be Paul. or which two a level, is, this a will the way other than say prepay half, years, either that half of over

And half $X if so it really they accelerate. billion the of had into $X we some of in reprices that of year, this, the billion, coming first

to year, Brett, results XXXX really you pointing the we're right in accelerating can half So significant standpoint. of XXXX, stronger that's we're now be but our from second why even we're going much asset our encouraged XXXX, line into about part the if our kind earning yields that's encouragement, a than each will, quarter-by-quarter the that so bottom uplift seeing that in results see more of quarter, of

Brett Rabatin

then I'm demand, just really you don't maybe maybe of is this potentially Is you cycle? originations? want on stronger into Okay. a anything you anything helpful. risk be curious on than maybe and Dan, to markets are also that guys credit environment And in kind with Dan question view option of That's there quality to are doing the quality hear a from for as your really obviously, and the strict next terms that there credit most. lot

Dan Brooks

Brett, Yes. and good Hi, morning.

As you disciplined know, we've always employed a approach. very

I You've the last the look different noted And books. on and the our to any way be years, we that we've on put no five effectively, what's have. as even is think in in think that best new book that's the case growing opportunities about been at that been to that continues

deals in to booked, book in going much place we're you're is today, seeing Honestly, equity incredibly that reflective environment proud we’re much in more is that's just underwriting the of being and that higher type the general, the means rates, of the in of.

that the we're to markets the we're terms be clients of that that see way particular, to in, is of I obvious point. would the across would class, the asset But to at be an of have continue occur. rare is classes just in we the continuing ones, opportunity asset there high asset the it In class of on the is If we Office a this bar. really an book of mindful honestly, say looking right? quality we at, in underwrite really the we're that, because rest and

Brett Rabatin

pencil any just well, don't either EPA requirements that the just Dan, increased that is there on as And may coverage? be Okay. debt given or segments equity service

Dan Brooks

I want. lot it based and think the a the returns right, on that they are to sources what to in, put of get sponsors the willing is equity

a And we've somewhat So, that, I think be that there anywhere property going with and right? kind supply them are on some the tighter in. markets, that out. there of I location are certainly seen has deals built retail activity, space. location have markets acquisition see seen deals really make to always come the equity caused I by think in like But Others pull multifamily those And typical we've of of in just probably or just order that's on is something from flow think given we in nature to by seen haven't of more of that. amount back. our the margin, than still been the It's in of it some margins just particular, some have that thinner made, multifamily, a facility, the could some good that

And without equity so it's harder more putting a lot a little in.

don't decision made that's those of but investor. the deals just by some make, usually So a

Brett Rabatin

color. That’s helpful. all the Appreciate Okay.

Operator

Thank remarks. back you. have for hand the At And questions. any this additional to then management closing time, floor the we no I'll

David Brooks

months calling in of is change both been to a front-line us, have to very care speckle teams, morning this We about our customers got year and we've taking great Thank and team. since rate needs. second hey, clients, -- a on, been and today. the of we our continued we this you. proud difficult back focus it's to everyone hopefully, but conveyed feel 'XX difficult our office really half of XX appreciate to for first -- at positive half overall with the come. started be I their have Really we've and It's

team appreciate so, a support. my Thanks. I appreciate the and you And day. your hope have investors and great I

Operator

and participation. for you This your will your for conclude in today Thank today's dialing conference.

lines You may now this disconnect your time. at

Independent Bank (IBTX) 25 Jul 232023 Q2 Earnings call transcript