Independent Bank Group, Inc

Good morning, everyone. I'm Paul Langdale, Executive Vice President of Corporate Development and Strategy for Independent Bank Group, and I would like to welcome you to the Independent Bank Group fourth quarter 2021 earnings call. We appreciate you joining us. The related earnings press release and a slide presentation can be accessed on our website at ibtx.com. I would like to remind you that remarks made today may include forward-looking statements. Those statements are subject to risks and uncertainties that could cause actual and expected results to differ. We intend such statements to be covered by safe harbor provisions for forward-looking statements. Please see page five of the text in the release or page two for the slide presentation for our safe harbor statement. All comments made during today's call are subject to that statement. Please note that if we give guidance about future results, that guidance is a statement of management's beliefs at the time the statement is made and we assume no obligation to publicly update guidance. In this call, we will discuss a number of financial measures considered to be non-GAAP under the SEC's rules. Reconciliations of these financial measures to the most directly comparable GAAP financial measures are included in our release. I'm joined this morning by David Brooks, our chairman and CEO, Dan Brooks, our vice chairman, and Michelle Hickox, executive vice president and CFO. At the end of their remarks, David will open the call to questions. With that, I will turn it over to David.

Thanks, Paul. Good morning, everyone, and thank you for joining us on today's call. We were very pleased to report solid results for the fourth quarter. with adjusted earnings of $1.28 per share, healthy return metrics, and a strong annualized organic loan growth of 11.2%. Notably, this organic growth is driven by broad-based lending to our customers across Texas and Colorado and is supported by the strong tailwinds that continue to benefit our four great markets. On the credit side, we were pleased to see and meaningful improvement in our non-performing assets, which declined from 44 basis points to 31 basis points during the quarter. Our company's strong performance in the fourth quarter resulted in tangible book value per share increasing by 46 cents to $35.25. In addition, we repurchased a total of 201,326 shares of our common stock and increased our dividend for the fourth quarter to 36 cents per share. These actions reiterate our steadfast commitment to deliver returns to our shareholders. With that overview, I'll now turn the call over to Michelle for more detail on the operating results for the quarter.

Thank you, David. Good morning, everyone. Note that slide 6 shows selected financial data for the quarter. Full year 2021 GAAP net income was $224.8 million, or $521 per diluted share, an increase of $23.5 million, or $0.54 per share over the prior year on a diluted basis. For the fourth quarter, adjusted net income totaled $55 million or $1.28 per share, an increase of $2.4 million or $0.06 per diluted share over the linked quarter. Net interest income trended upward to $132.7 million in the fourth quarter, which was an increase of $4 million over the linked quarter. This increase was driven by an increase of $1.7 million of acquired loan accretion income versus the linked quarter, as well as a strategic reduction in our deposit funding costs. During the quarter, we achieved our target of growing our securities book to $2 billion and booked loan growth at an 11.2% annualized rate. However, the impact of these increased earning asset balances were partially offset by lower incremental yields relative to older loans and securities maturing. PPP fees remain stable at $4 million in Q4, with $2.6 million remaining to be recognized. We anticipate this $2.6 million to be mostly recognized in the first half of 2022. The net interest margin excluding accretion was 2.87%, down four basis points from the linked quarter. The decrease is primarily due to increased average liquidity during the quarter, which had a negative impact of seven basis points, and was partially offset by the reduction in deposit costs. Total non-interest income was $15.1 million for the fourth quarter, a decrease of $1.8 million versus the linked quarter, which was primarily due to decreases in mortgage banking revenue due to seasonality impacts as well as the recent uptrend in mortgage rates more broadly impacting the mortgage business. Non-interest expense totaled $79.9 million for the fourth quarter, a flat reduction of $664,000 versus the linked quarter, and an increase of $4.7 million when compared to the fourth quarter of 2020. The increase over the prior year is primarily due to $5.2 million of increased salaries and benefits expense, mostly driven by additional headcount, including executive and senior leadership positions that were added during 2021. This increase was partially offset by a reduction in mortgage commissions and incentives, of $1.8 million due to lower volumes in the year-over-year period. Fourth quarter 2021 also includes $614,000 of non-interest expense related to COVID-19 vaccinations incentives and testing. Slide 19 shows our deposit mix and cost. Deposits total $15.6 billion at quarter end, with total non-interest-bearing deposits up by $153 million from linked quarter and $901.8 million from the fourth quarter of 2020. Interest-sparing deposit costs decreased eight basis points from 40 basis points in Q3 to 32 basis points in Q4. This was a result of our efforts to reduce rates on CDs and interest-sparing DDA accounts in anticipation of contemplated increases in the Fed funds rates during 2022. Capital ratios are presented on slide 21. In the fourth quarter, the company's consolidated capital ratios remain strong, with common equity Tier 1 capital of 11.12% and a total capital ratio of 13.67%. As David mentioned, we repurchased about 201,000 shares of our common stock during the quarter for an aggregate price of $14 million. That concludes my comments. I will turn it over to Dan to discuss the loan portfolio.