Independent Bank Group, Inc

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 5 of the text in the release or page 2 of the slide presentation for our Safe Harbor statement. All 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 several 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 am joined this morning by David Brooks, our Chairman and CEO, Dan Brooks, 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 thanks for joining the call today. For the second quarter, we announced suggested earnings of $1.27 per diluted share, as well as exceptional loan growth of 36% annualized for the quarter, excluding mortgage warehouse and the PPP. This record growth was driven by strong demand from our relationship borrowers across Texas and Colorado, as our markets continue to experience strong economic and demographic growth. Dan will provide some additional color on the geographic and product-type breakdown of the loan growth, while Michelle will touch on rates and sensitivity impacts. On the whole, though, this record growth was propelled by substantial investments we've made in attracting seasoned lenders to our bank over the past few years. These lenders have in turn built and developed strong teams of producers underneath them, At the same time, we've also greatly enhanced our infrastructure in both credit and lending support to ensure our producers have been able to pursue new lending opportunities while maintaining our longstanding credit culture that has guided us through previous downturns. Today, we have the strongest talent bench we have ever had in the history of our company, and this exceptional growth quarter is a direct result of that fact. During the quarter, we were also encouraged by the resilience of our core deposit base in the face of successive Fed hikes. Net interest income grew by 5.2% versus the prior quarter, while the NIM expanded by 29 basis points to 3.51%, aided by the granularity of our funding coupled with a rise in loan yields. In addition, The volatility in equity markets gave us the opportunity to repurchase over 1.6 million shares of our common stock during the quarter, consistent with our longstanding philosophy of returning excess capital to our shareholders. And 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 six shows selected financial data for the quarter. Second quarter adjusted net income totaled $53.3 million, or $1.27 per diluted share, an increase of $1.2 million over the linked quarter. Net interest income was $138 million for the quarter, which increased $6.9 million from the linked quarter. This increase was primarily due to the significant loan growth during the quarter, which saw the redeployment of much of our excess liquidity sooner than anticipated. The NIM excluding purchase loan accretion was 3.45%, up 32 basis points from the linked quarter. This increase was driven by deployment of liquidity from significant loan growth during the quarter and slightly offset by a rise in deposit costs. While our balance sheet is still somewhat asset sensitive, this deployment of cash to loans has reduced asset sensitivity as compared to previous quarters. Total non-interest income was 13.9 million for the second quarter, an increase of $1 million versus the linked quarter. The change was due to first quarter having included a $1.5 million loss on sale of loan offset by a $536,000 decrease in mortgage banking revenue in Q2. Mortgage production and mortgage warehouse revenues continue to be adversely impacted by lower volumes due to the rising rate environment. Non-interest expense totaled $85.9 million for the second quarter, The increase of $3.5 million versus the linked quarter was mostly driven by an increase in salaries and benefits expense, which includes $1.1 million of termination expenses for the departure of an executive officer, as well as elevated health insurance and recruitment expense. Slide 19 shows our deposit mix and cost. Deposits total $15.1 billion at quarter end, which is a slight increase over the linked quarter. The chart on slide 20 illustrates the change by vertical and shows the stability of our core deposit accounts with the year-to-date decrease coming from brokered and specialty treasury deposits as well as seasonality in public funds. Capital ratios are presented on slide 22. The company's consolidated capital ratios remain within our target levels with a common equity Tier 1 capital ratio of 9.81% and a total capital ratio of 12.24%. tangible common equity with 7.63% at quarter end. These ratios are down from March 31st due to the execution of our stock buyback plan acquiring $115 million during the second quarter. That concludes my comments. I will turn it over to Dan to discuss the loan portfolio.