Independent Bank Group, Inc

To our enhanced liability sensitivity, which will be reflected in our IRR and one-year gap disclosures, we also expect to continue repricing our fixed-rate loan portfolio upward. Our modeling indicates steadily expanding earning asset yields over the course of the year in both flat and down-rate scenarios. We anticipate that these factors acting in concert will allow us to grow NIM and NII from quarter to quarter throughout 2024 and beyond. Total borrowings were just $621.8 million at December 31st, a slight increase from the linked quarter. Still, borrowings remain at a low level relative to earlier in 2023. Additionally, we may explore utilizing BTFP during the first quarter to replace higher cost FHLB advances as one year OIS has evolved favorably to FHLB rates. The substantial contingent funding capacity available to us and low level of borrowing utilization strengthens our balance sheet against any subsequent shocks and positions us well to capitalize on sustained growth in earning asset yields. We reported a provision of $3.5 million for the fourth quarter, which supported the net growth we experienced during the quarter despite an improvement in the MEVs in the CECL model. Going forward, we expect provision that represents about 1% of loan growth. This is, of course, dependent on all else being held equal in the CECL model, which could, of course, be impacted by further changes to the macroeconomic forecast or specific reserves. Adjusted non-interest income was $12.4 million for the quarter, down slightly from adjusted non-interest income of $13.4 million for the linked quarter. Adjusted non-interest expense totaled $83.8 million for the quarter, up from $81.3 million in the linked quarter. Going forward, I expect non-interest expense to be between $85 and $86 million per quarter. These are all the comments I have today. So with that, I'll turn the call over to Dan.

Thanks, Paul. Core Loan Software Investment. excluding mortgage warehouse loans increased by 383.6 million or 11 percent annualized in the fourth quarter. For full year 2023 loans grew by 569.9 million or 4.2 percent. Growth for the fourth quarter and for the full quarter was supported by demand from our core customers across our markets in Texas and Colorado. Average mortgage warehouse purchase loans were $408.4 million for the quarter, down 4.1% from the third quarter averages. Overall, we saw relative stability in these balances on a month-to-month basis, and we anticipate these balances to generally remain stable moving forward. Credit quality metrics continue to remain strong during the fourth quarter. Non-performing assets were down one basis point to 0.32% of total assets at quarter end. and the bank again at just a single basis point of annualized charge-offs for the quarter. For the full year 2023, net charge-offs also totaled just one basis point of average loans. We were successful in moving a property held in ORE out of the bank during the quarter, which resulted in a loss on sale of $1.8 million. We also took a $3 million write-off related to the one repossessed property remaining in ORE as we position that property for an eventual sale. This is consistent with our overall philosophy of disposing of ORE in an expedited manner. Overall asset quality trends are very positive, and while we are always vigilant against emerging risks, we currently do not see any areas of concern across the loan portfolio. We are particularly encouraged that classified assets fell by 34% from $191.1 million at September 30 to $126 million at December 31st, due both to payoffs and upgrades. Total classified loans plus ORE bank capital was just 6.2% at year end, indicative of the overall health of the portfolio, even in a higher rate environment. These are all the comments I have related to the loan portfolio this morning. So with that, I'll turn it back over to David.

Thanks, Kent. While 2023 was a difficult year for our company, and our industry, we're happy to be through it and we remain very encouraged heading into 2024. We expect earning asset yields to continue to march upward while short duration funding cost pressures have already begun to abate as the forward curve points to meaningful rate cuts on the horizon. As Paul noted, we have already been able to reprice some of our marginal funding down in the first quarter and we expect to see NIM expansion and NII growth in the first quarter. In addition, we will maintain our discipline on the expense front, reallocating expenses to only the most strategic investments in our franchise. And to that end, we are excited to announce that we are opening our first full-service branch in San Antonio in the first quarter. This will allow our talented team already operating there to better serve our customers with a full spate of deposit products. Our company is fortunate to be supported by the growing Texas and Colorado economies, both of which are experiencing sustained inflows of labor and capital that insulate them from broader macroeconomic volatility. We're able to capitalize on this position of strength because across four of the most dynamic metropolitan markets in the country because of the incredible teams that we have across our footprint. I'm perennially thankful to our employees, all of whom are committed to serving our customers and communities by working together to provide outstanding service and fostering meaningful, lasting relationships. Thank you for taking the time to join us today. We'll now open the line to questions. Operator?