Independent Bank Group, Inc

and the tangible common equity ratio expanding by seven basis points to 7.62%. Consistent with our philosophy of providing consistent returns to our shareholders, our board of directors declared quarterly dividend of 38 cents per share payable to the holders of our common stock on May 16th. Lastly, and perhaps most importantly, I'm excited to announce that we opened our first full-service branch in San Antonio, Texas, market on March the 6th. Entering this market has been a key focus of our strategic plan and we opportunistically recruited a very highly thought of and talented team to serve as a beachhead there for our franchise. This first full service location will allow us to capitalize on a strong deposit and loan pipeline that we've already built in the market. And with that overview, I'll turn the call over to Paul to discuss some answers.

Thanks, David, and good morning, everyone. Net income for the quarter was $24.2 million, or $0.58 per diluted share. Adjusted net income for the quarter was $26.0 million, or $0.63 per diluted share, which primarily excludes the impact of the $2.1 million supplemental FDIC special assessment as well as a $345,000 Oreo impairment related to a closed branch property that was disposed of in the first quarter. As David mentioned, the NII and NIM inflection was delayed due to the abrupt reversal in rate markets experienced in February and March, as well as greater than anticipated non-interest bearing deposit attrition experienced in late January and early February. While the NIM compressed by seven basis points to 2.42% for the first quarter, our spot NIM in March increased by one basis point from February, and non-interest bearing balances have stabilized on an average basis. Average non-interest-bearing balances month-to-date in April are $3.41 billion, an increase from the March average of $3.35 billion. Currently, our modeling indicates that if these trends remain stable, we should see the expected inflection of both NIM and NII in the second quarter. Furthermore, NII was impacted in the quarter by lower average loan balances, and therefore NII should be bolstered by any growth in the average loan balance going forward. We continue to maintain a significant liability sensitivity that will benefit our income statement in the event of rate cuts, but that should also stabilize our interest-bearing deposit costs as the Fed holds rates constant. During the quarter, we further bolstered our liquidity position and reduced borrowings to the lowest level in over a year. Notably, we paid our FHLB liabilities down to zero at quarter end, and we were able to reduce broker deposits by 97 million during the quarter as well. Our deposit pipelines remain robust, and net growth in our core branch deposits will allow us to further optimize and manage our funding costs as we remain at the terminal rate. During the quarter, we recognized a $3.2 million release in our CECL reserve, which was driven partly by a reduction in the size of our loan portfolio, a further decline in classified loans, as well as an improvement in macroeconomic factors in the Moody's forecast. Adjusted non-interest income was $12.8 million in the first quarter, an increase from $12.4 million in the linked quarter. The increase was primarily driven by increases in mortgage banking revenue due to stronger mortgage production in the first quarter. Adjusted non-interest expense was 86 million for the first quarter, an increase from 83.8 million in the linked quarter that was primarily driven by anticipated additions to salary and benefits expense due to annual compensation adjustments and merit awards. Going forward, we expect non-interest expense to remain around 86 million per quarter for the remainder of the year. As David mentioned, Our consolidated risk-weighted capital ratios improved over the length quarter, with the common equity Tier 1 capital ratio improving two basis points to 9.60%, the Tier 1 capital ratio improving one basis point to 9.94%, and the total capital ratio improving 11 basis points to 11.68%. Additionally, our tangible common equity ratio improved by seven basis points to 7.62%. These are all the comments I have today. So with that, I'll turn the call over to Dan.

Thanks, Paul. Loans held for investment were $14.1 billion as of March 31st, 2024, down $101.3 million from the linked quarter. Growth was seasonally slow during the first quarter and payoffs rose to above average levels compared to recent quarters. Pipelines and fundings indicate that net loan production will pick up in the second quarter. As David mentioned, we had gross loan production totaling $640 million in new commitments during the first quarter. Average mortgage warehouse purchase loans were $455.7 million for the quarter compared to $408.4 million for the fourth quarter of 2023. Mortgage warehouse was supported during the quarter by higher borrower mortgage production driven by lower rates early in the quarter as well as recent exits and curtailment of the mortgage warehouse business by some of our competitors. While mortgage rates have begun to climb back up again alongside the broader rate markets, we do expect to be able to continue to maintain these levels of average balances going forward. As David mentioned, asset quality metrics continue to remain very strong. Net charge-offs were 0% annualized for the first quarter compared to 0.01% annualized in the linked quarter and 0.04% annualized in the first quarter of 2023. In addition, non-performing assets remained low at 0.34% of total assets. We observed a further decline in classified assets during the quarter. with classified loans representing just 5.18% of bank capital as of March 31, 2024. These are the lowest levels of classified loans to bank capital that we've experienced in over 15 years. We have managed our book with the same approach for the past 36 years with an eye toward conservatism and underwriting, and I focus on being nimble and proactive when risks emerge. We continue to be pleased with the performance of the portfolio, but as always, we remain both vigilant in our internal stress testing and watchful for emerging risks that may arise. 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, Dan. We remain very encouraged by the strength and resilience of our markets across Texas and Colorado, and we've been pleased to note growing demand for high-quality business from our core customers. Looking ahead, we will remain strategically focused on the discipline management of our expense base, optimization of our funding stack, and the continued pursuit of through cycle performance and healthy growth. We expect loan growth to remain slow with pipelines indicating that net growth in loan balances should gradually accelerate over the coming quarter. Notably, we have made strategic investments in CNI and SBA lenders that we expect to begin yielding new production in the second quarter, and we remain encouraged by our deposit production pipelines across all four of the metropolitan areas. Our entry into the San Antonio market should additionally help spur production for both loans and deposits. We are fortunate to be in dynamic and growing markets with strong fundamentals. The demographic and macroeconomic tailwinds in Texas and Colorado continue to support our goal of running a high-performance, purpose-driven company dedicated to serving our customers and communities. I remain tremendously grateful to our teams who are working tirelessly to deepen existing relationships and win new business across our footprint every day. Thank you for taking the time to join us today. We'll now open the line to questions. Operator.