LegacyTexas Financial Group, Inc. Reports Third Quarter 2019 Earnings
PLANO, Texas, Oct. 23, 2019 /PRNewswire/ -- LegacyTexas Financial Group, Inc. (Nasdaq: LTXB) (the "Company"), the holding company for LegacyTexas Bank (the "Bank"), today announced net income of $42.4 million for the third quarter of 2019, an increase of $15.4 million from the second quarter of 2019 and a decrease of $397,000 from the third quarter of 2018. Core (non-GAAP) net income totaled $42.7 million for the third quarter of 2019, up $13.8 million from the second quarter of 2019 and down $518,000 from the third quarter of 2018.*
On June 17, 2019, the Company and Prosperity Bancshares, Inc.® ("Prosperity") jointly announced the signing of a definitive merger agreement pursuant to which the Company will merge with Prosperity. Under the terms of the merger agreement, stockholders of the Company will receive 0.5280 shares of Prosperity common stock and $6.28 cash for each share of Company common stock. The merger is expected to be effective as of November 1, 2019, subject to the approval of the shareholders of Prosperity and the stockholders of the Company and the satisfaction or waiver of the other closing conditions described in the merger agreement. For additional information regarding the Company's proposed merger with Prosperity, see the Company's Current Reports filed on Form 8-K with the SEC on June 17, 2019 and October 9, 2019 and the Company's and Prosperity's joint proxy statement/prospectus filed with the SEC by the Company and Prosperity on September 17, 2019.
Third Quarter 2019 Performance Highlights
- Assets of $10.46 billion generated basic earnings per share for the third quarter of 2019 of $0.89 on a GAAP basis and $0.90 on a core (non-GAAP) basis.*
- Gross loans held for investment at September 30, 2019, excluding Warehouse Purchase Program loans, grew $44.6 million, or 0.6%, from June 30, 2019, which includes linked-quarter increases in consumer real estate, commercial and industrial and construction and land loans.
- Warehouse Purchase Program loans at September 30, 2019 grew $411.4 million, or 26.7%, from June 30, 2019.
- Return on average assets on an annualized basis improved to 1.72% for the third quarter of 2019, compared to 1.13% for the second quarter of 2019, while core (non-GAAP) return on average assets for the third quarter of 2019 was 1.73%, compared to 1.21% for the second quarter of 2019.*
- GAAP efficiency ratio improved to 44.72% for the third quarter of 2019, compared to 48.60% for the second quarter of 2019, while core (non-GAAP) efficiency ratio improved to 44.40% for the third quarter of 2019, compared to 46.19% for the second quarter of 2019.*
*See the section labeled "Supplemental Information- Non-GAAP Financial Measures" at the end of this document.
Financial Highlights |
|||||||||||
At or For the Quarters Ended |
|||||||||||
(unaudited) |
September 30, 2019 |
June 30, 2019 |
September 30, 2018 |
||||||||
(Dollars in thousands, except per share amounts) |
|||||||||||
Net interest income |
$ |
85,341 |
$ |
85,554 |
$ |
85,667 |
|||||
Provision for credit losses |
1,200 |
16,100 |
2,656 |
||||||||
Non-interest income |
13,349 |
12,232 |
13,227 |
||||||||
Non-interest expense |
44,133 |
47,526 |
42,192 |
||||||||
Income tax expense |
10,933 |
7,177 |
11,225 |
||||||||
Net income |
$ |
42,424 |
$ |
26,983 |
$ |
42,821 |
|||||
Basic earnings per common share |
$ |
0.89 |
$ |
0.57 |
$ |
0.91 |
|||||
Basic core (non-GAAP) earnings per common share1 |
$ |
0.90 |
$ |
0.61 |
$ |
0.92 |
|||||
Weighted average common shares outstanding - basic |
47,607,076 |
47,383,314 |
47,105,655 |
||||||||
Estimated Tier 1 common equity risk-based capital ratio2 |
10.48 |
% |
10.48 |
% |
10.46 |
% |
|||||
Total equity to total assets |
11.35 |
% |
11.50 |
% |
11.45 |
% |
|||||
Tangible common equity to tangible assets - Non-GAAP1 |
9.81 |
% |
9.88 |
% |
9.67 |
% |
|||||
1 |
See the section labeled "Supplemental Information - Non-GAAP Financial Measures" at the end of this document. |
2 |
Calculated at the Company level, which is subject to the capital adequacy requirements of the Federal Reserve. |
Basic earnings per share for the quarter ended September 30, 2019 was $0.89, an increase of $0.32 from the second quarter of 2019 and a decrease of $0.02 from the third quarter of 2018. Basic core (non-GAAP) earnings per share for the third quarter of 2019 was $0.90, an increase of $0.29 from the second quarter of 2019 and a decrease of $0.02 from the third quarter of 2018.
Net Interest Income and Net Interest Margin |
|||||||||||
For the Quarters Ended |
|||||||||||
(unaudited) |
September 30, 2019 |
June 30, 2019 |
September 30, 2018 |
||||||||
Interest income: |
(Dollars in thousands) |
||||||||||
Loans held for investment, excluding Warehouse Purchase Program loans |
$ |
92,280 |
$ |
92,903 |
$ |
89,034 |
|||||
Warehouse Purchase Program loans |
17,025 |
14,927 |
12,938 |
||||||||
Loans held for sale |
475 |
324 |
295 |
||||||||
Securities |
4,326 |
4,553 |
4,512 |
||||||||
Interest-earning deposit accounts |
1,212 |
1,370 |
1,368 |
||||||||
Total interest income |
$ |
115,318 |
$ |
114,077 |
$ |
108,147 |
|||||
Net interest income |
$ |
85,341 |
$ |
85,554 |
$ |
85,667 |
|||||
Net interest margin |
3.60 |
% |
3.77 |
% |
3.90 |
% |
|||||
Selected average balances: |
|||||||||||
Total earning assets |
$ |
9,414,989 |
$ |
9,091,192 |
$ |
8,736,076 |
|||||
Total loans held for investment |
8,480,816 |
8,158,810 |
7,758,802 |
||||||||
Total securities |
659,152 |
668,948 |
678,483 |
||||||||
Total deposits |
6,898,654 |
7,134,996 |
6,851,449 |
||||||||
Total borrowings |
1,622,283 |
1,101,559 |
1,154,079 |
||||||||
Total non-interest-bearing demand deposits |
1,742,265 |
1,812,042 |
1,752,095 |
||||||||
Total interest-bearing liabilities |
6,778,673 |
6,424,513 |
6,253,433 |
||||||||
Net interest income for the quarter ended September 30, 2019 was $85.3 million, a $213,000, or 0.2%, decrease from the second quarter of 2019 and a $326,000, or 0.4%, decrease from the third quarter of 2018. The $213,000 decrease from the second quarter of 2019 was primarily driven by increased borrowing volume compared to the linked quarter, as well as lower yields earned on the commercial real estate and commercial and industrial loan portfolios. A $520.7 million increase in the average balance of borrowings from the second quarter of 2019, partially offset by a 36 basis point decrease in the average rate paid on borrowed funds, resulted in a $2.5 million increase in interest expense. A $27.8 million increase in the average balance of the commercial real estate portfolio from the second quarter of 2019 was offset by a 15 basis point decrease in the average yield, which resulted in a $371,000 decrease in interest income. The average balance of commercial and industrial loans decreased by $10.4 million from the second quarter of 2019, while the average yield declined by 20 basis points, resulting in an $879,000 decrease in interest income.
These declines in interest income on the commercial real estate and commercial and industrial loan portfolios were partially offset by increased volume in Warehouse Purchase Program and consumer real estate loans compared to the linked quarter. Interest income earned on Warehouse Purchase Program loans increased by $2.1 million from the second quarter of 2019, as the average balance increased by $255.2 million, which was partially offset by a 30 basis point decrease in the average yield earned compared to the second quarter of 2019. Interest income earned on the consumer real estate portfolio increased by $582,000, driven by a $50.8 million linked-quarter increase in the average balance.
The $326,000 decrease in net interest income compared to the third quarter of 2018 was primarily due to higher rates paid on time and savings and money market deposits, which increased by 60 basis points and 28 basis points, respectively, compared to the same period last year. Additionally, the average balance of borrowings increased by $468.2 million from the third quarter of 2018, resulting in a $3.1 million increase in interest expense.
This increase in interest expense compared to the third quarter of 2018 was partially offset by increased volume in Warehouse Purchase Program, consumer real estate and commercial real estate loans compared to the same period last year. The average balance of Warehouse Purchase Program loans increased by $410.6 million from the third quarter of 2018, while the average yield earned on this portfolio decreased by 20 basis points, resulting in a $4.1 million increase in interest income compared to the third quarter of 2018. The average balance of consumer real estate loans increased by $190.3 million from the third quarter of 2018, while the average yield earned on this portfolio increased by nine basis points, which led to a $2.6 million increase in interest income. A $130.1 million increase in the average balance of commercial real estate loans compared to the third quarter of 2018 was partially offset by a nine basis point decrease in the average yield, which resulted in a $1.0 million increase in interest income. The average balance of commercial and industrial loans decreased by $12.9 million from the third quarter of 2018, while the average yield earned on this portfolio decreased by 17 basis points from the same period, resulting in a $1.1 million decrease in interest income.
The net interest margin for the third quarter of 2019 was 3.60%, a 17 basis point decrease from the second quarter of 2019 and a 30 basis point decrease from the third quarter of 2018. The average yield on earning assets for the third quarter of 2019 was 4.87%, a 16 basis point decrease from the second quarter of 2019 and a five basis point decrease from the third quarter of 2018. The cost of deposits for the third quarter of 2019 was 1.12%, down three basis points from the linked quarter and up 25 basis points from the third quarter of 2018.
Non-interest Income
Non-interest income for the third quarter of 2019 was $13.3 million, a $1.1 million, or 9.1%, increase from the second quarter of 2019 and a $122,000, or 0.9%, increase from the third quarter of 2018. Other non-interest income for the second quarter of 2019 included a $1.2 million net decrease in the value of investments in community development-oriented private equity funds used for Community Reinvestment Act purposes (the "CRA Funds"), compared to a $181,000 net increase in the CRA Funds for the third quarter of 2019. Service charges and other fees decreased by $516,000 compared to the second quarter of 2019, primarily resulting from lower title company income and lower commercial loan fee income (consisting of syndication, arrangement, non-usage and pre-payment fees), partially offset by increased Warehouse Purchase Program income and insufficient funds fees. Net gains on the sale of mortgage loans held for sale during the third quarter of 2019 increased by $172,000 compared to the linked quarter, which included gains recognized on $97.3 million of consumer real estate loans that were sold or committed for sale, fair value changes on mortgage derivatives and mortgage fees collected during the third quarter of 2019, compared to $74.8 million for the second quarter of 2019.
The $122,000 increase in non-interest income from the third quarter of 2018 was primarily due to a $1.5 million increase in net gains on the sale of mortgage loans held for sale, related to $97.3 million of consumer real estate loans that were sold or committed for sale, fair value changes on mortgage derivatives and mortgage fees collected during the 2019 period, compared to $38.7 million for the 2018 period. Service charges and other fees increased by $740,000 from the third quarter of 2018, which was driven by higher title company income, debit card interchange income, Warehouse Purchase Program income and insufficient funds fees, partially offset by lower commercial loan fee income (consisting of syndication, arrangement, non-usage and pre-payment fees). Other non-interest income for the third quarter of 2019 included a $181,000 net increase in the CRA Funds, up from a $1.1 million net decrease in the CRA Funds for the third quarter of 2018.
Non-interest Expenses
Non-interest expense for the third quarter of 2019 was $44.1 million, down $3.4 million, or 7.1%, from the second quarter of 2019 and up $1.9 million, or 4.6%, from the third quarter of 2018. The third quarter of 2019 included $318,000 in merger costs compared to $2.4 million in the second quarter of 2019, related to the proposed merger with Prosperity, which was announced on June 17, 2019. Regulatory assessments expense for the third quarter of 2019 decreased by $712,000 from the second quarter of 2019, due to the application of an FDIC assessment credit. Outside professional services expense for the third quarter of 2019 decreased by $280,000 from the second quarter of 2019, primarily due to lower legal expenses, while other non-interest expense decreased by $288,000 from the linked quarter, primarily due to lower lending and recruiting expenses. These linked-quarter decreases were partially offset by a $218,000 increase in salaries and employee benefits expense from the second quarter of 2019, which was driven by higher healthcare claims in the third quarter of 2019.
The $1.9 million increase in non-interest expense from the third quarter of 2018 was primarily due to a $1.8 million increase in salaries and employee benefits expense, which was primarily related to higher mortgage commissions paid in the 2019 period attributable to increased mortgage loan production, as well as higher healthcare claims and 401K matching expenses. Additionally, merit increases granted in the 2019 period also contributed to the increased salary expense compared to the third quarter of 2018. The third quarter of 2019 included $318,000 in merger costs with no comparable charges in the third quarter of 2018, related to the above-described proposed merger with Prosperity. Data processing expense increased by $303,000 from the third quarter of 2018 due to system upgrades and outsourcing certain segments of its data processing. These increases in non-interest expense compared to the 2018 period were partially offset by a $631,000 decrease in regulatory assessments expense and a $314,000 decrease in other non-interest expense, primarily related to lower debit card fraud compared to the third quarter of 2018.
Financial Condition - Loans
Gross loans held for investment at September 30, 2019, excluding Warehouse Purchase Program loans, grew $44.6 million from June 30, 2019, which included growth in all loan portfolios, with the exception of commercial real estate, which declined by $27.0 million from the linked quarter. At September 30, 2019, consumer real estate loans increased by $56.5 million from June 30, 2019, while commercial and industrial and construction and land loans increased by $7.4 million and $7.0 million, respectively, for the same period.
Compared to September 30, 2018, gross loans held for investment at September 30, 2019, excluding Warehouse Purchase Program loans, grew $360.6 million, which included growth in all loan portfolios, with the exception of commercial and industrial, which declined by $1.2 million. Consumer real estate and commercial real estate loans increased by $198.9 million and $141.2 million, respectively, at September 30, 2019, compared to September 30, 2018. Additionally, construction and land and other consumer loans increased by $17.2 million and $4.4 million, respectively, compared to September 30, 2018.
At September 30, 2019, Warehouse Purchase Program loans increased by $411.4 million compared to June 30, 2019 and by $899.6 million compared to September 30, 2018.
Reserve-based energy loans, which are secured by deeds of trust on properties containing proven oil and natural gas reserves and are included in the Company's commercial and industrial loan portfolio, totaled $512.0 million at September 30, 2019, down $6.6 million from $518.6 million at June 30, 2019 and down $35.4 million from $547.4 million at September 30, 2018. In addition to reserve-based energy loans, the Company has loans categorized as "Midstream and Other," which are typically related to the transmission of oil and natural gas and would only be indirectly impacted by declining commodity prices. At September 30, 2019, "Midstream and Other" loans had a total outstanding balance of $23.0 million, up $2.4 million from $20.6 million at June 30, 2019 and down $11.8 million from $34.8 million at September 30, 2018.
Financial Condition - Deposits
Total deposits at September 30, 2019 decreased by $509.9 million from June 30, 2019, which included declines of $213.9 million and $202.6 million in time and savings and money market deposits, respectively, while non-interest-bearing demand deposits decreased by $78.1 million compared to the linked quarter.
Compared to September 30, 2018, total deposits decreased by $233.8 million, which included declines of $216.0 million and $48.1 million in savings and money market and time deposits, respectively, which was partially offset by a $59.3 million increase in interest-bearing demand deposits compared to the same period last year.
Credit Quality |
|||||||||||
At or For the Quarters Ended |
|||||||||||
(unaudited) |
September 30, |
June 30, |
September 30, |
||||||||
(Dollars in thousands) |
|||||||||||
Net charge-offs (recoveries) |
$ |
26,656 |
$ |
1,434 |
$ |
791 |
|||||
Net charge-offs (recoveries)/Average loans held for investment, excluding Warehouse Purchase Program loans |
1.53 |
% |
0.08 |
% |
0.05 |
% |
|||||
Net charge-offs (recoveries)/Average loans held for investment |
1.26 |
0.07 |
0.04 |
||||||||
Provision for credit losses |
$ |
1,200 |
$ |
16,100 |
$ |
2,656 |
|||||
Non-performing loans ("NPLs") |
35,188 |
62,056 |
17,584 |
||||||||
NPLs/Total loans held for investment, excluding Warehouse Purchase Program loans |
0.49 |
% |
0.88 |
% |
0.26 |
% |
|||||
NPLs/Total loans held for investment |
0.39 |
0.72 |
0.22 |
||||||||
Non-performing assets ("NPAs") |
$ |
40,841 |
$ |
62,640 |
$ |
18,282 |
|||||
NPAs to total assets |
0.39 |
% |
0.63 |
% |
0.20 |
% |
|||||
NPAs/Loans held for investment and foreclosed assets, excluding Warehouse Purchase Program loans |
0.57 |
0.88 |
0.27 |
||||||||
NPAs/Loans held for investment and foreclosed assets |
0.45 |
0.73 |
0.23 |
||||||||
Allowance for loan losses |
$ |
66,763 |
$ |
92,219 |
$ |
66,354 |
|||||
Allowance for loan losses/Total loans held for investment, excluding Warehouse Purchase Program loans |
0.94 |
% |
1.30 |
% |
0.98 |
% |
|||||
Allowance for loan losses/Total loans held for investment |
0.74 |
1.07 |
0.85 |
||||||||
Allowance for loan losses/Total loans held for investment, excluding acquired loans & Warehouse Purchase Program loans1 |
0.97 |
1.35 |
1.03 |
||||||||
Allowance for loan losses/NPLs |
189.73 |
148.61 |
377.35 |
||||||||
1 |
Excludes loans acquired in previous bank acquisitions, which were initially recorded at fair value. |
The Company recorded a provision for credit losses of $1.2 million for the quarter ended September 30, 2019, compared to $16.1 million for the quarter ended June 30, 2019 and $2.7 million for the quarter ended September 30, 2018. The decrease in provision expense on a linked-quarter basis was primarily due to increased specific reserves allocated to corporate healthcare finance and energy loans during the quarter ended June 30, 2019, with no similar reserve build occurring during the quarter ended September 30, 2019. Net charge-offs totaled $26.7 million for the three months ended September 30, 2019, compared to net charge-offs totaling $1.4 million for the three months ended June 30, 2019 and $791,000 for the three months ended September 30, 2018. The $26.7 million of net charge-offs for the quarter ended September 30, 2019 included charge-offs of the Company's one remaining corporate healthcare finance relationship ($15.3 million), an energy relationship ($8.7 million) and a commercial real estate loan ($2.1 million.)
The below table shows criticized (rated "special mention") and classified (rated "substandard" or "doubtful") loans at September 30, 2019, June 30, 2019 and September 30, 2018.
September 30, |
June 30, |
September 30, |
Linked-Quarter |
Year-over-Year |
|||||||||||||||
(Dollars in thousands) |
|||||||||||||||||||
Commercial real estate |
$ |
1,165 |
$ |
18,074 |
$ |
16,750 |
$ |
(16,909) |
$ |
(15,585) |
|||||||||
Commercial and industrial, excluding energy |
6,886 |
9,275 |
7,884 |
(2,389) |
(998) |
||||||||||||||
Energy |
44,500 |
44,644 |
51,983 |
(144) |
(7,483) |
||||||||||||||
Consumer |
1,021 |
2,711 |
1,313 |
(1,690) |
(292) |
||||||||||||||
Total criticized (all performing) |
$ |
53,572 |
$ |
74,704 |
$ |
77,930 |
$ |
(21,132) |
$ |
(24,358) |
|||||||||
Commercial real estate |
$ |
1,412 |
$ |
1,421 |
$ |
1,757 |
$ |
(9) |
$ |
(345) |
|||||||||
Commercial and industrial, excluding energy |
851 |
869 |
1,059 |
(18) |
(208) |
||||||||||||||
Energy |
59,480 |
70,775 |
40,156 |
(11,295) |
19,324 |
||||||||||||||
Consumer |
2,595 |
2,688 |
1,527 |
(93) |
1,068 |
||||||||||||||
Total classified (performing) |
64,338 |
75,753 |
44,499 |
(11,415) |
19,839 |
||||||||||||||
Commercial real estate |
31 |
7,293 |
3,739 |
(7,262) |
(3,708) |
||||||||||||||
Commercial and industrial, excluding energy |
11,999 |
28,471 |
5,861 |
(16,472) |
6,138 |
||||||||||||||
Energy |
15,312 |
19,896 |
1,317 |
(4,584) |
13,995 |
||||||||||||||
Construction and land |
228 |
228 |
— |
— |
228 |
||||||||||||||
Consumer |
7,618 |
6,168 |
6,667 |
1,450 |
951 |
||||||||||||||
Total classified (non-performing) |
35,188 |
62,056 |
17,584 |
(26,868) |
17,604 |
||||||||||||||
Total classified loans |
$ |
99,526 |
$ |
137,809 |
$ |
62,083 |
$ |
(38,283) |
$ |
37,443 |
|||||||||
About LegacyTexas Financial Group, Inc.
LegacyTexas Financial Group, Inc. is the holding company for LegacyTexas Bank, a commercially oriented community bank based in Plano, Texas. LegacyTexas Bank operates 42 banking offices in the Dallas/Fort Worth Metroplex and surrounding counties. For more information, please visit www.LegacyTexasFinancialGroup.com or www.LegacyTexas.com.
This document and other filings by LegacyTexas Financial Group, Inc. (the "Company") with the Securities and Exchange Commission (the "SEC"), as well as press releases or other public or stockholder communications released by the Company, may contain forward-looking statements, including, but not limited to, (i) statements regarding the financial condition, results of operations and business of the Company, (ii) statements about the Company's plans, objectives, expectations and intentions and other statements that are not historical facts and (iii) other statements identified by the words or phrases "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," "intends" or similar expressions that are intended to identify "forward-looking statements", within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current beliefs and expectations of the Company's management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company's control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change.
The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: the expected cost savings, synergies and other financial benefits from our proposed merger with Prosperity might not be realized within the expected time frames or at all and costs or difficulties relating to integration matters might be greater than expected; the requisite shareholder and regulatory approvals and other closing conditions for the proposed merger of the Company and Prosperity may be delayed or may not be obtained or the merger agreement may be terminated; business disruption may occur following or in connection with the proposed merger of the Company and Prosperity; the Company's businesses may experience disruptions due to transaction-related uncertainty or other factors making it more difficult to maintain relationships with employees, customers, other business partners or governmental entities; the diversion of managements' attention from ongoing business operations and opportunities as a result of the proposed merger or otherwise; changes in economic conditions; legislative changes; changes in policies by regulatory agencies; fluctuations in interest rates; the risks of lending and investing activities, including changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses; the Company's ability to access cost-effective funding; fluctuations in real estate values and both residential and commercial real estate market conditions; demand for loans and deposits in the Company's market area; fluctuations in the price of oil, natural gas and other commodities; competition; changes in management's business strategies; changes in the regulatory and tax environments in which the Company operates, including the impact of the "Tax Cuts and Jobs Act" (the "TCJA") on the Company's deferred tax asset, and the anticipated impact of the TCJA on the Company's future earnings; and other factors set forth in the Company's filings with the SEC.
The factors listed above could materially affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements.
The Company does not undertake - and specifically declines any obligation - to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. When considering forward-looking statements, keep in mind these risks and uncertainties. Undue reliance should not be placed on any forward-looking statement, which speaks only as of the date made. Refer to the Company's periodic and current reports filed with the SEC for specific risks that could cause actual results to be significantly different from those expressed or implied by any forward-looking statements.
Additional Information about the Merger and Where to Find It
In connection with the proposed merger of the Company into Prosperity, Prosperity has filed with the SEC a registration statement on Form S-4 to register the shares of Prosperity common stock to be issued to the stockholders of the Company. The registration statement includes a joint proxy statement/prospectus which has been sent to the stockholders of the Company and the shareholders of Prosperity seeking their approval of the proposed transaction.
WE URGE INVESTORS AND SECURITY HOLDERS TO READ THE REGISTRATION STATEMENT ON FORM S-4, THE JOINT PROXY STATEMENT/PROSPECTUS INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM S-4 AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT PROSPERITY, THE COMPANY AND THE PROPOSED TRANSACTION.
Investors and security holders may obtain free copies of these documents through the website maintained by the SEC at http://www.sec.gov. Documents filed with the SEC by Prosperity will be available free of charge by directing a request by telephone or mail to Prosperity Bancshares, Inc., Prosperity Bank Plaza, 4295 San Felipe, Houston, Texas 77027 Attn: Investor Relations, (281) 269-7199 and documents filed with the SEC by the Company will be available free of charge by directing a request by telephone or mail to LegacyTexas Financial Group, Inc., 5851 Legacy Circle, Suite 1200, Plano, Texas 75024, (972) 578-5000.
Participants in the Solicitation
Prosperity, the Company and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of Prosperity and stockholders of the Company in connection with the proposed transaction. Certain information regarding the interests of these participants and a description of their direct and indirect interests, by security holdings or otherwise, will be included in the joint proxy statement/prospectus regarding the proposed transaction when it becomes available. Additional information about Prosperity and its directors and executive officers may be found in the definitive proxy statement of Prosperity relating to its 2019 Annual Meeting of Shareholders filed with the SEC on March 14, 2019, and other documents filed by Prosperity with the SEC. Additional information about the Company and its directors and executive officers may be found in the definitive proxy statement of the Company relating to its 2019 Annual Meeting of Stockholders filed with the SEC on April 12, 2019, and other documents filed by the Company with the SEC. These documents can be obtained free of charge from the sources described above.
No Offer or Solicitation
This communication is for informational purposes only and is not intended to and does not constitute an offer to subscribe for, buy or sell, or the solicitation of an offer to subscribe for, buy or sell, or an invitation to subscribe for, buy or sell any securities or a solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in which such offer, invitation, sale or solicitation would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended, and otherwise in accordance with applicable law.
LegacyTexas Financial Group, Inc. Consolidated Balance Sheets (unaudited) |
|||||||||||||||||||
(Dollars in thousands) ASSETS |
September 30, |
June 30, |
March 31, |
December 31, |
September 30, |
||||||||||||||
Cash and due from financial institutions |
$ |
59,099 |
$ |
56,949 |
$ |
55,472 |
$ |
60,416 |
$ |
64,681 |
|||||||||
Short-term interest-bearing deposits in other financial institutions |
233,991 |
206,894 |
219,051 |
208,777 |
189,634 |
||||||||||||||
Total cash and cash equivalents |
293,090 |
263,843 |
274,523 |
269,193 |
254,315 |
||||||||||||||
Securities available for sale, at fair value |
428,551 |
459,749 |
479,426 |
471,746 |
455,454 |
||||||||||||||
Securities held to maturity |
116,022 |
127,836 |
135,276 |
146,046 |
145,148 |
||||||||||||||
Total securities |
544,573 |
587,585 |
614,702 |
617,792 |
600,602 |
||||||||||||||
Loans held for sale |
56,254 |
46,571 |
11,380 |
23,193 |
22,175 |
||||||||||||||
Loans held for investment: |
|||||||||||||||||||
Loans held for investment - Warehouse Purchase Program |
1,954,114 |
1,542,684 |
1,096,160 |
960,404 |
1,054,505 |
||||||||||||||
Loans held for investment |
7,124,676 |
7,080,075 |
6,944,731 |
6,790,723 |
6,764,052 |
||||||||||||||
Gross loans |
9,135,044 |
8,669,330 |
8,052,271 |
7,774,320 |
7,840,732 |
||||||||||||||
Less: allowance for loan losses and deferred fees on loans held for investment |
(53,142) |
(80,468) |
(66,712) |
(57,031) |
(56,499) |
||||||||||||||
Net loans |
9,081,902 |
8,588,862 |
7,985,559 |
7,717,289 |
7,784,233 |
||||||||||||||
FHLB stock and other restricted securities, at cost |
117,939 |
79,195 |
56,044 |
56,226 |
60,596 |
||||||||||||||
Bank-owned life insurance |
59,776 |
59,724 |
59,377 |
59,036 |
58,692 |
||||||||||||||
Premises and equipment, net |
105,195 |
106,313 |
107,684 |
73,073 |
72,291 |
||||||||||||||
Goodwill |
178,559 |
178,559 |
178,559 |
178,559 |
178,559 |
||||||||||||||
Other assets |
79,040 |
71,853 |
69,624 |
79,974 |
73,504 |
||||||||||||||
Total assets |
$ |
10,460,074 |
$ |
9,935,934 |
$ |
9,346,072 |
$ |
9,051,142 |
$ |
9,082,792 |
|||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY |
|||||||||||||||||||
Non-interest-bearing demand |
$ |
1,769,117 |
$ |
1,847,229 |
$ |
1,752,694 |
$ |
1,773,762 |
$ |
1,798,109 |
|||||||||
Interest-bearing demand |
839,789 |
855,026 |
884,494 |
826,755 |
780,474 |
||||||||||||||
Savings and money market |
2,346,374 |
2,548,966 |
2,492,226 |
2,455,787 |
2,562,399 |
||||||||||||||
Time |
1,590,630 |
1,804,569 |
1,948,011 |
1,785,411 |
1,638,776 |
||||||||||||||
Total deposits |
6,545,910 |
7,055,790 |
7,077,425 |
6,841,715 |
6,779,758 |
||||||||||||||
FHLB advances |
2,329,451 |
1,384,765 |
820,084 |
825,409 |
932,317 |
||||||||||||||
Repurchase agreements |
50,976 |
52,414 |
37,277 |
50,340 |
40,408 |
||||||||||||||
Subordinated debt |
135,380 |
135,257 |
135,135 |
135,012 |
134,890 |
||||||||||||||
Accrued expenses and other liabilities |
210,907 |
165,063 |
155,064 |
104,299 |
155,820 |
||||||||||||||
Total liabilities |
9,272,624 |
8,793,289 |
8,224,985 |
7,956,775 |
8,043,193 |
||||||||||||||
Common stock |
493 |
488 |
487 |
485 |
485 |
||||||||||||||
Additional paid-in capital |
642,515 |
628,730 |
625,405 |
619,983 |
617,270 |
||||||||||||||
Retained earnings |
553,891 |
523,693 |
508,887 |
491,948 |
444,848 |
||||||||||||||
Accumulated other comprehensive income (loss), net |
1,545 |
860 |
(2,433) |
(6,658) |
(11,481) |
||||||||||||||
Unearned Employee Stock Ownership Plan (ESOP) shares |
(10,994) |
(11,126) |
(11,259) |
(11,391) |
(11,523) |
||||||||||||||
Total shareholders' equity |
1,187,450 |
1,142,645 |
1,121,087 |
1,094,367 |
1,039,599 |
||||||||||||||
Total liabilities and shareholders' equity |
$ |
10,460,074 |
$ |
9,935,934 |
$ |
9,346,072 |
$ |
9,051,142 |
$ |
9,082,792 |
|||||||||
LegacyTexas Financial Group, Inc. Consolidated Quarterly Statements of Income (unaudited) |
|||||||||||||||||||||||||||||||
For the Quarters Ended |
Third Quarter 2019 Compared to: |
||||||||||||||||||||||||||||||
Sep 30, |
Jun 30, |
Mar 31, |
Dec 31, |
Sep 30, |
Second Quarter |
Third Quarter |
|||||||||||||||||||||||||
Interest and dividend income |
(Dollars in thousands) |
||||||||||||||||||||||||||||||
Loans, including fees |
$ |
109,780 |
$ |
108,154 |
$ |
100,301 |
$ |
101,031 |
$ |
102,267 |
$ |
1,626 |
1.5 |
% |
$ |
7,513 |
7.3 |
% |
|||||||||||||
Taxable securities |
3,093 |
3,460 |
3,602 |
3,463 |
3,254 |
(367) |
(10.6) |
(161) |
(4.9) |
||||||||||||||||||||||
Nontaxable securities |
367 |
410 |
343 |
595 |
614 |
(43) |
(10.5) |
(247) |
(40.2) |
||||||||||||||||||||||
Interest-bearing deposits in other financial institutions |
1,212 |
1,370 |
1,277 |
1,507 |
1,368 |
(158) |
(11.5) |
(156) |
(11.4) |
||||||||||||||||||||||
FHLB and Federal Reserve Bank stock and other |
866 |
683 |
581 |
582 |
644 |
183 |
26.8 |
222 |
34.5 |
||||||||||||||||||||||
115,318 |
114,077 |
106,104 |
107,178 |
108,147 |
1,241 |
1.1 |
7,171 |
6.6 |
|||||||||||||||||||||||
Interest expense |
|||||||||||||||||||||||||||||||
Deposits |
19,425 |
20,444 |
18,215 |
16,634 |
15,077 |
(1,019) |
(5.0) |
4,348 |
28.8 |
||||||||||||||||||||||
FHLB advances |
8,273 |
5,794 |
4,456 |
4,000 |
5,198 |
2,479 |
42.8 |
3,075 |
59.2 |
||||||||||||||||||||||
Repurchase agreements and other borrowings |
2,279 |
2,285 |
2,269 |
2,245 |
2,205 |
(6) |
(0.3) |
74 |
3.4 |
||||||||||||||||||||||
29,977 |
28,523 |
24,940 |
22,879 |
22,480 |
1,454 |
5.1 |
7,497 |
33.3 |
|||||||||||||||||||||||
Net interest income |
85,341 |
85,554 |
81,164 |
84,299 |
85,667 |
(213) |
(0.2) |
(326) |
(0.4) |
||||||||||||||||||||||
Provision for credit losses |
1,200 |
16,100 |
9,800 |
— |
2,656 |
(14,900) |
(92.5) |
(1,456) |
(54.8) |
||||||||||||||||||||||
Net interest income after provision for credit losses |
84,141 |
69,454 |
71,364 |
84,299 |
83,011 |
14,687 |
21.1 |
1,130 |
1.4 |
||||||||||||||||||||||
Non-interest income |
|||||||||||||||||||||||||||||||
Service charges and other fees |
9,366 |
9,882 |
7,255 |
9,923 |
8,626 |
(516) |
(5.2) |
740 |
8.6 |
||||||||||||||||||||||
Net gain on sale of mortgage loans held for sale |
3,051 |
2,879 |
1,525 |
1,499 |
1,597 |
172 |
6.0 |
1,454 |
91.0 |
||||||||||||||||||||||
Bank-owned life insurance income |
456 |
489 |
482 |
482 |
482 |
(33) |
(6.7) |
(26) |
(5.4) |
||||||||||||||||||||||
Net gain (loss) on securities transactions |
— |
— |
6 |
— |
(10) |
— |
— |
10 |
(100.0) |
||||||||||||||||||||||
Gain (loss) on sale and disposition of assets |
65 |
18 |
(14) |
(56) |
977 |
47 |
261.1 |
(912) |
(93.3) |
||||||||||||||||||||||
Other |
411 |
(1,036) |
640 |
416 |
1,555 |
1,447 |
N/M |
(1,144) |
(73.6) |
||||||||||||||||||||||
13,349 |
12,232 |
9,894 |
12,264 |
13,227 |
1,117 |
9.1 |
122 |
0.9 |
|||||||||||||||||||||||
Non-interest expense |
(Dollars in thousands) |
||||||||||||||||||||||||||||||
Salaries and employee benefits |
26,804 |
26,586 |
26,871 |
23,728 |
25,053 |
218 |
0.8 |
1,751 |
7.0 |
||||||||||||||||||||||
Merger costs |
318 |
2,362 |
— |
— |
— |
(2,044) |
(86.5) |
318 |
100.0 |
||||||||||||||||||||||
Advertising |
740 |
982 |
903 |
1,301 |
824 |
(242) |
(24.6) |
(84) |
(10.2) |
||||||||||||||||||||||
Occupancy and equipment |
4,084 |
3,950 |
3,899 |
3,843 |
3,960 |
134 |
3.4 |
124 |
3.1 |
||||||||||||||||||||||
Outside professional services |
1,394 |
1,674 |
1,285 |
2,021 |
1,151 |
(280) |
(16.7) |
243 |
21.1 |
||||||||||||||||||||||
Regulatory assessments |
119 |
831 |
618 |
886 |
750 |
(712) |
(85.7) |
(631) |
(84.1) |
||||||||||||||||||||||
Data processing |
5,665 |
5,739 |
5,933 |
6,168 |
5,362 |
(74) |
(1.3) |
303 |
5.7 |
||||||||||||||||||||||
Office operations |
2,463 |
2,568 |
2,335 |
2,249 |
2,232 |
(105) |
(4.1) |
231 |
10.3 |
||||||||||||||||||||||
Other |
2,546 |
2,834 |
2,463 |
2,672 |
2,860 |
(288) |
(10.2) |
(314) |
(11.0) |
||||||||||||||||||||||
44,133 |
47,526 |
44,307 |
42,868 |
42,192 |
(3,393) |
(7.1) |
1,941 |
4.6 |
|||||||||||||||||||||||
Income before income tax expense (benefit) |
53,357 |
34,160 |
36,951 |
53,695 |
54,046 |
19,197 |
56.2 |
(689) |
(1.3) |
||||||||||||||||||||||
Income tax expense (benefit) |
10,933 |
7,177 |
7,871 |
(4,074) |
11,225 |
3,756 |
52.3 |
(292) |
(2.6) |
||||||||||||||||||||||
Net income |
$ |
42,424 |
$ |
26,983 |
$ |
29,080 |
$ |
57,769 |
$ |
42,821 |
$ |
15,441 |
57.2 |
% |
$ |
(397) |
(0.9) |
% |
|||||||||||||
N/M - Not meaningful |
LegacyTexas Financial Group, Inc. Selected Quarterly Financial Highlights (unaudited) |
|||||||||||
At or For the Quarters Ended |
|||||||||||
September 30, |
June 30, |
September 30, |
|||||||||
SHARE DATA: |
(Dollars in thousands, except per share amounts) |
||||||||||
Weighted average common shares outstanding - basic |
47,607,076 |
47,383,314 |
47,105,655 |
||||||||
Weighted average common shares outstanding - diluted |
48,149,900 |
47,923,391 |
47,755,441 |
||||||||
Shares outstanding at end of period |
49,255,006 |
48,833,238 |
48,491,169 |
||||||||
Income available to common shareholders1 |
$ |
42,206 |
$ |
26,837 |
$ |
42,672 |
|||||
Basic earnings per common share |
0.89 |
0.57 |
0.91 |
||||||||
Basic core (non-GAAP) earnings per common share2 |
0.90 |
0.61 |
0.92 |
||||||||
Diluted earnings per common share |
0.88 |
0.56 |
0.89 |
||||||||
Dividends declared per share |
0.25 |
0.25 |
0.16 |
||||||||
Total shareholders' equity |
1,187,450 |
1,142,645 |
1,039,599 |
||||||||
Common shareholders' equity per share (book value per share) |
24.11 |
23.40 |
21.44 |
||||||||
Tangible book value per share - Non-GAAP2 |
20.48 |
19.74 |
17.75 |
||||||||
Market value per share for the quarter: |
|||||||||||
High |
44.07 |
41.22 |
46.86 |
||||||||
Low |
38.85 |
36.50 |
38.53 |
||||||||
Close |
43.53 |
40.71 |
42.60 |
||||||||
KEY RATIOS: |
|||||||||||
Return on average common shareholders' equity |
14.63 |
% |
9.52 |
% |
16.76 |
% |
|||||
Core (non-GAAP) return on average common shareholders' equity2 |
14.72 |
10.18 |
16.90 |
||||||||
Return on average assets |
1.72 |
1.13 |
1.87 |
||||||||
Core (non-GAAP) return on average assets2 |
1.73 |
1.21 |
1.88 |
||||||||
Efficiency ratio (GAAP basis) |
44.72 |
48.60 |
42.66 |
||||||||
Core (non-GAAP) efficiency ratio2 |
44.40 |
46.19 |
42.46 |
||||||||
Estimated Tier 1 common equity risk-based capital ratio3 |
10.48 |
10.48 |
10.46 |
||||||||
Estimated total risk-based capital ratio3 |
12.58 |
12.97 |
12.88 |
||||||||
Estimated Tier 1 risk-based capital ratio3 |
10.60 |
10.62 |
10.60 |
||||||||
Estimated Tier 1 leverage ratio3 |
10.53 |
10.42 |
9.83 |
||||||||
Total equity to total assets |
11.35 |
11.50 |
11.45 |
||||||||
Tangible equity to tangible assets - Non-GAAP2 |
9.81 |
9.88 |
9.67 |
||||||||
Number of employees - full-time equivalent |
858 |
883 |
859 |
||||||||
1 |
Net of distributed and undistributed earnings to participating securities. |
2 |
See the section labeled "Supplemental Information - Non-GAAP Financial Measures" at the end of this document. |
3 |
Calculated at the Company level, which is subject to the capital adequacy requirements of the Federal Reserve. |
LegacyTexas Financial Group, Inc. Selected Loan Data (unaudited) |
|||||||||||||||||||
At or for the Quarter Ended |
|||||||||||||||||||
September 30, |
June 30, |
March 31, |
December 31, |
September 30, |
|||||||||||||||
Loans held for investment: |
(Dollars in thousands) |
||||||||||||||||||
Commercial real estate |
$ |
3,153,576 |
$ |
3,180,582 |
$ |
3,122,726 |
$ |
3,026,754 |
$ |
3,012,352 |
|||||||||
Warehouse Purchase Program |
1,954,114 |
1,542,684 |
1,096,160 |
960,404 |
1,054,505 |
||||||||||||||
Commercial and industrial |
2,110,335 |
2,102,917 |
2,070,715 |
2,057,791 |
2,111,510 |
||||||||||||||
Construction and land |
295,522 |
288,491 |
282,463 |
270,629 |
278,278 |
||||||||||||||
Consumer real estate |
1,516,958 |
1,460,417 |
1,423,095 |
1,390,378 |
1,318,038 |
||||||||||||||
Other consumer |
48,285 |
47,668 |
45,732 |
45,171 |
43,874 |
||||||||||||||
Gross loans held for investment |
$ |
9,078,790 |
$ |
8,622,759 |
$ |
8,040,891 |
$ |
7,751,127 |
$ |
7,818,557 |
|||||||||
Non-performing assets: |
|||||||||||||||||||
Commercial real estate |
$ |
31 |
$ |
7,293 |
$ |
6,623 |
$ |
159 |
$ |
3,739 |
|||||||||
Commercial and industrial |
27,311 |
48,367 |
49,261 |
16,710 |
7,178 |
||||||||||||||
Construction and land |
228 |
228 |
— |
— |
— |
||||||||||||||
Consumer real estate |
7,566 |
6,144 |
5,123 |
5,506 |
6,617 |
||||||||||||||
Other consumer |
52 |
24 |
21 |
46 |
50 |
||||||||||||||
Total non-performing loans |
35,188 |
62,056 |
61,028 |
22,421 |
17,584 |
||||||||||||||
Foreclosed assets |
5,653 |
584 |
782 |
1,333 |
698 |
||||||||||||||
Total non-performing assets |
$ |
40,841 |
$ |
62,640 |
$ |
61,810 |
$ |
23,754 |
$ |
18,282 |
|||||||||
Total non-performing assets to total assets |
0.39 |
% |
0.63 |
% |
0.66 |
% |
0.26 |
% |
0.20 |
% |
|||||||||
Total non-performing loans to total loans held for investment, excluding Warehouse Purchase Program loans |
0.49 |
% |
0.88 |
% |
0.88 |
% |
0.33 |
% |
0.26 |
% |
|||||||||
Total non-performing loans to total loans held for investment |
0.39 |
% |
0.72 |
% |
0.76 |
% |
0.29 |
% |
0.22 |
% |
|||||||||
Allowance for loan losses to non-performing loans |
189.73 |
% |
148.61 |
% |
127.04 |
% |
300.74 |
% |
377.35 |
% |
|||||||||
Allowance for loan losses to total loans held for investment, excluding Warehouse Purchase Program loans |
0.94 |
% |
1.30 |
% |
1.12 |
% |
0.99 |
% |
0.98 |
% |
|||||||||
Allowance for loan losses to total loans held for investment |
0.74 |
% |
1.07 |
% |
0.96 |
% |
0.87 |
% |
0.85 |
% |
|||||||||
Allowance for loan losses to total loans held for investment, excluding acquired loans and Warehouse Purchase Program loans 1 |
0.97 |
% |
1.35 |
% |
1.16 |
% |
1.04 |
% |
1.03 |
% |
|||||||||
Troubled debt restructured loans ("TDRs"): |
(Dollars in thousands) |
||||||||||||||||||
Performing TDRs: |
|||||||||||||||||||
Commercial real estate |
$ |
129 |
$ |
132 |
$ |
134 |
$ |
136 |
$ |
139 |
|||||||||
Consumer real estate |
688 |
704 |
722 |
788 |
786 |
||||||||||||||
Other consumer |
1 |
1 |
1 |
2 |
4 |
||||||||||||||
Total performing TDRs |
$ |
818 |
$ |
837 |
$ |
857 |
$ |
926 |
$ |
929 |
|||||||||
Non-performing TDRs:2 |
|||||||||||||||||||
Commercial real estate |
$ |
26 |
$ |
27 |
$ |
29 |
$ |
31 |
$ |
3,605 |
|||||||||
Commercial and industrial |
7,776 |
7,870 |
7,999 |
661 |
2,299 |
||||||||||||||
Consumer real estate |
1,015 |
1,037 |
447 |
467 |
495 |
||||||||||||||
Other consumer |
3 |
4 |
4 |
1 |
2 |
||||||||||||||
Total non-performing TDRs |
$ |
8,820 |
$ |
8,938 |
$ |
8,479 |
$ |
1,160 |
$ |
6,401 |
|||||||||
Allowance for loan losses: |
|||||||||||||||||||
Balance at beginning of period |
$ |
92,219 |
$ |
77,530 |
$ |
67,428 |
$ |
66,354 |
$ |
64,445 |
|||||||||
Provision expense for loans |
1,200 |
16,123 |
9,839 |
— |
2,700 |
||||||||||||||
Charge-offs |
(27,031) |
(1,624) |
(359) |
(2,590) |
(922) |
||||||||||||||
Recoveries |
375 |
190 |
622 |
3,664 |
131 |
||||||||||||||
Balance at end of period |
$ |
66,763 |
$ |
92,219 |
$ |
77,530 |
$ |
67,428 |
$ |
66,354 |
|||||||||
Net charge-offs (recoveries): |
|||||||||||||||||||
Commercial real estate |
$ |
2,082 |
$ |
— |
$ |
— |
$ |
— |
$ |
— |
|||||||||
Commercial and industrial |
24,315 |
1,236 |
(463) |
(1,355) |
537 |
||||||||||||||
Consumer real estate |
26 |
(4) |
3 |
37 |
47 |
||||||||||||||
Other consumer |
233 |
202 |
197 |
244 |
207 |
||||||||||||||
Total net charge-offs (recoveries) |
$ |
26,656 |
$ |
1,434 |
$ |
(263) |
$ |
(1,074) |
$ |
791 |
|||||||||
Allowance for off-balance sheet lending-related commitments |
|||||||||||||||||||
Provision expense (benefit) for credit losses |
$ |
— |
$ |
(23) |
$ |
(39) |
$ |
— |
$ |
(44) |
|||||||||
1 |
Excludes loans acquired in previous bank acquisitions, which were initially recorded at fair value. |
2 |
Non-performing TDRs are included in the non-performing assets reported above. |
LegacyTexas Financial Group, Inc. Average Balances and Yields/Rates (unaudited) |
|||||||||||||||||||
For the Quarters Ended |
|||||||||||||||||||
September 30, |
June 30, |
March 31, |
December 31, |
September 30, |
|||||||||||||||
Loans: |
(Dollars in thousands) |
||||||||||||||||||
Commercial real estate |
$ |
3,146,968 |
$ |
3,119,147 |
$ |
3,048,087 |
$ |
2,977,919 |
$ |
3,016,889 |
|||||||||
Warehouse Purchase Program |
1,508,449 |
1,253,262 |
724,070 |
864,012 |
1,097,879 |
||||||||||||||
Commercial and industrial |
2,075,406 |
2,085,820 |
2,088,056 |
2,024,676 |
2,088,318 |
||||||||||||||
Construction and land |
289,858 |
286,163 |
276,642 |
272,631 |
271,829 |
||||||||||||||
Consumer real estate |
1,485,633 |
1,434,812 |
1,404,292 |
1,327,912 |
1,295,353 |
||||||||||||||
Other consumer |
47,343 |
47,014 |
45,339 |
44,559 |
44,508 |
||||||||||||||
Less: deferred fees and allowance for loan loss |
(72,841) |
(67,408) |
(57,955) |
(56,899) |
(55,974) |
||||||||||||||
Total loans held for investment |
8,480,816 |
8,158,810 |
7,528,531 |
7,454,810 |
7,758,802 |
||||||||||||||
Loans held for sale |
49,596 |
30,572 |
15,347 |
24,279 |
26,121 |
||||||||||||||
Securities |
659,152 |
668,948 |
670,599 |
667,939 |
678,483 |
||||||||||||||
Overnight deposits |
225,425 |
232,862 |
218,608 |
266,434 |
272,670 |
||||||||||||||
Total interest-earning assets |
$ |
9,414,989 |
$ |
9,091,192 |
$ |
8,433,085 |
$ |
8,413,462 |
$ |
8,736,076 |
|||||||||
Deposits: |
|||||||||||||||||||
Interest-bearing demand |
$ |
832,528 |
$ |
855,948 |
$ |
800,557 |
$ |
775,921 |
$ |
760,889 |
|||||||||
Savings and money market |
2,635,615 |
2,581,816 |
2,487,833 |
2,532,732 |
2,654,990 |
||||||||||||||
Time |
1,688,247 |
1,885,190 |
1,776,829 |
1,703,421 |
1,683,475 |
||||||||||||||
FHLB advances and other borrowings |
1,622,283 |
1,101,559 |
882,061 |
851,084 |
1,154,079 |
||||||||||||||
Total interest-bearing liabilities |
$ |
6,778,673 |
$ |
6,424,513 |
$ |
5,947,280 |
$ |
5,863,158 |
$ |
6,253,433 |
|||||||||
Total assets |
$ |
9,865,805 |
$ |
9,540,365 |
$ |
8,891,059 |
$ |
8,850,435 |
$ |
9,167,607 |
|||||||||
Non-interest-bearing demand deposits |
$ |
1,742,265 |
$ |
1,812,042 |
$ |
1,688,937 |
$ |
1,778,681 |
$ |
1,752,095 |
|||||||||
Total deposits |
$ |
6,898,654 |
$ |
7,134,996 |
$ |
6,754,156 |
$ |
6,790,754 |
$ |
6,851,449 |
|||||||||
Total shareholders' equity |
$ |
1,159,824 |
$ |
1,134,001 |
$ |
1,107,719 |
$ |
1,062,331 |
$ |
1,022,032 |
|||||||||
Yields/Rates: |
|||||||||||||||||||
Loans: |
|||||||||||||||||||
Commercial real estate |
5.06 |
% |
5.21 |
% |
5.18 |
% |
5.20 |
% |
5.15 |
% |
|||||||||
Warehouse Purchase Program |
4.48 |
% |
4.78 |
% |
4.91 |
% |
4.81 |
% |
4.68 |
% |
|||||||||
Commercial and industrial |
5.61 |
% |
5.81 |
% |
5.98 |
% |
6.00 |
% |
5.78 |
% |
|||||||||
Construction and land |
6.01 |
% |
6.13 |
% |
6.03 |
% |
5.87 |
% |
5.41 |
% |
|||||||||
Consumer real estate |
4.76 |
% |
4.77 |
% |
4.81 |
% |
4.81 |
% |
4.67 |
% |
|||||||||
Other consumer |
5.75 |
% |
5.66 |
% |
5.88 |
% |
5.80 |
% |
5.81 |
% |
|||||||||
Total loans held for investment |
5.12 |
% |
5.30 |
% |
5.38 |
% |
5.37 |
% |
5.22 |
% |
|||||||||
Loans held for sale |
3.83 |
% |
4.25 |
% |
4.43 |
% |
4.71 |
% |
4.52 |
% |
|||||||||
Securities |
2.63 |
% |
2.72 |
% |
2.70 |
% |
2.78 |
% |
2.66 |
% |
|||||||||
Overnight deposits |
2.13 |
% |
2.36 |
% |
2.37 |
% |
2.24 |
% |
1.99 |
% |
|||||||||
Total interest-earning assets |
4.87 |
% |
5.03 |
% |
5.09 |
% |
5.06 |
% |
4.92 |
% |
|||||||||
Deposits: |
|||||||||||||||||||
Interest-bearing demand |
0.60 |
% |
0.71 |
% |
0.76 |
% |
0.69 |
% |
0.65 |
% |
|||||||||
Savings and money market |
1.20 |
% |
1.22 |
% |
1.13 |
% |
1.02 |
% |
0.92 |
% |
|||||||||
Time |
2.40 |
% |
2.35 |
% |
2.23 |
% |
2.05 |
% |
1.80 |
% |
|||||||||
FHLB advances and other borrowings |
2.58 |
% |
2.94 |
% |
3.09 |
% |
2.91 |
% |
2.55 |
% |
|||||||||
Total interest-bearing liabilities |
1.75 |
% |
1.78 |
% |
1.70 |
% |
1.55 |
% |
1.43 |
% |
|||||||||
Net interest spread |
3.12 |
% |
3.25 |
% |
3.39 |
% |
3.51 |
% |
3.49 |
% |
|||||||||
Net interest margin |
3.60 |
% |
3.77 |
% |
3.89 |
% |
3.98 |
% |
3.90 |
% |
|||||||||
Cost of deposits (including non-interest-bearing demand) |
1.12 |
% |
1.15 |
% |
1.09 |
% |
0.97 |
% |
0.87 |
% |
|||||||||
LegacyTexas Financial Group, Inc. Supplemental Information- Non-GAAP Financial Measures (unaudited) |
|||||||||||||||||||
At or For the Quarters Ended |
|||||||||||||||||||
September 30, 2019 |
June 30, 2019 |
March 31, 2019 |
December 31, 2018 |
September 30, 2018 |
|||||||||||||||
(Dollars in thousands, except per share amounts) |
|||||||||||||||||||
Reconciliation of Core (non-GAAP) to GAAP Net Income and Earnings per Share (calculated net of estimated tax rate of 21%) |
|||||||||||||||||||
GAAP net income available to common shareholders1 |
$ |
42,206 |
$ |
26,837 |
$ |
28,955 |
$ |
57,534 |
$ |
42,672 |
|||||||||
Distributed and undistributed earnings to participating securities1 |
218 |
146 |
125 |
235 |
149 |
||||||||||||||
GAAP net income |
42,424 |
26,983 |
29,080 |
57,769 |
42,821 |
||||||||||||||
Merger costs |
251 |
1,866 |
— |
— |
— |
||||||||||||||
(Gain) on one-time tax adjustment2 |
— |
— |
— |
(15,289) |
— |
||||||||||||||
Expenses related to above tax adjustment |
— |
— |
— |
202 |
— |
||||||||||||||
Loss on sale of branch locations and land |
— |
— |
— |
— |
372 |
||||||||||||||
Core (non-GAAP) net income |
$ |
42,675 |
$ |
28,849 |
$ |
29,080 |
$ |
42,682 |
$ |
43,193 |
|||||||||
Average shares for basic earnings per share |
47,607,076 |
47,383,314 |
47,246,282 |
47,159,578 |
47,105,655 |
||||||||||||||
Basic GAAP earnings per share |
$ |
0.89 |
$ |
0.57 |
$ |
0.61 |
$ |
1.22 |
$ |
0.91 |
|||||||||
Basic core (non-GAAP) earnings per share |
$ |
0.90 |
$ |
0.61 |
$ |
0.62 |
$ |
0.91 |
$ |
0.92 |
|||||||||
Average shares for diluted earnings per share |
48,149,900 |
47,923,391 |
47,835,693 |
47,714,421 |
47,755,441 |
||||||||||||||
Diluted GAAP earnings per share |
$ |
0.88 |
$ |
0.56 |
$ |
0.61 |
$ |
1.21 |
$ |
0.89 |
|||||||||
Diluted core (non-GAAP) earnings per share |
$ |
0.89 |
$ |
0.60 |
$ |
0.61 |
$ |
0.89 |
$ |
0.90 |
|||||||||
Reconciliation of Core (non-GAAP) to GAAP Non-Interest Income and Non-interest Expense (gross of tax) |
|||||||||||||||||||
GAAP non-interest income |
$ |
13,349 |
$ |
12,232 |
$ |
9,894 |
$ |
12,264 |
$ |
13,227 |
|||||||||
Loss on sale of branch locations and land |
— |
— |
— |
— |
471 |
||||||||||||||
Core (non-GAAP) non-interest income |
$ |
13,349 |
$ |
12,232 |
$ |
9,894 |
$ |
12,264 |
$ |
13,698 |
|||||||||
GAAP non-interest expense |
$ |
44,133 |
$ |
47,526 |
$ |
44,307 |
$ |
42,868 |
$ |
42,192 |
|||||||||
Merger costs |
(318) |
(2,362) |
— |
— |
— |
||||||||||||||
Expenses related to above tax adjustments |
— |
— |
— |
(256) |
— |
||||||||||||||
Core (non-GAAP) non-interest expense |
$ |
43,815 |
$ |
45,164 |
$ |
44,307 |
$ |
42,612 |
$ |
42,192 |
|||||||||
1 |
Unvested share-based awards that contain nonforfeitable rights to dividends are participating securities and are included in the computation of GAAP earnings per share pursuant to prescribed accounting guidance. |
2 |
This one-time income tax benefit resulted from tax rate changes and the favorable outcome of the Company's change in its tax method of accounting for its loan portfolio, related to the December 22, 2017 enactment of the Tax Cuts and Jobs Act. |
At or For the Quarters Ended |
|||||||||||||||||||
September 30, 2019 |
June 30, 2019 |
March 31, 2019 |
December 31, 2018 |
September 30, 2018 |
|||||||||||||||
Reconciliation of Core (non-GAAP) to GAAP Efficiency Ratio (gross of tax) |
(Dollars in thousands, except per share amounts) |
||||||||||||||||||
GAAP efficiency ratio: |
|||||||||||||||||||
Non-interest expense |
$ |
44,133 |
$ |
47,526 |
$ |
44,307 |
$ |
42,868 |
$ |
42,192 |
|||||||||
Net interest income plus non-interest income |
98,690 |
97,786 |
91,058 |
96,563 |
98,894 |
||||||||||||||
Efficiency ratio - GAAP basis |
44.72 |
% |
48.60 |
% |
48.66 |
% |
44.39 |
% |
42.66 |
% |
|||||||||
Core (non-GAAP) efficiency ratio: |
|||||||||||||||||||
Core (non-GAAP) non-interest expense |
$ |
43,815 |
$ |
45,164 |
$ |
44,307 |
$ |
42,612 |
$ |
42,192 |
|||||||||
Net interest income plus core (non-GAAP) non-interest income |
98,690 |
97,786 |
91,058 |
96,563 |
99,365 |
||||||||||||||
Efficiency ratio - core (non-GAAP) basis |
44.40 |
% |
46.19 |
% |
48.66 |
% |
44.13 |
% |
42.46 |
% |
|||||||||
Calculation of Tangible Book Value per Share: |
|||||||||||||||||||
Total shareholders' equity |
$ |
1,187,450 |
$ |
1,142,645 |
$ |
1,121,087 |
$ |
1,094,367 |
$ |
1,039,599 |
|||||||||
Less: Goodwill |
(178,559) |
(178,559) |
(178,559) |
(178,559) |
(178,559) |
||||||||||||||
Identifiable intangible assets, net |
(169) |
(193) |
(218) |
(245) |
(279) |
||||||||||||||
Total tangible shareholders' equity |
$ |
1,008,722 |
$ |
963,893 |
$ |
942,310 |
$ |
915,563 |
$ |
860,761 |
|||||||||
Shares outstanding at end of period |
49,255,006 |
48,833,238 |
48,704,070 |
48,505,261 |
48,491,169 |
||||||||||||||
Book value per share - GAAP |
$ |
24.11 |
$ |
23.40 |
$ |
23.02 |
$ |
22.56 |
$ |
21.44 |
|||||||||
Tangible book value per share - Non-GAAP |
20.48 |
19.74 |
19.35 |
18.88 |
17.75 |
||||||||||||||
Calculation of Tangible Equity to Tangible Assets: |
|||||||||||||||||||
Total assets |
$ |
10,460,074 |
$ |
9,935,934 |
$ |
9,346,072 |
$ |
9,051,142 |
$ |
9,082,792 |
|||||||||
Less: Goodwill |
(178,559) |
(178,559) |
(178,559) |
(178,559) |
(178,559) |
||||||||||||||
Identifiable intangible assets, net |
(169) |
(193) |
(218) |
(245) |
(279) |
||||||||||||||
Total tangible assets |
$ |
10,281,346 |
$ |
9,757,182 |
$ |
9,167,295 |
$ |
8,872,338 |
$ |
8,903,954 |
|||||||||
Equity to assets - GAAP |
11.35 |
% |
11.50 |
% |
12.00 |
% |
12.09 |
% |
11.45 |
% |
|||||||||
Tangible equity to tangible assets - Non-GAAP |
9.81 |
9.88 |
10.28 |
10.32 |
9.67 |
||||||||||||||
Calculation of Return on Average Assets and Return on Average Equity Ratios (GAAP and Core) |
|||||||||||||||||||
Net income |
$ |
42,424 |
$ |
26,983 |
$ |
29,080 |
$ |
57,769 |
$ |
42,821 |
|||||||||
Core (non-GAAP) net income |
42,675 |
28,849 |
29,080 |
42,682 |
43,193 |
||||||||||||||
Average total equity |
1,159,824 |
1,134,001 |
1,107,719 |
1,062,331 |
1,022,032 |
||||||||||||||
Average total assets |
9,865,805 |
9,540,365 |
8,891,059 |
8,850,435 |
9,167,607 |
||||||||||||||
Return on average common shareholders' equity |
14.63 |
% |
9.52 |
% |
10.50 |
% |
21.75 |
% |
16.76 |
% |
|||||||||
Core (non-GAAP) return on average common shareholders' equity |
14.72 |
10.18 |
10.50 |
16.07 |
16.90 |
||||||||||||||
Return on average assets |
1.72 |
1.13 |
1.31 |
2.61 |
1.87 |
||||||||||||||
Core (non-GAAP) return on average assets |
1.73 |
1.21 |
1.31 |
1.93 |
1.88 |
||||||||||||||
SOURCE LegacyTexas Financial Group, Inc.
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