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LegacyTexas Financial Group, Inc. Reports Fourth Quarter and Full Year 2016 Earnings

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PLANO, Texas, Jan. 24, 2017 /PRNewswire/ -- LegacyTexas Financial Group, Inc. (Nasdaq: LTXB) (the "Company"), the holding company for LegacyTexas Bank (the "Bank"), today announced net income of $25.3 million for the fourth quarter of 2016, a decrease of $1.9 million from the third quarter of 2016, and an increase of $8.9 million from the fourth quarter of 2015.  Net income for the year ended December 31, 2016 was $97.8 million, up $26.9 million from the year ended December 31, 2015.

"We are pleased to report another strong quarter with earnings of $25.3 million and loan growth of $308 million," said President and CEO Kevin Hanigan.  "For the year, we produced record earnings of $97.8 million and loan growth of $999 million, or 20%.  We continue to execute our strategy and look forward to growing our customer base and revenues in 2017 while controlling credit costs and operating revenues."

Fourth Quarter 2016 Performance Highlights

  • Company assets totaled $8.36 billion, which generated basic earnings per share for the fourth quarter of 2016 of $0.54 on a GAAP basis and $0.55 on a core (non-GAAP) basis.
  • GAAP and core (non-GAAP) efficiency ratio improved to 45.79% for the quarter ended December 31, 2016, compared to a GAAP efficiency ratio of 46.81% and a core (non-GAAP) efficiency ratio of 46.00% for the third quarter of 2016.
  • Gross loans held for investment at December 31, 2016, excluding Warehouse Purchase Program loans, grew $308.2 million, or 5.4%, from September 30, 2016.
  • Total deposits at December 31, 2016 grew $237.4 million, or 3.9%, from September 30, 2016.

Full Year 2016 Performance Highlights

  • Net income for the year ended December 31, 2016 increased by 37.9% compared to the year ended December 31, 2015, which included only a 3.2% increase in total non-interest expense and contributed to basic earnings per share for the year ended December 31, 2016 of $2.11 on a GAAP basis and $2.08 on a core (non-GAAP) basis.
  • Return on average assets for the year ended December 31, 2016 was 1.24%, compared to 1.10% for the year ended December 31, 2015, while core (non-GAAP) return on average assets was 1.22% for the year ended December 31, 2016, compared to 1.12% for the year ended December 31, 2015.
  • Return on average equity for the year ended December 31, 2016 was 11.52%, compared to 9.12% for the year ended December 31, 2015, while core (non-GAAP) return on average equity was 11.34% for the year ended December 31, 2016, compared to 9.24% for the year ended December 31, 2015.
  • GAAP efficiency ratio improved to 46.79% for the year ended December 31, 2016, compared to 53.01% for the year ended December 31, 2015. Core (non-GAAP) efficiency ratio improved to 47.30% for the year ended December 31, 2016, compared to 52.49% for the year ended December 31, 2015.
  • Gross loans held for investment at December 31, 2016, excluding Warehouse Purchase Program loans, grew $998.9 million, or 19.7%, from December 31, 2015, while total deposits increased by $1.14 billion, or 21.8%, for the same period.

 

Financial Highlights



At or For the Quarters Ended

(unaudited)

Dec 31, 2016


Sep 30, 2016


Dec 31, 2015


(Dollars in thousands, except per share amounts)

Net interest income

$

74,084



$

73,480



$

63,742


Provision for credit losses

7,833



3,467



11,200


Non-interest income

12,277



11,277



11,593


Non-interest expense

39,548



39,674



39,043


Income tax expense

13,675



14,399



8,646


Net income

$

25,305



$

27,217



$

16,446








Basic earnings per common share

$

0.54



$

0.59



$

0.36


Basic core (non-GAAP) earnings per common share1

$

0.55



$

0.61



$

0.36


Weighted average common shares outstanding - basic

46,346,053



46,227,734



45,939,817


Estimated Tier 1 common risk-based capital ratio2

9.13

%


8.91

%


9.56

%

Total equity to total assets

10.59

%


10.27

%


10.45

%

Tangible common equity to tangible assets - Non-GAAP1

8.63

%


8.32

%


8.29

%


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.


Core (non-GAAP) net income (which is net income adjusted for the impact of infrequent or non-recurring items) totaled $25.3 million for the quarter ended December 31, 2016, down $2.9 million from the third quarter of 2016 and up $8.9 million from the fourth quarter of 2015.  Basic earnings per share for the quarter ended December 31, 2016 was $0.54, a decrease of $0.05 from the third quarter of 2016 and an increase of $0.18 from the fourth quarter of 2015.  Basic core earnings per share for the fourth quarter of 2016 was $0.55, down $0.06 from the third quarter of 2016 and up $0.19 from the fourth quarter of 2015.


At or For the Years Ended

(unaudited)

Dec 31, 2016


Dec 31, 2015


(Dollars in thousands,

except per share amounts)

Net interest income

$

282,269



$

241,077


Provision for credit losses

26,900



25,465


Non-interest income

51,931



44,815


Non-interest expense

156,377



151,555


Income tax expense

53,102



37,956


Net income

$

97,821



$

70,916






Basic earnings per common share

$

2.11



$

1.54


Basic core (non-GAAP) earnings per common share1

$

2.08



$

1.57


Weighted average common shares outstanding - basic

46,184,074



45,847,284



1  See the section labeled "Supplemental Information- Non-GAAP Financial Measures" at the end of this document.


Core (non-GAAP) net income totaled $96.2 million for the year ended December 31, 2016, up $24.4 million from the year ended December 31, 2015.  Basic earnings per share for the year ended December 31, 2016 was $2.11, an increase of $0.57 from the year ended December 31, 2015.  Basic core earnings per share for the year ended December 31, 2016 was $2.08, up $0.51 from the year ended December 31, 2015.  The reconciliation of non-GAAP measures, which the Company believes facilitates the assessment of its banking operations and peer comparability, is included in tabular form at the end of this release.

Net Interest Income and Net Interest Margin



For the Quarters Ended

(unaudited)

Dec 31, 2016


Sep 30, 2016


Dec 31, 2015


(Dollars in thousands)

Interest income:






Loans held for investment, excluding Warehouse Purchase Program loans

$

71,090



$

69,543



$

59,405


Warehouse Purchase Program loans

9,112



9,266



6,473


Loans held for sale

192



157



176


Securities

3,410



3,482



3,318


Interest-earning deposit accounts

693



463



210


Total interest income

$

84,497



$

82,911



$

69,582


Net interest income

$

74,084



$

73,480



$

63,742


Net interest margin

3.70

%


3.80

%


3.94

%

Selected average balances:






Total earning assets

$

8,011,431



$

7,741,338



$

6,469,511


Total loans held for investment

6,886,696



6,742,006



5,588,437


Total securities

620,775



637,294



631,916


Total deposits

6,282,454



5,892,348



4,939,893


Total borrowings

1,201,004



1,333,438



1,075,948


Total non-interest-bearing demand deposits

1,349,561



1,283,434



1,198,337


Total interest-bearing liabilities

6,133,897



5,942,352



4,817,504


 

Net interest income for the quarter ended December 31, 2016 was $74.1 million, a $604,000 increase from the third quarter of 2016 and a $10.3 million increase from the fourth quarter of 2015.  The $604,000 increase from the linked quarter was primarily due to an increase in interest income on loans, which was driven by increased volume in the commercial and industrial, commercial real estate and construction and land portfolios.  The average balance of commercial and industrial loans increased by $126.1 million to $1.84 billion from the third quarter of 2016, resulting in a $2.1 million increase in interest income.  The average yield earned on the commercial and industrial loan portfolio for the fourth quarter of 2016 of 4.65% was positively impacted by the purchase of an energy loan in December at a $5.4 million discount; this discount will be amortized to interest income until the loan matures in May 2017.  The resulting increase to the average yield on the commercial and industrial loan portfolio for the fourth quarter of 2016 was partially offset by a linked-quarter increase in non-accrual commercial and industrial loans. 

The average balance of commercial real estate loans increased by $50.8 million to $2.60 billion from the third quarter of 2016, which was offset by a 14 basis point reduction in the average yield earned on that portfolio compared to the linked quarter, resulting in a $237,000 decrease in interest income.  The average yield earned on the commercial real estate portfolio for the third quarter of 2016 was positively impacted by a high number of loans that were paid in full during the quarter, which resulted in the unamortized portion of loan origination fees being recognized to interest income at the time the loan was paid in full, increasing the average yield earned on the commercial real estate portfolio during the third quarter of 2016.  The high number of commercial real estate loan pay-offs did not continue during the fourth quarter of 2016, causing the average yield earned on the commercial real estate portfolio to decline when compared to the linked quarter. 

The average balance of construction and land loans increased by $9.5 million to $300.5 million from the third quarter of 2016, which was partially offset by a 13 basis point reduction in the average yield earned on that portfolio compared to the linked quarter, resulting in a $27,000 increase in interest income.  The average yield earned on the construction and land loan portfolio for the fourth quarter of 2016 of 5.11% was negatively impacted by a linked-quarter increase in non-accrual construction loans.  The average balance of Warehouse Purchase Program loans decreased by $31.2 million to $1.10 billion from the third quarter of 2016, resulting in a $154,000 decrease in interest income, while interest income earned on consumer real estate loans decreased by $349,000 for the same period due to linked-quarter declines in the average balance and the average yield.

Interest income on loans for the fourth quarter of 2016 included $849,000 in accretion of purchase accounting fair value adjustments on acquired loans, which includes $255,000 on acquired commercial real estate loans, $143,000 on acquired commercial and industrial loans, $39,000 on acquired construction and land loans and $401,000 on acquired consumer loans.  Accretion of purchase accounting fair value adjustments on acquired loans contributed four basis points, three basis points and 13 basis points to the average yields on commercial real estate, commercial and industrial and consumer real estate loans, respectively, for the fourth quarter of 2016, compared to eight basis points, four basis points and 14 basis points, respectively, for the third quarter of 2016. 

The $10.3 million increase in net interest income compared to the fourth quarter of 2015 was primarily due to a $14.3 million increase in interest income on loans, which was driven by increased volume in all loan categories with the exception of other consumer loans.  The average balance of commercial real estate loans increased by $496.3 million from the fourth quarter of  2015, resulting in a $6.0 million increase in interest income.  The average balance of commercial and industrial loans increased by $333.6 million from the fourth quarter of 2015, resulting in a $4.5 million increase in interest income.  The average balance of Warehouse Purchase Program and consumer real estate loans increased by $322.8 million and $156.9 million, respectively, compared to the fourth quarter of 2015, leading to increases in interest income of $2.6 million and $1.3 million, respectively.

Interest expense for the quarter ended December 31, 2016 increased by $982,000 compared to the linked quarter, which was primarily due to higher average rates paid on savings, money market and time products and increased volume in all deposit products compared to the third quarter of 2016.  The average balance of savings and money market accounts increased by $271.9 million to $2.69 billion from the third quarter of 2016, resulting in a $665,000 increase in interest expense, while the average balance of time deposits increased by $35.0 million to $1.41 billion for the same period, resulting in a $281,000 increase in interest expense. A $132.4 million decrease in the average balance of borrowings from the third quarter of 2016 was more than offset by a 13 basis point increase in the average rate, resulting in a $4,000 increase in interest expense on borrowed funds.

Compared to the fourth quarter of 2015, interest expense for the quarter ended December 31, 2016 increased by $4.6 million, primarily due to higher average rates and increased volume in all deposit products.  The average balance of savings and money market deposits increased by $658.6 million and the average balance of time deposits increased by $442.3 million compared to the fourth quarter of 2015, which increased interest expense by $1.7 million and $1.3 million, respectively.  Interest expense on borrowings increased by $1.4 million compared to the fourth quarter of 2015, primarily due to the issuance of $50.0 million of fixed-to-floating rate subordinated notes by the Company in September 2016, as well as a 39 basis point increase in the average rate paid. 

The net interest margin for the fourth quarter of 2016 was 3.70%, a ten basis point decrease from the third quarter of 2016 and a 24 basis point decrease from the fourth quarter of 2015.  Accretion of interest resulting from the merger with LegacyTexas Group, Inc. on January 1, 2015, as well as the 2012 Highlands acquisition, contributed four basis points to the net interest margin and average yield on earning assets for the quarter ended December 31, 2016, compared to six basis points for the quarter ended September 30, 2016 and ten basis points for the quarter ended December 31, 2015.  The average yield on earning assets for the fourth quarter of 2016 was 4.22%, a six basis point decrease from the third quarter of 2016 and an eight basis point decrease from the fourth quarter of 2015.  The cost of deposits for the fourth quarter of 2016 was 0.43%, up four basis points from the linked quarter and up 14 basis points from the fourth quarter of 2015.

Non-interest Income

Non-interest income for the fourth quarter of 2016 was $12.3 million, a $1.0 million increase from the third quarter of 2016 and a $684,000 increase from the fourth quarter of 2015.  Gain (loss) on sale and disposition of assets for the third quarter of 2016 was a loss of $1.5 million resulting from a loss on the sale of the Company's Federal Housing Administration ("FHA") loan portfolio, compared to a loss of $412,000, which was primarily due to a $407,000 loss on the sale of a foreclosed property recorded in the fourth quarter of 2016.  Service charges and other fees increased by $242,000 from the third quarter of 2016, which included a $695,000 incentive payment received from Mastercard in the fourth quarter of 2016 for 2015 transaction performance. This increase was partially offset by a $257,000 linked-quarter decline in Warehouse Purchase Program fee income and a $136,000 reduction in commercial loan fee income (consisting of syndication, arrangement, non-usage and pre-payment fees).  The Company recognized $2.0 million in net gains on the sale of mortgage loans held for sale during the fourth quarter of 2016, which includes the gain recognized on $57.8 million of one-to four-family mortgage loans that were sold or committed for sale during the fourth quarter of 2016, fair value changes on mortgage derivatives and mortgage fees collected, compared to $2.4 million in comparable net gains recorded during the third quarter of 2016 on $60.2 million of one-to four-family mortgage loans sold or committed for sale.

The $684,000 increase in non-interest income from the fourth quarter of 2015 was primarily due to a $1.9 million increase in service charges and other fees, which was driven by a $1.1 million increase in commercial loan fee income (consisting of syndication, arrangement, non-usage and pre-payment fees) and a $145,000 increase in Warehouse Purchase Program fee income, as well as the above-mentioned $695,000 incentive received from Mastercard.  Gain (loss) on sale and disposition of assets for the fourth quarter of 2016 included a loss of $407,000 on the sale of a foreclosed property, compared to a $138,000 gain recorded in the fourth quarter of 2015 on the sale of one of the Company's branch locations. 

Non-interest Expenses

Non-interest expense for the quarter ended December 31, 2016 was $39.5 million, a $126,000 decrease from the third quarter of 2016 and a $505,000 increase from the fourth quarter of 2015.  Salaries and employee benefits expense decreased by $472,000 from the third quarter of 2016, primarily due to an $898,000 reduction in performance incentive accruals based on the recent increase in non-performing loans, as well as a $617,000 reduction in expense related to the third quarter 2016 pay-off of one of the Company's ESOP loans.  These decreases were partially offset by a $712,000 linked-quarter increase in health care costs and a $525,000 linked-quarter increase in share-based compensation expense related to an increase in the Company's average stock price, as well as new stock awards granted during the third quarter of 2016.

The $505,000 increase in non-interest expense from the fourth quarter of 2015 was primarily due to an $875,000 increase in data processing expense, which included increased expenses for debit card issuance and processing services, as the Company has converted all debit cards to the Europay, Mastercard and Visa ("EMV") chip technology to reduce future fraud.  Data processing expense for the fourth quarter of 2016 also included increased costs compared to the prior year for system upgrades to enhance customer service and increase operating efficiency. 

Financial Condition - Loans

Gross loans held for investment at December 31, 2016, excluding Warehouse Purchase Program loans, grew $308.2 million from September 30, 2016, which included growth in commercial real estate, commercial and industrial and consumer real estate loans.  Commercial real estate and commercial and industrial loans at December 31, 2016 increased by $137.1 million and $158.6 million, respectively, from September 30, 2016, and consumer real estate loans increased by $28.5 million for the same period.  These linked-quarter increases were partially offset by a $12.8 million decline in construction and land loans. 

Compared to December 31, 2015, gross loans held for investment at December 31, 2016, excluding Warehouse Purchase Program loans, grew $998.9 million, which included growth in all loan portfolios with the exception of a $15.8 million decline in other consumer loans.  On a year over year basis, commercial real estate and commercial and industrial loans increased by $492.9 million and $358.5 million, respectively.  Consumer real estate and construction and land loans increased by $138.2 million and $25.2 million, respectively, from December 31, 2015. 

At December 31, 2016, Warehouse Purchase Program loans decreased by $290.5 million compared to September 30, 2016 but increased by $11.6 million compared to December 31, 2015. 

Reserve-based energy loans, which are secured by deeds of trust on properties containing proven oil and natural gas reserves, totaled $527.2 million at December 31, 2016, up $93.7 million from $433.5 million at September 30, 2016 and up $67.4 million from $459.8 million at December 31, 2015.  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 from declining commodity prices.  At December 31, 2016, "Midstream and Other" loans had a total outstanding balance of $39.0 million, down $14.9 million from $53.9 million at September 30, 2016 and down $25.6 million from $64.6 million at December 31, 2015.

Financial Condition - Deposits

Total deposits at December 31, 2016 increased by $237.4 million from September 30, 2016, with savings, money market and demand deposits growing on a linked-quarter basis.  Savings and money market and interest-bearing demand deposits increased by $267.9 million and $54.8 million, respectively, on a linked-quarter basis, while non-interest-bearing demand deposits increased by $8.1 million.  These increases were partially offset by a $93.3 million decline in time deposits from September 30, 2016.

Compared to December 31, 2015, total deposits increased by $1.14 billion, which includes growth in all deposit categories.  On a year over year basis, savings and money market deposits and time deposits increased by $500.6 million and $340.5 million, respectively, while non-interest-bearing demand and interest-bearing demand deposits increased by $213.7 million and $84.0 million, respectively, from December 31, 2015.

Credit Quality



At or For the Quarters Ended

(unaudited)

Dec 31, 2016


Sep 30, 2016


Dec 31, 2015


(Dollars in thousands)

Net charge-offs

$

242



$

7,176



$

489


Net charge-offs/Average loans held for investment, excluding Warehouse Purchase Program loans

0.02

%


0.51

%


0.04

%

Net charge-offs/Average loans held for investment

0.01



0.43



0.04


Provision for credit losses

$

7,833



$

3,467



$

11,200


Non-performing loans ("NPLs")

111,389



40,865



38,216


NPLs/Total loans held for investment, excluding Warehouse Purchase Program loans

1.84

%


0.71

%


0.75

%

NPLs/Total loans held for investment

1.56



0.58



0.63


Non-performing assets ("NPAs")

$

122,227



$

54,325



$

44,908


NPAs to total assets

1.46

%


0.64

%


0.58

%

NPAs/Loans held for investment and foreclosed assets, excluding Warehouse Purchase Program loans

2.01



0.94



0.89


NPAs/Loans held for investment and foreclosed assets

1.71



0.76



0.73


Allowance for loan losses

$

64,576



$

57,318



$

47,093


Allowance for loan losses/Total loans held for investment, excluding Warehouse Purchase Program loans

1.06

%


1.00

%


0.93

%

Allowance for loan losses/Total loans held for investment

0.91



0.81



0.77


Allowance for loan losses/Total loans held for investment, excluding acquired loans & Warehouse Purchase Program loans1

1.18



1.12



1.14


Allowance for loan losses/NPLs

57.97



140.26



123.23



Excludes loans acquired in the Highlands and LegacyTexas transactions, which were initially recorded at fair value.

 

The Company recorded a provision for credit losses of $7.8 million for the quarter ended December 31, 2016, an increase of $4.4 million from the quarter ended September 30, 2016 and a decrease of $3.4 million from the quarter ended December 31, 2015.  The increase in provision expense on a linked-quarter basis was primarily due to increased qualitative factors related to some negative migration in asset quality during the fourth quarter of 2016, as well as increased loan production compared to the linked quarter and a $2.4 million increase in specific reserves on energy loans.  In the fourth quarter of 2015, the Company increased qualitative reserve factors applied to the energy loan portfolio due to the impact of pressure on the price of oil, which led to increased provision expense in the 2015 period compared to the 2016 period.  The Company has continued to apply elevated reserve amounts to the energy portfolio through 2016 due to sustained economic and regulatory uncertainty surrounding energy loans.

The below table shows special mention and substandard loans at December 31, 2016, September 30, 2016 and December 31, 2015. 


December 31, 2016


September 30,
 2016


Linked-Quarter

 Change


December 31, 2015


Year-over-Year

 Change


(Dollars in thousands)

Commercial real estate

$

7,972



$

9,044



$

(1,072)



$

13,633



$

(5,661)


Commercial and industrial, excluding energy

13,316



14,002



(686)



23,700



(10,384)


Energy

141,794



125,807



15,987



68,348



73,446


Consumer

2,120



2,281



(161)



3,338



(1,218)


Total special mention

(all performing)

$

165,202



$

151,134



$

14,068



$

109,019



$

56,183












Commercial real estate

$

8,445



$

8,512



$

(67)



$

16,953



$

(8,508)


Commercial and industrial, excluding energy

17,215



19,638



(2,423)



4,308



12,907


Energy



76,786



(76,786)



38,712



(38,712)


Construction and land

86



88



(2)



93



(7)


Consumer

2,362



2,402



(40)



3,287



(925)


Total substandard performing

28,108



107,426



(79,318)



63,353



(35,245)












Commercial real estate

4,430



4,566



(136)



10,619



(6,189)


Commercial and industrial, excluding energy

19,024



6,193



12,831



4,705



14,319


Energy

67,576



22,033



45,543



12,110



55,466


Construction and land

11,385





11,385





11,385


Consumer

6,292



5,310



982



6,735



(443)


Total substandard non-performing

108,707



38,102



70,605



34,169



74,538












Total substandard loans

$

136,815



$

145,528



$

(8,713)



$

97,522



$

39,293


 

The $45.5 million increase in substandard non-performing energy loans from September 30, 2016 was due to two reserve-based  energy relationships totaling $53.3 million that were rated as substandard performing at September 30, 2016 and were downgraded to substandard non-performing at December 31, 2016.  The relationships were downgraded due to declining collateral values and resulting diminished operating performance.

The allowance for loan losses allocated to energy loans at December 31, 2016 totaled $19.2 million, up $3.1 million from $16.1 million at September 30, 2016 and up $7.2 million from $12.0 million at December 31, 2015.  In addition to $2.6 million in specific reserves on non-performing energy relationships, these reserve amounts continue to reflect elevated qualitative factors compared to the same period in 2015. Since the inception of the Energy Finance Group, the Company has maintained a number of risk mitigation techniques, including sound underwriting (reasonable advance rates based on number and diversification of wells), sound policy (requiring hedges on production sales) and conservative collateral valuations (frequent borrowing base determinations at prices below NYMEX posted rates).  All borrowing base valuations are performed by experienced and nationally recognized third party firms intimately familiar with the properties and their production history.  The Company believes that the level of loan loss reserves for energy loans as of December 31, 2016 is sufficient to cover estimated credit losses in the portfolio based on currently available information; however, future sustained declines in oil pricing could lead to further risk rating downgrades, additional loan loss reserves or losses. 

Commercial and industrial non-performing loans (excluding energy loans) and construction and land non-performing loans increased by $12.8 million and $11.4 million, respectively, from the third quarter of 2016.  The increase in commercial and industrial (excluding energy loans) was due to a relationship with a borrower who owns and operates hospitals in Texas, while the increase in construction and land was due to a relationship with a residential home builder.  Both relationships were placed on non-accrual in the fourth quarter of 2016 due to diminished operating performance, and no specific reserve was set aside on either of these relationships at December 31, 2016.

Net charge-offs for the fourth quarter of 2016 totaled $242,000, down $6.9 million from the third quarter of 2016 and down $247,000 from the fourth quarter of 2015.

Subsequent Events

The Company is required, under generally accepted accounting principles, to evaluate subsequent events through the filing of its consolidated financial statements for the year ended December 31, 2016 on Form 10-K.  As a result, the Company will continue to evaluate the impact of any subsequent events on critical accounting assumptions and estimates made as of December 31, 2016 and will adjust amounts preliminarily reported, if necessary.

Conference Call

The Company will host an investor conference call to review these results on Wednesday, January 25, 2017 at 8 a.m. Central Time.  Participants may pre-register for the call by visiting http://dpregister.com/10098894 and will receive a unique PIN that can be used when dialing in for the call.  This will allow attendees to enter the call immediately.  Alternatively, participants may call (toll-free) 877-513-4119 at least five minutes prior to the call to be placed into the call by an operator.  International participants are asked to call 412-902-4148 and participants in Canada are asked to call (toll-free) 855-669-9657.  The call and corresponding presentation slides will be webcast live on the home page of the Company's website, www.LegacyTexasFinancialGroup.com.  An audio replay will be available one hour after the conclusion of the call at 877-344-7529, Conference #10098894.   This replay, as well as the webcast, will be available until February 25, 2017.

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 44 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 acquisition or disposition transactions 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; 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 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, you should keep in mind these risks and uncertainties. You should not place undue reliance on any forward-looking statement, which speaks only as of the date made. You should refer to our 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.

 

LegacyTexas Financial Group, Inc. Consolidated Balance Sheets



December 31, 2016


September 30,
 2016


June 30,
 2016


March 31,
 2016


December 31, 2015


(Dollars in thousands)

ASSETS

(unaudited)


(unaudited)


(unaudited)


(unaudited)



Cash and due from financial institutions

$

59,823



$

63,598



$

59,217



$

55,348



$

53,847


Short-term interest-bearing deposits in other financial institutions

229,389



214,289



363,407



261,423



561,792


Total cash and cash equivalents

289,212



277,887



422,624



316,771



615,639


Securities available for sale, at fair value

354,515



433,603



325,042



320,866



311,708


Securities held to maturity

210,387



220,919



224,452



228,576



240,433


Total securities

564,902



654,522



549,494



549,442



552,141


Loans held for sale

21,279



23,184



20,752



17,615



22,535


Loans held for investment:










Loans held for investment - Warehouse Purchase Program

1,055,341



1,345,818



980,390



1,028,561



1,043,719


Loans held for investment

6,065,423



5,757,224



5,693,047



5,269,312



5,066,507


Gross loans

7,142,043



7,126,226



6,694,189



6,315,488



6,132,761


Less: allowance for loan losses and deferred fees on loans held for investment

(66,827)



(54,557)



(59,795)



(55,001)



(48,953)


Net loans

7,075,216



7,071,669



6,634,394



6,260,487



6,083,808


FHLB stock and other restricted securities, at cost

43,266



54,850



62,247



54,648



63,075


Bank-owned life insurance

56,477



56,169



55,853



55,535



55,231


Premises and equipment, net

74,226



72,325



71,232



71,271



77,637


Goodwill

178,559



178,559



178,559



180,776



180,776


Other assets

80,397



74,029



82,602



73,196



63,633


Total assets

$

8,362,255



$

8,440,010



$

8,057,005



$

7,562,126



$

7,691,940












LIABILITIES AND SHAREHOLDERS' EQUITY







Non-interest-bearing demand

$

1,383,951



$

1,375,883



$

1,235,731



$

1,174,816



$

1,170,272


Interest-bearing demand

903,314



848,564



811,015



782,161



819,350


Savings and money market

2,710,307



2,442,434



2,249,490



2,225,611



2,209,698


Time

1,367,904



1,461,194



1,326,446



1,120,261



1,027,391


Total deposits

6,365,476



6,128,075



5,622,682



5,302,849



5,226,711


FHLB advances

833,682



1,134,318



1,333,337



1,201,632



1,439,904


Repurchase agreements

86,691



75,138



68,049



69,079



83,269


Subordinated debt

134,032



134,083



85,231



85,104



84,992


Other borrowings





24,894






Accrued expenses and other liabilities

57,009



101,551



79,508



80,410



52,988


Total liabilities

7,476,890



7,573,165



7,213,701



6,739,074



6,887,864


Shareholders' equity










Common stock

479



478



476



476



476


Additional paid-in capital

589,408



583,800



580,386



578,050



576,753


Retained earnings

310,641



292,510



272,454



255,908



240,496


Accumulated other comprehensive income (loss), net

(2,713)



2,639



2,918



1,841



(133)


Unearned Employee Stock Ownership Plan (ESOP) shares

(12,450)



(12,582)



(12,930)



(13,223)



(13,516)


Total shareholders' equity

885,365



866,845



843,304



823,052



804,076


Total liabilities and shareholders' equity

$

8,362,255



$

8,440,010



$

8,057,005



$

7,562,126



$

7,691,940


 

LegacyTexas Financial Group, Inc.

Consolidated Quarterly Statements of Income (unaudited)




For the Quarters Ended


Fourth Quarter 2016 Compared to:


Dec 31, 2016


Sep 30, 2016


Jun 30, 2016


Mar 31, 2016


Dec 31, 2015


Third Quarter

 2016


Fourth Quarter

2015

 

Interest and dividend income

(Dollars in thousands) 

Loans, including fees

$

80,394



$

78,966



$

73,376



$

68,806



$

66,054



$

1,428


1.8

%


$

14,340


21.7

%

Taxable securities

2,269



2,314



2,359



2,312



2,264



(45)


(1.9)



5


0.2


Nontaxable securities

756



763



759



774



780



(7)


(0.9)



(24)


(3.1)


Interest-bearing deposits in other financial institutions

693



463



392



330



210



230


49.7



483


230.0


FHLB and Federal Reserve Bank stock and other

385



405



450



386



274



(20)


(4.9)



111


40.5



84,497



82,911



77,336



72,608



69,582



1,586


1.9



14,915


21.4


Interest expense
















Deposits

6,734



5,756



4,422



4,122



3,569



978


17.0



3,165


88.7


FHLB advances

1,526



1,865



2,103



1,673



1,466



(339)


(18.2)



60


4.1


Repurchase agreements and other borrowings

2,153



1,810



1,457



1,462



805



343


19.0



1,348


167.5



10,413



9,431



7,982



7,257



5,840



982


10.4



4,573


78.3


Net interest income

74,084



73,480



69,354



65,351



63,742



604


0.8



10,342


16.2


Provision for credit losses

7,833



3,467



6,800



8,800



11,200



4,366


125.9



(3,367)


(30.1)


Net interest income after provision for credit losses

66,251



70,013



62,554



56,551



52,542



(3,762)


(5.4)



13,709


26.1


Non-interest income
















Service charges and other fees

9,912



9,670



8,927



8,181



8,041



242


2.5



1,871


23.3


Net gain on sale of mortgage loans held for sale

2,012



2,383



2,250



1,580



1,899



(371)


(15.6)



113


6.0


Bank-owned life insurance income

436



441



441



426



432



(5)


(1.1)



4


0.9


Gain (loss) on sale of available for sale securities

(6)



(3)



65





17



(3)


N/M



(23)


N/M


Gain (loss) on sale and disposition of assets

(412)



(1,490)



1,186



4,072



188



1,078


N/M



(600)


N/M


Other

335



276



853



396



1,016



59


21.4



(681)


(67.0)



12,277



11,277



13,722



14,655



11,593



1,000


8.9



684


5.9


















Non-interest expense

(Dollars in thousands)

Salaries and employee benefits

23,446



23,918



22,867



22,337



23,374



(472)


(2.0)



72


0.3


Advertising

1,039



751



1,035



1,036



1,140



288


38.3



(101)


(8.9)


Occupancy and equipment

3,715



3,822



3,779



3,691



3,592



(107)


(2.8)



123


3.4


Outside professional services

889



940



1,227



816



1,114



(51)


(5.4)



(225)


(20.2)


Regulatory assessments

1,316



1,169



1,330



1,133



1,266



147


12.6



50


3.9


Data processing

3,991



3,989



3,664



3,290



3,116



2


0.1



875


28.1


Office operations

2,524



2,368



2,541



2,468



2,773



156


6.6



(249)


(9.0)


Other

2,628



2,717



3,170



2,771



2,668



(89)


(3.3)



(40)


(1.5)



39,548



39,674



39,613



37,542



39,043



(126)


(0.3)



505


1.3


Income before income tax expense

38,980



41,616



36,663



33,664



25,092



(2,636)


(6.3)



13,888


55.3


Income tax expense

13,675



14,399



13,446



11,582



8,646



(724)


(5.0)



5,029


58.2


Net income

$

25,305



$

27,217



$

23,217



$

22,082



$

16,446



$

(1,912)


(7.0)

%


$

8,859


53.9

%


N/M - Not meaningful

 

LegacyTexas Financial Group, Inc.

Selected Quarterly Financial Highlights (unaudited)



At or For the Quarters Ended


December 31,
 2016


September 30,
 2016


December 31,
 2015

SHARE DATA:

(Dollars in thousands, except per share amounts)

Weighted average common shares outstanding- basic

46,346,053



46,227,734



45,939,817


Weighted average common shares outstanding- diluted

46,873,215



46,546,532



46,267,956


Shares outstanding at end of period

47,876,198



47,773,160



47,645,826


Income available to common shareholders1

$

25,174



$

27,084



$

16,336


Basic earnings per common share

0.54



0.59



0.36


Basic core (non-GAAP) earnings per common share2

0.55



0.61



0.36


Diluted earnings per common share

0.54



0.58



0.35


Dividends declared per share

0.15



0.15



0.14


Total shareholders' equity

885,365



866,845



804,076


Common shareholders' equity per share (book value per share)

18.49



18.15



16.88


Tangible book value per share- Non-GAAP2

14.75



14.39



13.06


Market value per share for the quarter:






High

43.81



31.90



31.97


Low

31.59



25.81



24.59


Close

43.06



31.63



25.02


KEY RATIOS:






Return on average common shareholders' equity

11.50

%


12.66

%


8.22

%

Core (non-GAAP) return on average common shareholders' equity2

11.50



13.11



8.17


Return on average assets

1.20



1.33



0.95


Core (non-GAAP) return on average assets2

1.20



1.38



0.95


Efficiency ratio (GAAP basis)

45.79



46.81



51.83


Core (non-GAAP) efficiency ratio2

45.79



46.00



51.92


Estimated Tier 1 common equity risk-based capital ratio3

9.13



8.91



9.56


Estimated total risk-based capital ratio3

11.71



11.41



11.58


Estimated Tier 1 risk-based capital ratio3

9.28



9.06



9.73


Estimated Tier 1 leverage ratio3

8.73



8.72



9.46


Total equity to total assets

10.59



10.27



10.45


Tangible equity to tangible assets- Non-GAAP2

8.63



8.32



8.29


Number of employees- full-time equivalent

885



873



840












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 Full Year Financial Highlights (unaudited)



At or For the Years Ended


December 31, 2016


December 31, 2015

SHARE DATA:

(Dollars in thousands, except per share amounts)

Basic earnings per common share

$

2.11



$

1.54


Basic core (non-GAAP) earnings per common share1

2.08



1.57


Diluted earnings per common share

2.09



1.53


Dividends declared per share

0.58



0.54


KEY RATIOS:




Return on average common shareholders' equity

11.52

%


9.12

%

Core (non-GAAP) return on average common shareholders' equity1

11.34



9.24


Return on average assets

1.24



1.10


Core (non-GAAP) return on average assets1

1.22



1.12


Efficiency ratio (GAAP basis)

46.79



53.01


Core (non-GAAP) efficiency ratio1

47.30



52.49



1 See the section labeled "Supplemental Information- Non-GAAP Financial Measures" at the end of this document.

 


LegacyTexas Financial Group, Inc.

Selected Loan Data (unaudited)



At the Quarter Ended


December 31,
 2016


September 30,
 2016


June 30,
 2016


March 31,
 2016


December 31,
 2015

Loans held for investment:

(Dollars in thousands)

Commercial real estate

$

2,670,455



$

2,533,404



$

2,520,431



$

2,324,338



$

2,177,543


Warehouse Purchase Program

1,055,341



1,345,818



980,390



1,028,561



1,043,719


Commercial and industrial

1,971,160



1,812,558



1,782,463



1,640,042



1,612,669


Construction and land

294,894



307,734



281,936



267,543



269,708


Consumer real estate

1,074,923



1,046,397



1,046,794



972,115



936,757


Other consumer

53,991



57,131



61,423



65,274



69,830


Gross loans held for investment

$

7,120,764



$

7,103,042



$

6,673,437



$

6,297,873



$

6,110,226


Non-performing assets:










Commercial real estate

$

5,195



$

5,336



$

1,183



$

1,307



$

11,418


Commercial and industrial

86,664



28,282



31,362



30,105



16,877


Construction and land

11,385



27



27



31



33


Consumer real estate

7,987



7,051



10,005



11,948



9,781


Other consumer

158



169



274



105



107


Total non-performing loans

111,389



40,865



42,851



43,496



38,216


Foreclosed assets

10,838



13,460



13,368



13,370



6,692


Total non-performing assets

$

122,227



$

54,325



$

56,219



$

56,866



$

44,908


Total non-performing assets to total assets

1.46

%


0.64

%


0.70

%


0.75

%


0.58

%

Total non-performing loans to total loans held for investment, excluding Warehouse Purchase Program loans

1.84

%


0.71

%


0.75

%


0.83

%


0.75

%

Total non-performing loans to total loans held for investment

1.56

%


0.58

%


0.64

%


0.69

%


0.63

%

Allowance for loan losses to non-performing loans

57.97

%


140.26

%


145.14

%


127.56

%


123.23

%

Allowance for loan losses to total loans held for investment, excluding Warehouse Purchase Program loans

1.06

%


1.00

%


1.09

%


1.05

%


0.93

%

Allowance for loan losses to total loans held for investment

0.91

%


0.81

%


0.93

%


0.88

%


0.77

%

Allowance for loan losses to total loans held for investment, excluding acquired loans and Warehouse Purchase Program loans1

1.18

%


1.12

%


1.26

%


1.25

%


1.14

%

Troubled debt restructured loans ("TDRs"):

(Dollars in thousands)

Performing TDRs:










Commercial real estate

$

154



$

156



$

158



$

160



$

161


Commercial and industrial





7



15



30


Consumer real estate

269



271



361



364



368


Other consumer

31



35



39



42



46


Total performing TDRs

$

454



$

462



$

565



$

581



$

605


Non-performing TDRs:2










Commercial real estate

$

808



$

813



$

820



$

938



$

946


Commercial and industrial

9,181



8,700



8,726



8,923



1,793


Consumer real estate

1,669



1,725



3,603



3,625



3,393


Other consumer

43



50



51



65



75


Total non-performing TDRs

$

11,701



$

11,288



$

13,200



$

13,551



$

6,207


Allowance for loan losses:










Balance at beginning of period

$

57,318



$

62,194



$

55,484



$

47,093



$

36,382


Provision expense for loans

7,500



2,300



6,800



8,800



11,200


Charge-offs

(367)



(7,566)



(345)



(581)



(722)


Recoveries

125



390



255



172



233


Balance at end of period

$

64,576



$

57,318



$

62,194



$

55,484



$

47,093


Net charge-offs (recoveries):










Commercial real estate

$

(5)



$

72



$

(3)



$

(6)



$

71


Commercial and industrial

34



6,989



(96)



347



317


Consumer real estate

20



(40)



61



(43)



(19)


Other consumer

193



155



128



111



120


Total net charge-offs

$

242



$

7,176



$

90



$

409



$

489


Allowance for off-balance sheet lending-related commitments










Provision expense for credit losses

$

333



$

1,167



$



$



$



Excludes loans acquired in the Highlands and LegacyTexas 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


December 31,
 2016


September 30,
 2016


June 30,
 2016


March 31,
 2016


December 31, 2015

Loans:

(Dollars in thousands)

Commercial real estate

$

2,599,006



$

2,548,202



$

2,416,288



$

2,228,682



$

2,102,708


Warehouse Purchase Program

1,100,723



1,131,959



987,225



796,832



777,927


Commercial and industrial

1,836,519



1,710,387



1,695,037



1,612,125



1,502,875


Construction and land

300,460



290,930



266,968



269,691



277,597


Consumer real estate

1,052,231



1,055,801



1,002,848



949,568



895,336


Other consumer

56,480



59,212



63,525



67,055



72,981


Less: deferred fees and allowance for loan loss

(58,723)



(54,485)



(55,940)



(49,178)



(40,987)


Total loans held for investment

6,886,696



6,742,006



6,375,951



5,874,775



5,588,437


Loans held for sale

22,509



18,132



19,726



19,588



18,560


Securities

620,775



637,294



623,148



599,680



631,916


Overnight deposits

481,451



343,906



291,754



238,576



230,598


Total interest-earning assets

$

8,011,431



$

7,741,338



$

7,310,579



$

6,732,619



$

6,469,511


Deposits:










Interest-bearing demand

$

838,631



$

821,516



$

784,741



$

774,798



$

748,176


Savings and money market

2,686,847



2,414,974



2,166,002



2,209,675



2,028,249


Time

1,407,415



1,372,424



1,169,960



1,049,810



965,131


FHLB advances and other borrowings

1,201,004



1,333,438



1,508,787



1,106,577



1,075,948


Total interest-bearing liabilities

$

6,133,897



$

5,942,352



$

5,629,490



$

5,140,860



$

4,817,504












Total assets

$

8,445,209



$

8,176,612



$

7,739,015



$

7,157,259



$

6,891,210


Non-interest-bearing demand deposits

$

1,349,561



$

1,283,434



$

1,194,118



$

1,134,070



$

1,198,337


Total deposits

$

6,282,454



$

5,892,348



$

5,314,821



$

5,168,353



$

4,939,893


Total shareholders' equity

$

880,250



$

860,142



$

835,752



$

818,538



$

800,411












Yields/Rates:










Loans:










Commercial real estate

5.08

%


5.22

%


5.04

%


5.05

%


5.13

%

Warehouse Purchase Program

3.31

%


3.27

%


3.26

%


3.35

%


3.33

%

Commercial and industrial

4.65

%


4.49

%


4.36

%


4.45

%


4.49

%

Construction and land

5.11

%


5.24

%


5.34

%


5.35

%


5.41

%

Consumer real estate

4.60

%


4.71

%


4.69

%


4.77

%


4.81

%

Other consumer

5.69

%


5.68

%


5.62

%


5.66

%


5.63

%

Total loans held for investment

4.66

%


4.68

%


4.59

%


4.67

%


4.72

%

Loans held for sale

3.41

%


3.46

%


3.55

%


3.68

%


3.79

%

Securities

2.20

%


2.19

%


2.29

%


2.32

%


2.10

%

Overnight deposits

0.58

%


0.54

%


0.54

%


0.55

%


0.36

%

Total interest-earning assets

4.22

%


4.28

%


4.23

%


4.31

%


4.30

%

Deposits:










Interest-bearing demand

0.50

%


0.50

%


0.49

%


0.48

%


0.47

%

Savings and money market

0.39

%


0.33

%


0.24

%


0.24

%


0.19

%

Time

0.86

%


0.80

%


0.73

%


0.70

%


0.71

%

FHLB advances and other borrowings

1.23

%


1.10

%


0.94

%


1.13

%


0.84

%

Total interest-bearing liabilities

0.68

%


0.63

%


0.57

%


0.56

%


0.48

%

Net interest spread

3.54

%


3.65

%


3.66

%


3.75

%


3.82

%

Net interest margin

3.70

%


3.80

%


3.79

%


3.88

%


3.94

%

Cost of deposits (including non-interest-bearing demand)

0.43

%


0.39

%


0.33

%


0.32

%


0.29

%

 

LegacyTexas Financial Group, Inc.

Supplemental Information- Non-GAAP Financial Measures

(unaudited)



At or For the Quarters Ended


December 31,
 2016


September 30,
 2016


June 30,
 2016


March 31,
 2016


December 31,
 2015

Reconciliation of Core (non-GAAP) to GAAP Net Income and Earnings per Share (calculated net of estimated tax rate of 35%, except as otherwise noted)

(Dollars in thousands, except per share amounts)

GAAP net income available to common shareholders1

$

25,174



$

27,084



$

23,114



$

21,954



$

16,336


Distributed and undistributed earnings to participating securities1

131



133



103



128



110


GAAP net income

25,305



27,217



23,217



22,082



16,446


Net (gain) on sale of insurance subsidiary operations2





(39)






(Gain) on sale of branch locations







(2,529)



(90)


Loss on sale of FHA loan portfolio



969








Core (non-GAAP) net income

$

25,305



$

28,186



$

23,178



$

19,553



$

16,356


Average shares for basic earnings per share

46,346,053


46,227,734


46,135,999


46,024,250



45,939,817


Basic GAAP earnings per share

$

0.54



$

0.59



$

0.50



$

0.48



$

0.36


Basic core (non-GAAP) earnings per share

$

0.55



$

0.61



$

0.50



$

0.42



$

0.36


Average shares for diluted earnings per share

46,873,215


46,546,532


46,352,141


46,152,301



46,267,956


Diluted GAAP earnings per share

$

0.54



$

0.58



$

0.50



$

0.48



$

0.35


Diluted core (non-GAAP) earnings per share

$

0.54



$

0.61



$

0.50



$

0.42



$

0.35


Reconciliation of Core (non-GAAP) to GAAP Non-Interest Income (gross of tax)










GAAP non-interest income

$

12,277



$

11,277



$

13,722



$

14,655



$

11,593


Net (gain) on sale of insurance subsidiary operations





(1,181)






(Gain) loss on sale of branch locations







(3,891)



(138)


Loss on sale of FHA loan portfolio



1,491








Core (non-GAAP) non-interest income

$

12,277



$

12,768



$

12,541



$

10,764



$

11,455



1 Unvested share-based awards that contain nonforfeitable rights to dividends (whether paid or unpaid) are participating securities and are included in the computation of GAAP earnings per share pursuant to the two-class method described in ASC 260-10-45-60B.

2  Calculated net of tax on extraordinary gain totaling $1.1 million.

 


At or For the Quarters Ended


December 31,
 2016


September 30,
 2016


June 30,
 2016


March 31,
 2016


December 31,
 2015

Reconciliation of Core (non-GAAP) to GAAP Efficiency Ratio (gross of tax)

(Dollars in thousands)

GAAP efficiency ratio:










Non-interest expense

$

39,548



$

39,674



$

39,613



$

37,542



$

39,043


Net interest income plus non-interest income

86,361



84,757



83,076



80,006



75,335


Efficiency ratio- GAAP basis

45.79

%


46.81

%


47.68

%


46.92

%


51.83

%

Core (non-GAAP) efficiency ratio:










Non-interest expense

$

39,548



$

39,674



$

39,613



$

37,542



$

39,043


Net interest income plus core (non-GAAP) non-interest income

86,361



86,248



81,895



76,115



75,197


Efficiency ratio- core (non-GAAP) basis

45.79

%


46.00

%


48.37

%


49.32

%


51.92

%











Calculation of Tangible Book Value per Share:









Total shareholders' equity

$

885,365



$

866,845



$

843,304



$

823,052



$

804,076


Less: Goodwill

(178,559)



(178,559)



(178,559)



(180,776)



(180,776)


Identifiable intangible assets, net

(665)



(752)



(838)



(924)



(1,030)


Total tangible shareholders' equity

$

706,141



$

687,534



$

663,907



$

641,352



$

622,270


Shares outstanding at end of period

47,876,198


47,773,160


47,670,440


47,645,826



47,645,826












Book value per share- GAAP

$

18.49



$

18.15



$

17.69



$

17.27



$

16.88


Tangible book value per share- Non-GAAP

14.75



14.39



13.93



13.46



13.06












Calculation of Tangible Equity to Tangible Assets:









Total assets

$

8,362,255



$

8,440,010



$

8,057,005



$

7,562,126



$

7,691,940


Less: Goodwill

(178,559)



(178,559)



(178,559)



(180,776)



(180,776)


Identifiable intangible assets, net

(665)



(752)



(838)



(924)



(1,030)


Total tangible assets

$

8,183,031



$

8,260,699



$

7,877,608



$

7,380,426



$

7,510,134












Equity to assets- GAAP

10.59

%


10.27

%


10.47

%


10.88

%


10.45

%

Tangible equity to tangible assets- Non-GAAP

8.63



8.32



8.43



8.69



8.29



Calculation of Return on Average Assets and Return on Average Equity Ratios (GAAP and core) (unaudited)

Net income

$

25,305



$

27,217



$

23,217



$

22,082



$

16,446


Core (non-GAAP) net income

25,305



28,186



23,178



19,553



16,356


Average total equity

880,250



860,142



835,752



818,538



800,411


Average total assets

8,445,209



8,176,612



7,739,015



7,157,259



6,891,210


Return on average common shareholders' equity

11.50

%


12.66

%


11.11

%


10.79

%


8.22

%

Core (non-GAAP) return on average common shareholders' equity

11.50



13.11



11.09



9.56



8.17


Return on average assets

1.20



1.33



1.20



1.23



0.95


Core (non-GAAP) return on average assets

1.20



1.38



1.20



1.09



0.95


 


At or For the Years Ended


December 31, 2016


December 31, 2015

Reconciliation of Core (non-GAAP) to GAAP Net Income and Earnings per Share (calculated net of estimated tax rate of 35%, except as otherwise noted)

(Dollars in thousands, except per share amounts)

GAAP net income available to common shareholders 1

$

97,324



$

70,382


Distributed and undistributed earnings to participating securities 1

497



534


GAAP net income

97,821



70,916


Merger and acquisition costs



1,009


Net (gain) on sale of insurance subsidiary operations2

(39)




(Gain) on sale of branch locations

(2,529)



(190)


Loss on sale of FHA loan portfolio

969




Valuation adjustment on mortgage servicing rights



121


Core (non-GAAP) net income

$

96,222



$

71,856


Average shares for basic earnings per share

46,184,074



45,847,284


Basic (GAAP) earnings per share

$

2.11



$

1.54


Basic core (non-GAAP) earnings per share

$

2.08



$

1.57


Average shares for diluted earnings per share

46,484,967



46,125,447


Diluted GAAP earnings per share

$

2.09



$

1.53


Diluted core (non-GAAP) earnings per share

$

2.07



$

1.56






Reconciliation of Core (non-GAAP) to GAAP Non-Interest Income (gross of tax)

GAAP non-interest income

$

51,931



$

44,815


Net (gain) on sale of insurance subsidiary operations

(1,181)




(Gain) loss on sale of branch locations

(3,891)



(293)


Loss on sale of FHA loan portfolio

1,491




Valuation adjustment on mortgage servicing rights



186


Core (non-GAAP) non-interest income

$

48,350



$

44,708






GAAP non-interest expense

$

156,377



$

151,555


Merger and acquisition costs



(1,553)


Core (non-GAAP) non-interest expense

$

156,377



$

150,002






Reconciliation of Core (non-GAAP) to GAAP Efficiency Ratio (gross of tax)



Net interest income

$

282,269



$

241,077


GAAP efficiency ratio:




Non-interest expense

$

156,377



$

151,555


Net interest income plus non-interest income

334,200



285,892


Efficiency ratio- GAAP basis

46.79

%


53.01

%

Core (non-GAAP) efficiency ratio:




Core (non-GAAP) non-interest expense

$

156,377



$

150,002


Net interest income plus core (non-GAAP) non-interest income

330,619



285,785


Efficiency ratio- core (non-GAAP) basis

47.30

%


52.49

%


1 Unvested share-based awards that contain nonforfeitable rights to dividends (whether paid or unpaid) are participating securities and are included in the computation of GAAP earnings per share pursuant to the two-class method described in ASC 260-10-45-60B.

2 Calculated net of tax on extraordinary gain totaling $1.1 million.

 


At or For the Years Ended


December 31, 2016


December 31, 2015


(Dollars in thousands, except per share amounts)

Calculation of Return on Average Assets and Return on Average Equity Ratios (GAAP and core) (unaudited)

Net income

$

97,821



$

70,916


Core (non-GAAP) net income

96,222



71,856


Average total equity

848,788



777,408


Average total assets

7,881,881



6,442,998


Return on average common shareholders' equity

11.52

%


9.12

%

Core (non-GAAP) return on average common shareholders' equity

11.34



9.24


Return on average assets

1.24



1.10


Core (non-GAAP) return on average assets

1.22



1.12


 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/legacytexas-financial-group-inc-reports-fourth-quarter-and-full-year-2016-earnings-300395964.html

SOURCE LegacyTexas Financial Group, Inc.

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