Market Overview

LegacyTexas Financial Group, Inc. Reports Third Quarter 2017 Earnings of $28.7 million

Share:

PLANO, Texas, Oct. 24, 2017 /PRNewswire/ -- LegacyTexas Financial Group, Inc. (Nasdaq: LTXB) (the "Company"), the holding company for LegacyTexas Bank (the "Bank"), today announced net income of $28.7 million for the third quarter of 2017, an increase of $774,000 from the second quarter of 2017 and $1.5 million from the third quarter of 2016.

www.LegacyTexasFinancialGroup.com . (PRNewsFoto/) (PRNewsFoto/LegacyTexas Financial Group, Inc)" alt="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, visit www.LegacyTexasFinancialGroup.com . (PRNewsFoto/) (PRNewsFoto/LegacyTexas Financial Group, Inc)"/>

"We are pleased to announce yet another solid quarter for our company," said President and CEO Kevin Hanigan.  "We continue to grow our customer base as evidenced by strong growth in both loans and deposits.  Our team continues to execute on our strategy of growing while managing costs and risk."

Third Quarter 2017 Performance Highlights

  • Company assets of $9.07 billion generated basic earnings per share for the third quarter of 2017 of $0.61 on both a GAAP and core (non-GAAP) basis.
  • Gross loans held for investment at September 30, 2017, excluding Warehouse Purchase Program loans, grew $208.6 million from June 30, 2017, while total deposits grew $197.9 million for the same period.
  • Efficiency ratio improved to 44.19% for the quarter ended September 30, 2017, compared to 44.96% for the quarter ended June 30, 2017.
  • Return on average assets for the quarter ended September 30, 2017 was 1.29%, compared to 1.32% for the quarter ended June 30, 2017 and 1.33% for the quarter ended September 30, 2016.

 

Financial Highlights



At or For the Quarters Ended

(unaudited)

Sep 30, 2017


Jun 30, 2017


Sep 30, 2016


(Dollars in thousands, except per share amounts)

Net interest income

$

78,964



$

75,720



$

73,480


Provision for credit losses

7,157



6,255



3,467


Non-interest income

12,226



12,325



11,277


Non-interest expense

40,295



39,589



39,674


Income tax expense

15,029



14,266



14,399


Net income

$

28,709



$

27,935



$

27,217








Basic earnings per common share

$

0.61



$

0.60



$

0.59


Basic core (non-GAAP) earnings per common share1

$

0.61



$

0.60



$

0.61


Weighted average common shares outstanding - basic

46,664,233



46,596,467



46,227,734


Estimated Tier 1 common equity risk-based capital ratio2

9.17

%


8.92

%


8.91

%

Total equity to total assets

10.48

%


10.31

%


10.27

%

Tangible common equity to tangible assets - Non-GAAP1

8.67

%


8.49

%


8.32

%



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 $28.5 million for the quarter ended September 30, 2017, up $537,000 from the second quarter of 2017 and up $286,000 from the third quarter of 2016.  Basic earnings per share for the quarter ended September 30, 2017 was $0.61, an increase of $0.01 from the second quarter of 2017 and $0.02 from the third quarter of 2016.  Basic core earnings per share for the third quarter of 2017 was $0.61, up $0.01 from the second quarter of 2017 and unchanged from the third quarter of 2016.

Net Interest Income and Net Interest Margin



For the Quarters Ended

(unaudited)

Sep 30, 2017


Jun 30, 2017


Sep 30, 2016


(Dollars in thousands)

Interest income:






Loans held for investment, excluding Warehouse Purchase Program loans

$

78,986



$

75,432



$

69,543


Warehouse Purchase Program loans

9,873



8,260



9,266


Loans held for sale

225



225



157


Securities

3,855



3,875



3,482


Interest-earning deposit accounts

1,524



955



463


Total interest income

$

94,463



$

88,747



$

82,911


Net interest income

$

78,964



$

75,720



$

73,480


Net interest margin

3.71

%


3.77

%


3.78

%

Selected average balances:






Total earning assets

$

8,451,478



$

8,052,636



$

7,741,338


Total loans held for investment

7,331,173



7,060,044



6,742,006


Total securities

652,841



645,605



637,294


Total deposits

6,632,649



6,319,171



5,892,348


Total borrowings

1,178,031



1,142,998



1,333,438


Total non-interest-bearing demand deposits

1,481,654



1,410,566



1,283,434


Total interest-bearing liabilities

6,329,026



6,051,603



5,942,352


Net interest income for the quarter ended September 30, 2017 was $79.0 million, a $3.2 million increase from the second quarter of 2017 and a $5.5 million increase from the third quarter of 2016.  The average balance of commercial real estate loans increased by $72.9 million to $2.85 billion from the second quarter of 2017, resulting in a $1.2 million increase in interest income, while the average balance of consumer real estate loans increased by $50.2 million to $1.18 billion for the same period, resulting in a $422,000 increase in interest income.  The average yield earned on commercial and industrial loans during the quarter ended September 30, 2017 was 4.89%, a 26 basis point increase from the linked quarter, which was primarily related to the current rising interest rate environment, as well as $295,000 in unamortized loan origination fees that were recognized as interest income during the third quarter of 2017 on the pay off of an energy loan.  This linked-quarter increase in average yield, as well as a $27.0 million increase in the average balance of commercial and industrial loans to $2.02 billion from the second quarter of 2017, resulted in a $1.9 million increase in interest income.  The average balance of Warehouse Purchase Program loans increased by $124.7 million to $1.02 billion from the second quarter of 2017, resulting in a $1.6 million increase in interest income.  Interest income on loans for the third quarter of 2017 included $750,000 in accretion of purchase accounting fair value adjustments on acquired loans, which included $281,000 on acquired commercial real estate loans, $88,000 on acquired commercial and industrial loans, $53,000 on acquired construction and land loans and $328,000 on acquired consumer loans.

The $5.5 million increase in net interest income compared to the third quarter of 2016 was primarily due to a $10.1 million increase in interest income on loans, which was driven by increased volume in the commercial real estate, commercial and industrial and consumer real estate loan portfolios, as well as higher yields earned on commercial and industrial and Warehouse Purchase Program loans.  The average balance of commercial real estate loans increased by $306.1 million from the third quarter of 2016, resulting in a $3.1 million increase in interest income.  The average balance of commercial and industrial loans increased by $312.5 million from the third quarter of 2016, while the average yield earned on this portfolio increased by 42 basis points for the same period, resulting in a $5.7 million increase in interest income.  The average balance of consumer real estate loans increased by $121.2 million compared to the third quarter of 2016, leading to a $908,000 increase in interest income. Despite a $111.3 million decline in the average balance compared to the prior year period, interest income on Warehouse Purchase Program loans increased by $607,000 due to a 58 basis point increase in the average yield earned for the third quarter of 2017, compared to the same quarter last year.

Interest expense for the quarter ended September 30, 2017 increased by $2.5 million compared to the linked quarter, which was primarily due to higher average deposit and borrowing rates, as well as increases of $154.5 million, $62.4 million and $25.5 million in the average balances of savings and money market, time and interest-bearing demand deposits, respectively, compared to the second quarter of 2017.  A 12 basis point increase in the average rate paid for borrowings and a $35.0 million increase in the average balance of borrowings from the second quarter of 2017 resulted in a $560,000 increase in interest expense on borrowed funds.

Compared to the third quarter of 2016, interest expense for the quarter ended September 30, 2017 increased by $6.1 million, primarily due to higher average deposit and borrowing rates and increased volume in all deposit products.  The average balance of savings and money market and time deposits increased by $442.8 million and $45.7 million, respectively, compared to the third quarter of 2016, while the average rates paid on these deposits increased by 35 basis points and 30 basis points, respectively, compared to the prior year period.  These increases in volume and rate on savings and money market and time deposits increased interest expense compared to the third quarter of 2016 by $2.9 million and $1.2 million, respectively.  The average rate paid on interest-bearing demand deposits increased by 18 basis points compared to the third quarter of 2016, while the average balance of interest-bearing demand deposits increased by $53.6 million for the same period.  A $155.4 million decrease in the average balance of borrowings from the third quarter of 2016 was more than offset by a 66 basis point increase in the average rate, resulting in a $1.6 million increase in interest expense on borrowed funds.

The net interest margin for the third quarter of 2017 was 3.71%, a six basis point decrease from the second quarter of 2017 and a seven basis point decrease from the third quarter of 2016.  The average yield on earning assets for the third quarter of 2017 was 4.44%, a two basis point increase from the second quarter of 2017 and a 17 basis point increase from the third quarter of 2016.  The cost of deposits for the third quarter of 2017 was 0.61%, up eight basis points from the linked quarter and up 22 basis points from the third quarter of 2016.

Non-interest Income

Non-interest income for the third quarter of 2017 was $12.2 million, a $99,000 decrease from the second quarter of 2017 and a $949,000 increase from the third quarter of 2016.  Service charges and other fees decreased by $605,000 from the second quarter of 2017, which was primarily due to a $308,000 decrease in title premiums and a $207,000 decrease 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 third quarter of 2017, which includes gains recognized on $52.4 million of one-to four-family mortgage loans that were sold or committed for sale during the third quarter of 2017 and fair value changes on mortgage derivatives and mortgage fees collected, compared to $2.2 million in comparable net gains recorded during the second quarter of 2017 on $56.4 million of one-to four-family mortgage loans sold or committed for sale.  Other non-interest income for the third quarter of 2017 included a $134,000 net increase in the value of investments in community development-oriented private equity funds used for Community Reinvestment Act purposes (the "CRA Funds"), compared to a $368,000 net decrease in the CRA Funds for the second quarter of 2017.  Gain (loss) on sale and disposition of assets for the third quarter of 2017 included a $365,000 gain on the sale of a branch location, compared to a $139,000 gain on the sale of foreclosed properties recorded in the second quarter of 2017. 

The $949,000 increase in non-interest income from the third quarter of 2016 was primarily due to a $1.8 million increase in gain (loss) on sale and disposition of assets due to a loss of $1.5 million recorded in the third quarter of 2016 on the sale of the Company's Federal Housing Administration ("FHA") loan portfolio, compared to a $365,000 gain on the sale of a branch location recorded in the third quarter of 2017.  Service charges and other fees decreased by $379,000, which was driven by a $355,000 decrease in commercial loan fee income (consisting of syndication, arrangement, non-usage and pre-payment fees).  Net gains on the sale of mortgage loans held for sale during the third quarter of 2017 decreased by $401,000 compared to the third quarter of 2016, which included gains recognized on $60.2 million of one-to four-family mortgage loans that were sold or committed for sale and fair value changes on mortgage derivatives and mortgage fees collected during the 2016 period, compared to $52.4 million for the third quarter of 2017.

Non-interest Expenses

Non-interest expense for the quarter ended September 30, 2017 was $40.3 million, a $706,000 increase from the second quarter of 2017 and a $621,000 increase from the third quarter of 2016.  Salaries and employee benefits expense increased by $784,000 from the second quarter of 2017, which was primarily driven by increased health care costs and decreased deferred salary costs related to loan originations that will be accounted for over the lives of the related loans.  Compared to the second quarter of 2017, data processing expense increased by $410,000 due to increased costs for system upgrades to enhance customer service and increase operating efficiency, while other non-interest expense increased by $327,000, primarily due to increased lending expenses.  Occupancy and equipment expense decreased by $357,000 compared to the second quarter of 2017, primarily resulting from an early termination fee collected from a tenant.   Regulatory assessments expense for the quarter ended September 30, 2017 decreased by $260,000 due to a lower FDIC assessment rate for the third quarter of 2017, while advertising expense decreased by $199,000 for the same period due to a lower number of events and sponsorships compared to the linked quarter. 

The $621,000 increase in non-interest expense from the third quarter of 2016 was primarily related to a $298,000 increase in data processing expense due to increased costs for system upgrades to enhance customer service and increase operating efficiency and a $290,000 increase in outside professional services expense related to higher consulting, legal and compliance costs.  Salaries and employee benefits expense also increased by $257,000 compared to the 2016 period, which was driven by merit increases, as well as increased health care costs and higher share-based compensation expense related to new stock awards granted in the 2017 period. 

Financial Condition - Loans

Gross loans held for investment at September 30, 2017, excluding Warehouse Purchase Program loans, grew $208.6 million from June 30, 2017, which included growth in commercial real estate, construction and land and consumer real estate loans.  Commercial real estate and construction and land loans at September 30, 2017 increased by $199.1 million and $12.5 million, respectively, from June 30, 2017, and consumer real estate loans increased by $43.6 million for the same period.  These linked-quarter increases were partially offset by a $45.0 million decline in commercial and industrial loans.

Compared to September 30, 2016, gross loans held for investment at September 30, 2017, excluding Warehouse Purchase Program loans, grew $860.7 million, which included growth in commercial real estate, commercial and industrial and consumer real estate loans.  On a year-over-year basis, commercial real estate, commercial and industrial and consumer real estate loans increased by $483.1 million, $262.1 million and $151.5 million, respectively.  These year-over-year increases were partially offset by declines of $25.2 million and $10.9 million in construction and land and other consumer loans, respectively. 

At September 30, 2017, Warehouse Purchase Program loans decreased by $128.8 million compared to June 30, 2017 and by $217.9 million compared to September 30, 2016. 

Reserve-based energy loans, which are secured by deeds of trust on properties containing proven oil and natural gas reserves and included in the Company's commercial and industrial loan portfolio, totaled $526.8 million at September 30, 2017, up $11.3 million from $515.5 million at June 30, 2017 and up $93.3 million from $433.5 million at September 30, 2016.  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 September 30, 2017, "Midstream and Other" loans had a total outstanding balance of $27.8 million, down $2.6 million from $30.4 million at June 30, 2017 and down $26.1 million from $53.9 million at September 30, 2016.

Financial Condition - Deposits

Total deposits at September 30, 2017 increased by $197.9 million from June 30, 2017, which included growth in non-interest-bearing demand deposits, which increased by $6.2 million, and growth in savings and money market balances, which increased by $282.0 million.  These increases were partially offset by an $86.5 million decline in time deposits and a $3.9 million decline in interest-bearing demand balances. 

Compared to September 30, 2016, total deposits increased by $632.3 million, which includes growth in all deposit categories with the exception of time deposit balances, which declined by $87.2 million.  Savings and money market deposits and non-interest-bearing demand deposits increased by $525.2 million and $153.2 million, respectively, while interest-bearing demand deposits increased by $41.1 million from September 30, 2016.

Credit Quality



At or For the Quarters Ended

(unaudited)

Sep 30, 2017


Jun 30, 2017


Sep 30, 2016


(Dollars in thousands)

Net charge-offs

$

12,347



$

1,765



$

7,176


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

0.78

%


0.11

%


0.51

%

Net charge-offs/Average loans held for investment

0.67



0.10



0.43


Provision for credit losses

$

7,157



$

6,255



$

3,467


Non-performing loans ("NPLs")

76,915



99,196



40,865


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

1.16

%


1.55

%


0.71

%

NPLs/Total loans held for investment

0.99



1.29



0.58


Non-performing assets ("NPAs")

$

90,500



$

112,479



$

54,325


NPAs to total assets

1.00

%


1.25

%


0.64

%

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

1.36



1.75



0.94


NPAs/Loans held for investment and foreclosed assets

1.17



1.46



0.76


Allowance for loan losses

$

70,044



$

75,091



$

57,318


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

1.06

%


1.17

%


1.00

%

Allowance for loan losses/Total loans held for investment

0.90



0.98



0.81


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

1.13



1.26



1.12


Allowance for loan losses/NPLs

91.07



75.70



140.26




1

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 $7.2 million for the quarter ended September 30, 2017, an increase of $902,000 from the quarter ended June 30, 2017 and $3.7 million from the quarter ended September 30, 2016.  The increase in provision expense on a linked-quarter and year-over-year basis was primarily related to $11.9 million in charge-offs recorded during the third quarter of 2017 on the resolution of two reserve-based energy relationships.  These relationships, which totaled  $22.6 million at June 30, 2017, were rated as substandard and were non-performing; therefore, the resolution of these credits drove the $22.3 million decline in non-performing loans compared to June 30, 2017.

The below table shows criticized (rated "special mention") and classified (rated "substandard" or "doubtful") loans at September 30, 2017, June 30, 2017 and September 30, 2016. 


Sep 30, 2017


Jun 30, 2017


Sep 30, 2016


Linked-Quarter

 Change


Year-over-Year

 Change


(Dollars in thousands)

Commercial real estate

$

28,187



$

28,598



$

9,044



$

(411)



$

19,143


Commercial and industrial, excluding energy

16,300



18,771



14,002



(2,471)



2,298


Energy

27,754



59,608



125,807



(31,854)



(98,053)


Consumer

1,491



1,514



2,281



(23)



(790)


Total criticized (all performing)

$

73,732



$

108,491



$

151,134



$

(34,759)



$

(77,402)












Commercial real estate

$

7,094



$

6,822



$

8,512



$

272



$

(1,418)


Commercial and industrial, excluding energy

14,516



8,470



19,637



6,046



(5,121)


Energy

25,589





76,786



25,589



(51,197)


Construction and land



82



88



(82)



(88)


Consumer

2,391



2,423



2,588



(32)



(197)


Total classified performing

49,590



17,797



107,611



31,793



(58,021)












Commercial real estate

4,064



4,201



5,336



(137)



(1,272)


Commercial and industrial, excluding energy

14,548



13,193



6,347



1,355



8,201


Energy

51,012



74,406



21,935



(23,394)



29,077


Construction and land





27





(27)


Consumer

7,291



7,396



7,220



(105)



71


Total classified non-performing

76,915



99,196



40,865



(22,281)



36,050












Total classified loans

$

126,505



$

116,993



$

148,476



$

9,512



$

(21,971)


At September 30, 2017, the allowance for loan losses allocated to the Company's $554.6 million energy loan portfolio totaled $18.4 million, while the allowance for loan losses allocated to the Company's $46.0 million corporate healthcare finance portfolio totaled $4.6 million.

Conference Call

The Company will host an investor conference call to review the results on Wednesday, October 25, 2017 at 8 a.m. Central Time.  Participants may pre-register for the call by visiting http://dpregister.com/10112750 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 1-412-902-4148 and participants in Canada are asked to call (toll-free) 1-855-669-9657.

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 #10112750.  This replay will be available until November 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



September 30,
 2017


June 30,
 2017


March 31,
 2017


December 31,
 2016


September 30,
 2016


(Dollars in thousands)

ASSETS

(unaudited)


(unaudited)


(unaudited)




(unaudited)

Cash and due from financial institutions

$

58,776



$

61,989



$

60,073



$

59,823



$

63,598


Short-term interest-bearing deposits in other financial institutions

268,567



256,251



294,955



229,389



214,289


Total cash and cash equivalents

327,343



318,240



355,028



289,212



277,887


Securities available for sale, at fair value

410,450



397,957



381,831



354,515



433,603


Securities held to maturity

180,968



191,578



200,541



210,387



220,919


Total securities

591,418



589,535



582,372



564,902



654,522


Loans held for sale

25,955



19,374



19,315



21,279



23,184


Loans held for investment:










Loans held for investment - Warehouse Purchase Program

1,127,929



1,256,742



846,973



1,055,341



1,345,818


Loans held for investment

6,617,892



6,409,259



6,265,263



6,065,423



5,757,224


  Gross loans

7,771,776



7,685,375



7,131,551



7,142,043



7,126,226


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

(64,632)



(70,642)



(67,834)



(66,827)



(54,557)


  Net loans

7,707,144



7,614,733



7,063,717



7,075,216



7,071,669


FHLB stock and other restricted securities, at cost

50,333



56,618



43,156



43,266



54,850


Bank-owned life insurance

57,383



57,078



56,768



56,477



56,169


Premises and equipment, net

70,052



71,068



72,312



74,226



72,325


Goodwill

178,559



178,559



178,559



178,559



178,559


Other assets

86,380



84,544



84,630



80,397



74,029


  Total assets

$

9,068,612



$

8,970,375



$

8,436,542



$

8,362,255



$

8,440,010












LIABILITIES AND SHAREHOLDERS' EQUITY







Non-interest-bearing demand

$

1,529,052



$

1,522,856



$

1,449,656



$

1,383,951



$

1,375,883


Interest-bearing demand

889,627



893,544



873,085



903,314



848,564


Savings and money market

2,967,672



2,685,627



2,679,538



2,710,307



2,442,434


Time

1,374,017



1,460,479



1,377,367



1,367,904



1,461,194


Total deposits

6,760,368



6,562,506



6,379,646



6,365,476



6,128,075


FHLB advances

998,146



1,151,682



830,195



833,682



1,134,318


Repurchase agreements

81,073



73,433



76,880



86,691



75,138


Subordinated debt

134,400



134,277



134,155



134,032



134,083


Accrued expenses and other liabilities

144,533



123,194



115,749



57,009



101,551


Total liabilities

8,118,520



8,045,092



7,536,625



7,476,890



7,573,165


Shareholders' equity










Common stock

480



480



479



479



478


Additional paid-in capital

598,820



595,730



592,159



589,408



583,800


Retained earnings

363,890



342,384



321,648



310,641



292,510


Accumulated other comprehensive income (loss), net

(1,045)



(1,125)



(2,051)



(2,713)



2,639


Unearned Employee Stock Ownership Plan (ESOP) shares

(12,053)



(12,186)



(12,318)



(12,450)



(12,582)


Total shareholders' equity

950,092



925,283



899,917



885,365



866,845


Total liabilities and shareholders' equity

$

9,068,612



$

8,970,375



$

8,436,542



$

8,362,255



$

8,440,010


 

LegacyTexas Financial Group, Inc.

Consolidated Quarterly Statements of Income (unaudited)



For the Quarters Ended


Third Quarter 2017 Compared to:


Sep 30,
 2017


Jun 30,
 2017


Mar 31,
 2017


Dec 31,
 2016


Sep 30,
 2016


Second Quarter

 2017


Third Quarter

2016

Interest and dividend income


(Dollars in thousands)


Loans, including fees

$

89,084



$

83,917



$

83,103



$

80,394



$

78,966



$

5,167


6.2

%


$

10,118


12.8

%

Taxable securities

2,694



2,725



2,562



2,269



2,314



(31)


(1.1)



380


16.4


Nontaxable securities

713



739



755



756



763



(26)


(3.5)



(50)


(6.6)


Interest-bearing deposits in other financial institutions

1,524



955



732



693



463



569


59.6



1,061


229.2


FHLB and Federal Reserve Bank stock and other

448



411



384



385



405



37


9.0



43


10.6



94,463



88,747



87,536



84,497



82,911



5,716


6.4



11,552


13.9


Interest expense
















Deposits

10,271



8,359



7,110



6,734



5,756



1,912


22.9



4,515


78.4


FHLB advances

2,944



2,427



1,632



1,526



1,865



517


21.3



1,079


57.9


Repurchase agreements and other borrowings

2,284



2,241



2,246



2,153



1,810



43


1.9



474


26.2



15,499



13,027



10,988



10,413



9,431



2,472


19.0



6,068


64.3


Net interest income

78,964



75,720



76,548



74,084



73,480



3,244


4.3



5,484


7.5


Provision for credit losses

7,157



6,255



22,301



7,833



3,467



902


14.4



3,690


106.4


Net interest income after provision for credit losses

71,807



69,465



54,247



66,251



70,013



2,342


3.4



1,794


2.6


Non-interest income
















Service charges and other fees

9,291



9,896



8,431



9,912



9,670



(605)


(6.1)



(379)


(3.9)


Net gain on sale of mortgage loans held for sale

1,982



2,156



1,628



2,012



2,383



(174)


(8.1)



(401)


(16.8)


Bank-owned life insurance income

435



440



422



436



441



(5)


(1.1)



(6)


(1.4)


Net gain (loss) on securities transactions

(20)





(19)



(6)



(3)



(20)


N/M



(17)


N/M


Gain (loss) on sale and disposition of assets

352



157



1,399



(412)



(1,490)



195


124.2



1,842


N/M


Other

186



(324)



269



335



276



510


N/M



(90)


(32.6)



12,226



12,325



12,130



12,277



11,277



(99)


(0.8)



949


8.4







For the Quarters Ended


Third Quarter 2017 Compared to:


Sep 30,
 2017


Jun 30,
 2017


Mar 31,
 2017


Dec 31,
 2016


Sep 30,
 2016


Second Quarter

 2017


Third Quarter

2016

















Non-interest expense

(Dollars in thousands)

Salaries and employee benefits

24,175



23,391



24,444



23,446



23,918



784


3.4



257


1.1


Advertising

980



1,179



817



1,039



751



(199)


(16.9)



229


30.5


Occupancy and equipment

3,299



3,656



3,654



3,715



3,822



(357)


(9.8)



(523)


(13.7)


Outside professional services

1,230



1,203



1,156



889



940



27


2.2



290


30.9


Regulatory assessments

1,011



1,271



985



1,316



1,169



(260)


(20.5)



(158)


(13.5)


Data processing

4,287



3,877



3,895



3,991



3,989



410


10.6



298


7.5


Office operations

2,378



2,404



2,276



2,524



2,368



(26)


(1.1)



10


0.4


Other

2,935



2,608



2,525



2,628



2,717



327


12.5



218


8.0



40,295



39,589



39,752



39,548



39,674



706


1.8



621


1.6


Income before income tax expense

43,738



42,201



26,625



38,980



41,616



1,537


3.6



2,122


5.1


Income tax expense

15,029



14,266



8,435



13,675



14,399



763


5.3



630


4.4


Net income

$

28,709



$

27,935



$

18,190



$

25,305



$

27,217



$

774


2.8

%


$

1,492


5.5

%


N/M - Not meaningful


 

LegacyTexas Financial Group, Inc.

Selected Quarterly Financial Highlights (unaudited)



At or For the Quarters Ended


September 30,
 2017


June 30,
 2017


September 30,
 2016

SHARE DATA:

(Dollars in thousands, except per share amounts)

Weighted average common shares outstanding- basic

46,664,233



46,596,467



46,227,734


Weighted average common shares outstanding- diluted

47,158,729



47,005,554



46,546,532


Shares outstanding at end of period

48,040,059



48,009,379



47,773,160


Income available to common shareholders1

$

28,617



$

27,837



$

27,084


Basic earnings per common share

0.61



0.60



0.59


Basic core (non-GAAP) earnings per common share2

0.61



0.60



0.61


Diluted earnings per common share

0.61



0.59



0.58


Dividends declared per share

0.15



0.15



0.15


Total shareholders' equity

950,092



925,283



866,845


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

19.78



19.27



18.15


Tangible book value per share- Non-GAAP2

16.05



15.54



14.39


Market value per share for the quarter:






High

39.92



40.18



31.90


Low

34.87



35.22



25.81


Close

39.92



38.13



31.63


KEY RATIOS:






Return on average common shareholders' equity

12.21

%


12.22

%


12.66

%

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

12.11



12.22



13.11


Return on average assets

1.29



1.32



1.33


Core (non-GAAP) return on average assets2

1.28



1.32



1.38


Efficiency ratio (GAAP basis)

44.19



44.96



46.81


Core (non-GAAP) efficiency ratio2

44.37



44.96



46.00


Estimated Tier 1 common equity risk-based capital ratio3

9.17



8.92



8.91


Estimated total risk-based capital ratio3

11.61



11.43



11.41


Estimated Tier 1 risk-based capital ratio3

9.32



9.06



9.06


Estimated Tier 1 leverage ratio3

9.01



9.14



8.72


Total equity to total assets

10.48



10.31



10.27


Tangible equity to tangible assets - Non-GAAP2

8.67



8.49



8.32


Number of employees- full-time equivalent

864



862



873
















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 the Quarter Ended


September 30,
 2017


June 30,
 2017


March 31,
 2017


December 31,
 2016


September 30,
 2016

Loans held for investment:

(Dollars in thousands)

Commercial real estate

$

3,016,533



$

2,817,443



$

2,786,477



$

2,670,455



$

2,533,404


Warehouse Purchase Program

1,127,929



1,256,742



846,973



1,055,341



1,345,818


Commercial and industrial

2,074,635



2,119,678



2,028,347



1,971,160



1,812,558


Construction and land

282,536



270,050



290,258



294,894



307,734


Consumer real estate

1,197,911



1,154,353



1,109,459



1,074,923



1,046,397


Other consumer

46,277



47,735



50,722



53,991



57,131


Gross loans held for investment

$

7,745,821



$

7,666,001



$

7,112,236



$

7,120,764



$

7,103,042


Non-performing assets:










Commercial real estate

$

4,064



$

4,201



$

4,337



$

5,195



$

5,336


Commercial and industrial

65,560



87,599



94,503



86,664



28,282


Construction and land





310



11,385



27


Consumer real estate

7,175



7,265



7,193



7,987



7,051


Other consumer

116



131



1,061



158



169


  Total non-performing loans

76,915



99,196



107,404



111,389



40,865


Foreclosed assets

13,585



13,283



13,654



10,838



13,460


  Total non-performing assets

$

90,500



$

112,479



$

121,058



$

122,227



$

54,325


Total non-performing assets to total assets

1.00

%


1.25

%


1.43

%


1.46

%


0.64

%

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

1.16

%


1.55

%


1.71

%


1.84

%


0.71

%

Total non-performing loans to total loans held for investment

0.99

%


1.29

%


1.51

%


1.56

%


0.58

%

Allowance for loan losses to non-performing loans

91.07

%


75.70

%


65.79

%


57.97

%


140.26

%

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

1.06

%


1.17

%


1.13

%


1.06

%


1.00

%

Allowance for loan losses to total loans held for investment

0.90

%


0.98

%


0.99

%


0.91

%


0.81

%

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

1.13

%


1.26

%


1.23

%


1.18

%


1.12

%




At the Quarter Ended


September 30,
 2017


June 30,
 2017


March 31,
 2017


December 31,
 2016


September 30,
 2016

Troubled debt restructured loans ("TDRs"):


(Dollars in thousands)



  Performing TDRs:










  Commercial real estate

$

147



$

150



$

152



$

154



$

156


  Consumer real estate

263



265



267



269



271


  Other consumer

20



23



27



31



35


    Total performing TDRs

$

430



$

438



$

446



$

454



$

462


  Non-performing TDRs:2










  Commercial real estate

$

37



$

39



$

40



$

808



$

813


  Commercial and industrial

7,984



22,946



23,338



9,181



8,700


  Consumer real estate

1,343



1,401



1,618



1,669



1,725


  Other consumer

25



31



38



43



50


    Total non-performing TDRs

$

9,389



$

24,417



$

25,034



$

11,701



$

11,288


  Allowance for loan losses:










  Balance at beginning of period

$

75,091



$

70,656



$

64,576



$

57,318



$

62,194


    Provision expense for loans

7,300



6,200



22,700



7,500



2,300


    Charge-offs

(12,496)



(2,160)



(17,246)



(367)



(7,566)


    Recoveries

149



395



626



125



390


  Balance at end of period

$

70,044



$

75,091



$

70,656



$

64,576



$

57,318


  Net charge-offs (recoveries):










  Commercial real estate

$



$



$

(189)



$

(5)



$

72


  Commercial and industrial

12,215



1,350



16,490



34



6,989


  Construction and land



(75)



418






  Consumer real estate

(10)



5



23



20



(40)


  Other consumer

142



485



(122)



193



155


    Total net charge-offs

$

12,347



$

1,765



$

16,620



$

242



$

7,176


  Allowance for off-balance sheet lending-related commitments







   Provision expense (benefit) for credit losses

$

(143)



$

55



$

(399)



$

333



$

1,167




1

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


September 30,
 2017


June 30,
 2017


March 31,
 2017


December 31,
 2016


September 30,
 2016

Loans:

(Dollars in thousands)

Commercial real estate

$

2,854,343



$

2,781,472



$

2,724,167



$

2,599,006



$

2,548,202


Warehouse Purchase Program

1,020,706



896,018



697,316



1,100,723



1,131,959


Commercial and industrial

2,022,859



1,995,882



1,969,766



1,836,519



1,710,387


Construction and land

279,189



278,986



290,856



300,460



290,930


Consumer real estate

1,176,955



1,126,744



1,090,700



1,052,231



1,055,801


Other consumer

47,169



49,721



52,655



56,480



59,212


Less: deferred fees and allowance for loan loss

(70,048)



(68,779)



(65,904)



(58,723)



(54,485)


Total loans held for investment

7,331,173



7,060,044



6,759,556



6,886,696



6,742,006


Loans held for sale

23,154



22,581



12,667



22,509



18,132


Securities

652,841



645,605



629,366



620,775



637,294


Overnight deposits

444,310



324,406



332,664



481,451



343,906


  Total interest-earning assets

$

8,451,478



$

8,052,636



$

7,734,253



$

8,011,431



$

7,741,338


Deposits:










Interest-bearing demand

$

875,097



$

849,633



$

855,075



$

838,631



$

821,516


Savings and money market

2,857,790



2,703,291



2,652,866



2,686,847



2,414,974


Time

1,418,108



1,355,681



1,314,607



1,407,415



1,372,424


FHLB advances and other borrowings

1,178,031



1,142,998



1,040,835



1,201,004



1,333,438


  Total interest-bearing liabilities

$

6,329,026



$

6,051,603



$

5,863,383



$

6,133,897



$

5,942,352












Total assets

$

8,889,914



$

8,491,696



$

8,172,072



$

8,445,209



$

8,176,612


Non-interest-bearing demand deposits

$

1,481,654



$

1,410,566



$

1,341,315



$

1,349,561



$

1,283,434


Total deposits

$

6,632,649



$

6,319,171



$

6,163,863



$

6,282,454



$

5,892,348


Total shareholders' equity

$

940,606



$

914,564



$

900,118



$

880,250



$

860,142












Yields/Rates:










Loans:










Commercial real estate

5.06

%


5.08

%


5.05

%


5.05

%


5.19

%

Warehouse Purchase Program

3.84

%


3.70

%


3.50

%


3.29

%


3.26

%

Commercial and industrial

4.89

%


4.63

%


5.40

%


4.63

%


4.47

%

Construction and land

5.16

%


5.12

%


5.18

%


5.08

%


5.21

%

Consumer real estate

4.54

%


4.59

%


4.54

%


4.60

%


4.71

%

Other consumer

5.64

%


5.57

%


5.51

%


5.66

%


5.65

%

Total loans held for investment

4.81

%


4.75

%


4.97

%


4.64

%


4.65

%

Loans held for sale

3.89

%


3.99

%


3.85

%


3.41

%


3.46

%

Securities

2.36

%


2.40

%


2.35

%


2.20

%


2.19

%

Overnight deposits

1.36

%


1.18

%


0.89

%


0.57

%


0.54

%

  Total interest-earning assets

4.44

%


4.42

%


4.58

%


4.20

%


4.27

%

Deposits:










Interest-bearing demand

0.67

%


0.58

%


0.53

%


0.50

%


0.49

%

Savings and money market

0.68

%


0.56

%


0.46

%


0.39

%


0.33

%

Time

1.10

%


0.99

%


0.91

%


0.86

%


0.80

%

FHLB advances and other borrowings

1.76

%


1.64

%


1.51

%


1.22

%


1.10

%

  Total interest-bearing liabilities

0.97

%


0.86

%


0.76

%


0.68

%


0.63

%

Net interest spread

3.47

%


3.56

%


3.82

%


3.52

%


3.64

%

Net interest margin

3.71

%


3.77

%


4.00

%


3.68

%


3.78

%

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

0.61

%


0.53

%


0.47

%


0.43

%


0.39

%

 

LegacyTexas Financial Group, Inc.

Supplemental Information- Non-GAAP Financial Measures

(unaudited)



At or For the Quarters Ended


September 30,
 2017


June 30,
 2017


March 31,
 2017


December 31,
 2016


September 30,
 2016

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

(Dollars in thousands, except per share amounts)

GAAP net income available to common shareholders1

$

28,617



$

27,837



$

18,111



$

25,174



$

27,084


Distributed and undistributed earnings to participating securities1

92



98



79



131



133


GAAP net income

28,709



27,935



18,190



25,305



27,217


(Gain) on sale of branch locations and land

(237)





(847)






Loss on sale of FHA loan portfolio









969


Core (non-GAAP) net income

$

28,472



$

27,935



$

17,343



$

25,305



$

28,186


Average shares for basic earnings per share

46,664,233



46,596,467



46,453,658



46,346,053



46,227,734


Basic GAAP earnings per share

$

0.61



$

0.60



$

0.39



$

0.54



$

0.59


Basic core (non-GAAP) earnings per share

$

0.61



$

0.60



$

0.37



$

0.55



$

0.61


Average shares for diluted earnings per share

47,158,729



47,005,554



47,060,306



46,873,215



46,546,532


Diluted GAAP earnings per share

$

0.61



$

0.59



$

0.38



$

0.54



$

0.58


Diluted core (non-GAAP) earnings per share

$

0.60



$

0.59



$

0.37



$

0.54



$

0.61


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










GAAP non-interest income

$

12,226



$

12,325



$

12,130



$

12,277



$

11,277


(Gain) loss on sale of branch locations and land

(365)





(1,304)






Loss on sale of FHA loan portfolio









1,491


Core (non-GAAP) non-interest income

$

11,861



$

12,325



$

10,826



$

12,277



$

12,768




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.

 


At or For the Quarters Ended


September 30,
 2017


June 30,
 2017


March 31,
 2017


December 31,
 2016


September 30,
 2016

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

(Dollars in thousands)

GAAP efficiency ratio:










Non-interest expense

$

40,295



$

39,589



$

39,752



$

39,548



$

39,674


Net interest income plus non-interest income

91,190



88,045



88,678



86,361



84,757


Efficiency ratio- GAAP basis

44.19

%


44.96

%


44.83

%


45.79

%


46.81

%

Core (non-GAAP) efficiency ratio:










Non-interest expense

$

40,295



$

39,589



$

39,752



$

39,548



$

39,674


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

90,825



88,045



87,374



86,361



86,248


Efficiency ratio- core (non-GAAP) basis

44.37

%


44.96

%


45.50

%


45.79

%


46.00

%











Calculation of Tangible Book Value per Share:









Total shareholders' equity

$

950,092



$

925,283



$

899,917



$

885,365



$

866,845


Less: Goodwill

(178,559)



(178,559)



(178,559)



(178,559)



(178,559)


Identifiable intangible assets, net

(463)



(524)



(585)



(665)



(752)


Total tangible shareholders' equity

$

771,070



$

746,200



$

720,773



$

706,141



$

687,534


Shares outstanding at end of period

48,040,059



48,009,379



47,940,133



47,876,198



47,773,160












Book value per share- GAAP

$

19.78



$

19.27



$

18.77



$

18.49



$

18.15


Tangible book value per share- Non-GAAP

16.05



15.54



15.03



14.75



14.39












Calculation of Tangible Equity to Tangible Assets:









Total assets

$

9,068,612



$

8,970,375



$

8,436,542



$

8,362,255



$

8,440,010


Less: Goodwill

(178,559)



(178,559)



(178,559)



(178,559)



(178,559)


Identifiable intangible assets, net

(463)



(524)



(585)



(665)



(752)


Total tangible assets

$

8,889,590



$

8,791,292



$

8,257,398



$

8,183,031



$

8,260,699












Equity to assets- GAAP

10.48

%


10.31

%


10.67

%


10.59

%


10.27

%

Tangible equity to tangible assets- Non-GAAP

8.67



8.49



8.73



8.63



8.32



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

Net income

$

28,709



$

27,935



$

18,190



$

25,305



$

27,217


Core (non-GAAP) net income

28,472



27,935



17,343



25,305



28,186


Average total equity

940,606



914,564



900,118



880,250



860,142


Average total assets

8,889,914



8,491,696



8,172,072



8,445,209



8,176,612


Return on average common shareholders' equity

12.21

%


12.22

%


8.08

%


11.50

%


12.66

%

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

12.11



12.22



7.71



11.50



13.11


Return on average assets

1.29



1.32



0.89



1.20



1.33


Core (non-GAAP) return on average assets

1.28



1.32



0.85



1.20



1.38


 

 

View original content with multimedia:http://www.prnewswire.com/news-releases/legacytexas-financial-group-inc-reports-third-quarter-2017-earnings-of-287-million-300542213.html

SOURCE LegacyTexas Financial Group, Inc.

View Comments and Join the Discussion!
 

Partner Center