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Independent Bank Group, Inc. (IBTX)·Q2 2024 Earnings Summary

Executive Summary

  • Q2 2024 GAAP results were dominated by a non-cash goodwill impairment: net loss of $493.5M (−$11.89 diluted EPS) on a $518.0M goodwill impairment tied to stock price below book and the pending SouthState merger; adjusted net income was $24.9M ($0.60 adjusted diluted EPS) .
  • Net interest margin expanded +5 bps QoQ to 2.47% as loan yields rose to 6.03% and outpaced deposit cost pressure; net interest income was $105.1M .
  • Credit quality remained solid: NPA ratio 0.35%, NPLs 0.40% of loans, and ACL coverage of NPLs ~259%; net charge-offs were 0.10% annualized (elevated by two relationships) .
  • Capital stayed well above “well-capitalized”: total capital ratio 11.75% (+7 bps QoQ), TCE ratio 7.72% (+10 bps QoQ); quarterly dividend maintained at $0.38 per share .
  • Estimates context: S&P Global consensus EPS and revenue were unavailable via our tool, so we cannot quantify beats/misses this quarter (SPGI mapping for IBTX missing).

What Went Well and What Went Wrong

  • What Went Well

    • Net interest margin expanded to 2.47% (+5 bps QoQ) as increases in loan yields outpaced deposit costs; average loan yield rose to ~6.00%–6.03% .
    • Credit metrics remained resilient: NPA ratio 0.35%, NPLs 0.40%, ACL/NPLs 258.83%; management emphasized “resilient credit quality across product types” .
    • Capital improved (total capital ratio 11.75%; TCE 7.72%), and borrowings declined sequentially with payoff of a $70M BTFP advance; dividend maintained at $0.38 .

  • What Went Wrong

    • Goodwill impairment of $518.0M drove a GAAP net loss of $493.5M (−$11.89 EPS); impairment linked to market valuation and the pending SouthState merger .
    • Net charge-offs ticked up to 0.10% annualized (vs. 0.00% in Q1), reflecting charge-offs on a commercial relationship and single-family construction .
    • Funding costs remained elevated (cost of interest-bearing liabilities 4.16% vs. 4.11% in Q1), with continued mix shift into interest-bearing and brokered deposits .

Financial Results

MetricQ4 2023Q1 2024Q2 2024
Net Interest Income ($USD Thousands)$106,305 $103,031 $105,148
Noninterest Income ($USD Thousands)$10,614 $12,870 $13,433
Net Income (Loss) ($USD Thousands)$14,859 $24,150 $(493,455)
Adjusted Net Income ($USD Thousands)$25,509 $26,001 $24,884
Diluted EPS ($USD)$0.36 $0.58 $(11.89)
Adjusted Diluted EPS ($USD)$0.62 $0.63 $0.60
Net Interest Margin (%)2.49% 2.42% 2.47%

Credit Quality KPIs

MetricQ4 2023Q1 2024Q2 2024
NPA / Total Assets (%)0.32 0.34 0.35
NPL / Total Loans (%)0.37 0.40 0.40
Net Charge-offs (Annualized, %)0.01 0.00 0.10
ACL / NPLs (%)293.17 263.85 258.83
ACL / Total Loans (%)1.07 1.06 1.04

Capital & Balance Sheet

MetricQ4 2023Q1 2024Q2 2024
CET1 / RWA (%)9.58 9.60 9.69
Tier 1 Leverage (%)8.94 8.91 8.76
Tier 1 / RWA (%)9.93 9.94 10.03
Total Capital / RWA (%)11.57 11.68 11.75
TCE / Tangible Assets (%)7.55 7.62 7.72
Total Deposits ($USD MM)$15,723 $15,672 $15,842
Total Borrowings ex Jr. Sub Debt ($USD MM)$621.8 $497.0 $427.1

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per ShareQ2 2024$0.38 (Q1 declared) $0.38 (Q2 declared) Maintained
Financial GuidanceQ2 2024Not providedNot providedn/a

No formal revenue/EPS/margin guidance was disclosed in Q2 materials .

Earnings Call Themes & Trends

We attempted to locate IBTX’s Q2 2024 earnings call transcript but found none in the document catalog; Q1 2024 transcript was available, Q2 was not (search conducted across “earnings-call-transcript” Q2 window returned no results).

TopicPrevious Mentions (Q4 2023, Q1 2024)Current Period (Q2 2024)Trend
Margin trajectoryNIM compressing YoY; cost of deposits rising; Q1 NIM 2.42% NIM expanded to 2.47% (+5 bps QoQ); loan yields up to ~6.00–6.03% Improving QoQ
Deposit costs & mixShift into interest-bearing and brokered deposits; deposit cost 4.03% in Q1 Cost of interest-bearing liabilities 4.16%; continued pressure cited Elevated costs persist
Credit qualityNPA ~0.32–0.34%; NCOs near zero NPA 0.35%, NPLs 0.40%, NCOs 0.10% annualized (specific relationships) Stable-to-slightly higher NCOs
Capital & liquidityBorrowings reduced; capital ratios improved in Q1 Total capital 11.75% (+7 bps), TCE 7.72% (+10 bps); BTFP payoff Improving
Strategic/M&An/a in Q4; no M&A in Q1 Pending merger with SouthState announced May 20, 2024 New strategic development

Management Commentary

  • “We were pleased to see the anticipated expansion of our net interest margin… loan yields began to outpace deposit cost pressures… our loan portfolio remains bolstered by resilient credit quality… We are very excited to join SouthState” — David R. Brooks, Chairman & CEO .
  • “We maintained exceptional credit quality while continuing to reprice our maturing fixed-rate loans upward… reduced our borrowings to the lowest level in over a year” — David R. Brooks .
  • “Healthy growth in our core loan book… continued strength in our credit metrics… we took deliberate actions to strengthen our balance sheet” — David R. Brooks (Q4) .

Q&A Highlights

We sought the Q2 2024 earnings call transcript but did not find it in our document set; therefore, specific Q&A themes, guidance clarifications, and tone shifts cannot be summarized for Q2. Q1 2024 call materials were available; Q2 call transcript was unavailable in our retrieval.

Estimates Context

  • S&P Global consensus estimates for Q2 2024 EPS and revenue were not retrievable due to a missing CIQ mapping for IBTX in our system. As a result, we cannot quantify performance vs. Wall Street estimates this quarter (Values from S&P Global unavailable).

Key Takeaways for Investors

  • GAAP optics are severely distorted by a non-cash goodwill impairment (−$11.89 EPS); adjusted EPS of $0.60 better reflects core run-rate and is the relevant lens near-term .
  • Margin trajectory improved: NIM +5 bps QoQ and loan yields +10 bps, suggesting repricing tailwinds; watch deposit costs, which remain elevated .
  • Credit quality remains strong despite modest uptick in NCOs; ACL coverage and low NPA/NPL ratios support stability .
  • Capital buffers increased; dividend maintained at $0.38, reinforcing confidence in balance sheet and earnings capacity .
  • Merger with SouthState is the key medium-term catalyst; monitor regulatory timeline and integration plans highlighted by management .
  • Near-term trading: expect volatility around GAAP optics; focus on adjusted metrics and NIM trajectory; any signs of deposit cost relief could be a positive catalyst .
  • Medium-term thesis: improving core margin, disciplined credit, and stronger combined platform post-merger could support multiple normalization once integration milestones are met .

Notes on sources:

  • Prior two quarters’ earnings materials reviewed: Q1 2024 press release and data ; Q4 2023 press release and data .
  • Q2 2024 earnings press release (Exhibit 99.1) and consolidated financial data read in full .
  • Q2 earnings call transcript unavailable via our documents search; we documented this limitation.