Attached files
| file | filename |
|---|---|
| EX-99.2 - EXHIBIT 99.2 - LegacyTexas Financial Group, Inc. | ex992q22016dividendannounc.htm |
| EX-99.1 - EXHIBIT 99.1 - LegacyTexas Financial Group, Inc. | ex991q22016earningsrelease.htm |
| 8-K - 8-K - LegacyTexas Financial Group, Inc. | a8kq22016covererslides.htm |
July 20, 2016
EXHIBIT 99.3
Second Quarter 2016
Investor Presentation
2
Safe harbor statement
When used in filings by LegacyTexas Financial Group, Inc. (the "Company”) with the Securities and Exchange Commission (the “SEC”),
in the Company's press releases or other public or stockholder communications, and in oral statements made with the approval of an
authorized executive officer, the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,”
“project,” “intends” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties that could cause actual
results to differ materially from historical earnings and those presently anticipated or projected, including, among other things: 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 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.
SECOND QUARTER 2016
3
Today’s presenters
SECOND QUARTER 2016
Kevin Hanigan
President and Chief Executive Officer
• CEO and President of LegacyTexas Financial Group, Inc.
• Former Chairman and Chief Executive Officer of Highlands Bancshares in 2010
• Former Chairman and Chief Executive Officer of Guaranty Bank in 2009
• 35+ years of Texas banking experience
Mays Davenport
Executive Vice President, Chief Financial Officer
• Former Executive Vice President at LegacyTexas Bank
• Senior management experience for retail branch, treasury management, human resources, marketing,
mortgage, and wealth advisory functions
• Certified Public Accountant, former national accounting and tax advisory firm experience
• 23+ years of Texas banking experience
4
Profitability
Recent
Recognitions
• Recognized as the #2 Fastest Growing North Texas Company and ranked among the top 100
North Texas Public Companies by Dallas Business Journal
• Awarded 2015 Raymond James Community Bankers Cup-recognizes top 10% of community
banks (with assets between $500 million and $10 billion)
• Rated by S&P Global Market Intelligence as #8 in the 100 best-performing community banks
in 2015 (with assets between $1 billion and $10 billion)
• Named one of 25 KBW "Challenger Banks" who can most effectively challenge large universal
banks for market share
Capital
Key franchise highlights
Quarterly earnings of $23.2 million and basic EPS of $0.50 for Q2 2016
• Return on average assets of 1.2%, return on average equity of 11.1%
• Exceptional loan growth of $423.7 million for Q2 2016 with 8.0% linked quarter growth¹
• Efficiency ratio of 48.2%, improved from 49.0% for Q1 2016
Asset quality
Growth balanced with disciplined underwriting and risk management resulting in strong asset
quality
• NPAs / loans + OREO: 0.99% 1
• NCOs / average loans: 0.01% for Q2 20161
Profitability levered excess capital while maintaining strong capital levels
• TCE / TA2: 8.4%
• Estimated Tier 1 common risk-based capital3: 9.28%
Source: Company Documents
1 Excludes Warehouse Purchase Program loans and loans held for sale
2 See the section labeled "Supplemental Information- Non-GAAP Financial Measures“
3 Calculated at the Company level, which is subject to the capital adequacy requirements of the Federal Reserve
SECOND QUARTER 2016 – FRANCHISE HIGHLIGHTS
5
Source: Company Documents
¹ Based on deposit market share of banks headquartered in Texas
² Includes banks headquartered in the Dallas-Fort Worth-Arlington, TX MSA
North Texas focused
Leading market position
#1
in Collin
County among
independent
banks¹
#2
in Collin
County among
all banks
#3
among Dallas
based banks in
DFW²
SECOND QUARTER 2016 – FRANCHISE HIGHLIGHTS
Employment by industry
42%
8%
3%
4%
13%
1%
5%
9%
7%
6%
2%
Service-providing
Goods-providing
Construction
Manufacturing
Trade, transportation and
utilities
Information
Financial activities
Professional and business
services
Education and health
services
Leisure and hospitality
Other
Source: Bureau of Labor Statistics
Note: Represents latest available data for the Dallas-Fort Worth-Arlington, TX MSA (i.e., data as of
2015Q4)
21 DFW companies in Fortune 500
6
Second quarter highlights
($ in millions except for per share data) Quarter ended
June 30,
2015
March 31,
2016
June 30,
2016 Linked Q ∆ YOY ∆
Selected balance sheet data
Gross loans held for investment1 $ 4,394.8 $ 5,269.3 $ 5,693.0 8.0 % 29.5%
Total deposits 4,527.8 5,302.8 5,622.7 6.0 % 24.2%
Selected profitability data
Net interest income $ 59.8 $ 65.4 $ 69.4 6.1 % 15.9%
NIM 4.06% 3.88% 3.79% -9bps -27bps
Non-interest income $ 12.0 $ 14.7 $ 13.7 (6.4)% 14.7%
Non-interest expense 36.9 37.5 39.6 5.5 % 7.3%
Net income 20.3 22.1 23.2 5.1 % 14.6%
Core net income2 20.1 19.9 23.3 17.1 % 15.8%
Basic EPS 0.44 0.48 0.50 4.2 % 13.6%
Core EPS2 0.44 0.43 0.50 16.3 % 13.6%
Source: Company Documents
1 Excludes Warehouse Purchase Program loans
2 See the section labeled "Supplemental Information- Non-GAAP Financial Measures“
SECOND QUARTER 2016 – QUARTERLY HIGHLIGHTS
7
44.3%
22.7%
8.6%
4.9% 18.4%
1.1%
Originated loans
Acquired from LegacyTexas Group, Inc.
2011Y 2012Y 2013Y 2014Y 2015Y 2016 Q2
$1,228
$1,691
$2,050
$2,634
$3,667
$5,693
$1,400
($ in millions)
Robust commercially focused growth
Source: Company Documents
1 Excludes Warehouse Purchase Program loans
2 Represents balance acquired on January 1, 2015
Gross loans held for investment at June 30, 2016, excluding Warehouse Purchase Program loans,
grew $423.7 million, or 8.0%, from March 31, 2016, with $338.5 million of growth in commercial real
estate and commercial and industrial loans.
As of June 30, 20161
Total Loans HFI1
Quarterly yield on loans held for investment1: 4.84%
SECOND QUARTER 2016 – BALANCE SHEET
Commercial RE
C&I (ex-energy)
Energy
C&D
Consumer RE
Other Consumer
2
$5,067
8
• Reserve-based energy portfolio at
June 30, 2016 consisted of 49% crude
oil reserves and 51% natural gas
reserves
• At June 30, 2016, 44 reserve-based
borrowers and 5 midstream borrowers
• $321 million, or 59%, of our
outstanding energy loans are backed by
private equity firms with significant
capital invested and additional equity
commitments available Permian
Bakken
Eagle Ford
Ark-La-Tex
Mid-Con
Energy lending
Source: Company documents for loans managed by Energy Finance group
R: 000
G: 048
B: 135
R: 111
G: 162
B: 135
SECOND QUARTER 2016 – ENERGY LENDING
Geographic Concentration of
Reserves
Texas Panhandle
Marcellus
Gulf of Mexico
Central/Southern
Louisiana
Other
23%
5%
2%
21%13%
5%
8%
2%
4%
17%
9
31%
8%
61%
2016 2017 2018
47%
35%
12%
60%
48%
18%
85% 84%
49%
78%
86%
73%
1 % of engineered PDP volumes
Source: Company documents for loans managed by Energy Finance group
• Reserve-based loans are almost exclusively first liens, with only a $5 million
commitment to a 2nd lien facility at June 30, 2016
• No unsecured commitments/exposure
• At June 30, 2016, only $3.3 million in outstanding loans to oil field service
companies, of which only $133,000 are criticized
Energy lending
R: 000
G: 048
B: 135
R: 111
G: 162
B: 135
SECOND QUARTER 2016 – ENERGY LENDING
Hedging Percentages at June 30, 2016 compared to
March 31, 2016 with June 30, 2016 Weighted Average Prices1
$63.33 $56.19
$58.78
$3.31 $3.09 $2.89
SNC Breakout of
Reserve-Based Energy Loans
Non-LTXB
Led SNC
LTXB Led SNC Direct and Other
Participations
March 31, 2016 June 30, 2016
Oil Oil
Gas Gas
10
Energy lending
Source: Company documents
Outstanding loan balances and related loan loss reservesSubstandard energy loans
R: 000
G: 048
B: 135
R: 111
G: 162
B: 135
The allowance for loan losses allocated to energy loans at June 30, 2016 totaled $21.9 million,
or 4.0% of total energy loans (including both reserve-based and midstream), up $4.5 million
($0.10 per share on a pre-tax basis, $0.06 per share after tax) from $17.4 million at March 31,
2016.
SECOND QUARTER 2016 – ENERGY LENDING
($ in millions)($ in millions)
Energy
reserves $4.7 $4.9 $12.0 $17.4 $21.9
Reserve-based Reserve %Midstream
$21.3
$31.1
Substandard performing
Substandard non-performing
2015 Q2 2015 Q3 2015 Q4 2016 Q1 2016 Q2
$58.6
$8.1
$38.7
$48.1
$81.5$36.2
$12.1
$25.2
$26.6
$5.2
2015 Q2 2015 Q3 2015 Q4 2016 Q1 2016 Q2
$402.6
$431.4
$459.8 $461.1
$489.1
$64.6 $63.7
$54.8
1.1% 1.1%
2.3%
3.3%
4.0%
11
Collateral Mix of Houston Portfolio
• Continued low LTV in Houston CRE portfolio - 66% for entire Houston portfolio, 70% for energy
corridor only
• Low loan price per square foot - energy corridor ranges $74-$122 with average of $100
• Only one Houston area loss since the 2003 inception of CRE lending in Houston, totaling only $34
thousand
36%
26%
35%
3%
Office
Retail
Multifamily
Other
Commercial Real Estate- Houston
Source: Company Documents
SECOND QUARTER 2016 – BALANCE SHEET
$ in thousands except % data
Total
Houston CRE
Portfolio
Energy Corridor
(all office)
Remainder
Houston
Portfolio
Outstanding Balance at June 30,
2016 $ 465,951 $ 75,486 $ 390,465
% of Houston CRE Portfolio 16% 84%
Weighted Average Debt Service
Coverage 1.79X 1.71X 1.80X
Weighted Average Yield on Debt 11.91% 11.16% 12.07%
12
Originated Deposits
Acquired from LegacyTexas Group, Inc.
Deposit Cost
2011Y 2012Y 2013Y 2014Y 2015Y 2016 Q2
$1,963 $2,178
$2,265
$2,658
$3,599
$5,623
$1,6281.11%
0.54% 0.43% 0.34%
0.29% 0.33%
Total deposits at June 30, 2016 increased by $319.8 million from March 31, 2016, with all deposit
categories growing on a linked-quarter basis. Time and non-interest-bearing demand deposits
increased by $206.2 million and $60.9 million, respectively, on a linked-quarter basis, while
interest-bearing demand and savings and money market deposits increased by $28.9 million and
$23.9 million, respectively, for the same period.
Core funded, low cost deposit base
Source: Company Documents
1 Represents balance acquired on January 1, 2015
($ in millions)
Total Deposits
Cost of deposits: 0.33%
SECOND QUARTER 2016 – BALANCE SHEET
As of June 30, 2016
22.0%
14.4%
40.0%
23.6% Non-interest
bearing-demand
Interest-bearing
demand
Savings and money
market
Time
$5,227
1
13
Solid net interest income growth
Source: Company Documents
Net interest income and NIM
R: 000
G: 048
B: 135
R: 111
G: 162
B: 135
• Net interest income for the second quarter of 2016 increased by $4.0 million, or 6.1%, from the linked quarter
and $9.5 million, or 15.9%, from the second quarter of 2015.
• Net interest margin for the quarter ended June 30, 2016 was 3.79%, a nine basis point decrease from the first
quarter of 2016 and a 27 basis point decrease from the second quarter of 2015. Accretion of purchase
accounting fair value adjustments contributed seven basis points to the net interest margin for the quarter
ended June 30, 2016 and for the quarter ended March 31, 2016. Accretion contributed 20 basis points for the
quarter ended June 30, 2015.
SECOND QUARTER 2016 – INCOME STATEMENT
Net interest income ($mm) NIM
2012Y 2013Y 2014Y 2015Y 2015 Q2 2016 Q2
$116 $118 $133
$241
$60 $69
3.61% 3.71%
3.78%
4.00%
4.06%
3.79%
14
Net interest income Core non-interest income Core non-interest expense Efficiency ratio
2013Y 2014Y 2015Y 2015 Q2 2016 Q2
$118
$133
$241
$60 $69
$21 $21
$45
$12 $13
$88 $87
$150
$37 $40
63.4%
57.0%
52.4% 51.6%
48.2%
• Efficiency ratio improved to 48.17%, compared to 48.96% for the first quarter of 2016 and 51.61% for the
second quarter of 2015.
• Core non-interest income increased by $1.4 million from the linked quarter and by $1.0 million year-over-year.
Core non-interest expense increased by $2.1 million from the first quarter of 2016 and by $2.7 million from
the second quarter of 2015.
Disciplined expense management
SECOND QUARTER 2016 – INCOME STATEMENT
Source: Company Documents
Note: Core non-interest income and core non-interest expense exclude changes in the value of private equity funds, gains (losses) from securities transactions and
fixed assets, net gain on sale of insurance subsidiary operations, goodwill impairment, merger and acquisition costs and one-time payroll costs. Efficiency ratio metrics
exclude the aforementioned items, as well as gain (loss) on foreclosed assets and amortization of intangible assets.
($ in millions)
15
Strong asset quality
Source: Company documents
1 Held for investment, excluding Warehouse Purchase Program loans
NCOs / average loans HFI¹NPAs / loans HFI1 + OREO
R: 000
G: 048
B: 135
R: 111
G: 162
B: 135
• Growth balanced with disciplined underwriting and risk management resulting in strong asset quality
• All of the key credit quality ratios remained strong, with asset quality metrics continuing to compare
favorably to industry
SECOND QUARTER 2016 – ASSET QUALITY
2012Y 2013Y 2014Y 2015Y 2016 Q2
1.72%
1.10%
0.91% 0.89%
0.99%
2012Y 2013Y 2014Y 2015Y 2016 Q2
0.17%
0.10%
0.02%
0.09%
0.01%
16
Prudent capital management
Source: Company documents
1 Calculated at the Company level, which is subject to the capital adequacy requirements of the Federal Reserve
TCE / TA Tier 1 common risk-based¹
Tier 1 leverage¹
• Profitability levered excess capital while maintaining strong capital levels
• In November 2015, the Company completed a public offering of $75.0 million of fixed-to-
floating rate subordinated notes due in 2025, the proceeds of which are being used for general
corporate purposes, potential strategic acquisitions and investments in the Bank as regulatory
capital.
SECOND QUARTER 2016 – CAPITAL
2012Y 2013Y 2014Y 2015Y 2016 Q2
13.5% 14.7% 13.0%
8.3% 8.4%
2012Y 2013Y 2014Y 2015Y 2016 Q2
21.7%
18.2%
15.1%
9.6% 9.3%
2012Y 2013Y 2014Y 2015Y 2016 Q2
14.0% 15.7% 13.9%
9.5% 8.9%
17
Key investment highlights
One of the largest independent Texas financial services companies built
upon a strong customer focus and a long history of serving Texans
Robust loan growth and disciplined expense management
Growth balanced with disciplined underwriting and risk management
resulting in strong asset quality
Capital ratios remain strong; provides dry powder for robust organic growth
SECOND QUARTER 2016 – INVESTMENT HIGHLIGHTS
18
Looking ahead
Expand our Texas footprint and solidify our deep-rooted culture
Focus on growth – organically and through selective acquisitions
Diversify income sources
Prudent and focused expense management
Maintain strong asset quality
Strategic capital deployment
SECOND QUARTER 2016 – LOOKING AHEAD
19
Manifesto
We believe in our customers. Their goals. Their
dreams. Their ambitions for tomorrow.
And since 1952, we’ve been doing whatever it takes to support them as they
advance in business and in life.
We are responsive, accountable, trusted, experts at what we do. And we
listen. Because we believe that true understanding is the first step toward
bold, meaningful results.
Fueled by an independent spirit, inspired by the ingenuity of our customers
and grounded by the values of our community, we are a family like no other.
We are LegacyTexas.
SECOND QUARTER 2016 – OUR VISION
Appendix
21
Supplemental Information – Non-GAAP Financial Measures (unaudited)
At or For the Quarters Ended
June 30,
2016
March 31,
2016
December 31,
2015
September 30,
2015
June 30,
2015
(Dollars in thousands, except per share amounts)
GAAP net income available to common shareholders 1 $23,114 $21,954 $16,336 $17,768 $20,091
Distributed and undistributed earnings to participating securities 1 103 128 110 127 160
Merger and acquisition costs — — — — 5
Net (gain) on sale of insurance subsidiary operations (39) — — — —
One-time (gain) loss on assets 155 (2,184) (133) (130) (142)
(Gain) loss on sale of available-for-sale securities (42) — (11) 16 —
Core (non-GAAP) net income $23,291 $19,898 $16,302 $17,781 $20,114
Average shares for basic earnings per share 46,135,999 46,024,250 45,939,817 45,862,840 45,760,232
GAAP basic earnings per share $0.50 $0.48 $0.36 $0.39 $0.44
Core (non-GAAP) basic earnings per share $0.50 $0.43 $0.35 $0.39 $0.44
Average shares for diluted earnings per share 46,352,141 46,152,301 46,267,956 46,188,461 46,031,267
GAAP diluted earnings per share $0.50 $0.48 $0.35 $0.38 $0.44
Core (non-GAAP) diluted earnings per share $0.50 $0.43 $0.35 $0.38 $0.44
Reconciliation of Core (non-GAAP) to GAAP Net Income and Earnings per Share (net of tax):
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 Years Ended
December 31,
2015
December 31,
2014
December 31,
2013
December 31,
2012
December 31,
2011
GAAP net income available to common shareholders 1 $70,382 $30,942 $31,294 $35,135 $26,205
Distributed and undistributed earnings to participating securities 1 534 336 394 106 123
Merger and acquisition costs 1,009 7,071 431 2,683 306
Costs relating to sale of VPM — – – 84 –
One-time payroll and severance costs — 234 436 777 –
One-time (gain) loss on assets 149 319 (574) (1,353) (497)
Goodwill impairment — – – 532 176
(Gain) loss on sale of available-for-sale securities (132) – 115 (659) (4,074)
Core (non-GAAP) net income $71,942 $38,902 $32,096 $37,305 $22,239
Average shares for basic earnings per share 45,847,284 37,919,065 37,589,548 35,879,704 32,219,841
GAAP basic earnings per share $1.54 $0.82 $0.83 $0.98 $0.81
Core (non-GAAP) basic earnings per share $1.57 $1.03 $0.85 $1.04 $0.69
Average shares for diluted earnings per share 46,125,447 38,162,094 37,744,786 35,998,345 32,283,107
GAAP diluted earnings per share $1.53 $0.81 $0.83 $0.98 $0.81
Core (non-GAAP) diluted earnings per share $1.56 $1.02 $0.85 $1.04 $0.69
22
Calculation of Tangible Book Value:
Supplemental Information – Non-GAAP Financial Measures (unaudited)
At or For the Quarters Ended
June 30, 2016 March 31, 2016 December 31, 2015 September 30, 2015 June 30, 2015
(Dollars in thousands, except per share amounts)
Total shareholders' equity $843,304 $823,052 $804,076 $792,637 $776,924
Less: Goodwill (178,559) (180,776) (180,776) (180,632) (180,632)
Less: Identifiable intangible assets, net (838) (924) (1,030) (1,142) (1,280)
Total tangible shareholders' equity $663,907 $641,352 $622,270 $610,863 $595,012
Shares outstanding at end of period 47,670,440 47,645,826 47,645,826 47,640,193 47,619,493
Book value per share- GAAP $17.69 $17.27 $16.88 $16.64 $16.32
Tangible book value per share- Non-GAAP $13.93 $13.46 $13.06 $12.82 $12.50
Calculation of Tangible Equity to Tangible Assets:
Total assets $8,057,005 $7,562,126 $7,691,940 $6,878,843 $6,669,624
Less: Goodwill (178,559) (180,776) (180,776) (180,632) (180,632)
Less: Identifiable intangible assets, net (838) (924) (1,030) (1,142) (1,280)
Total tangible assets $7,877,608 $7,380,426 $7,510,134 $6,697,069 $6,487,712
Equity to assets- GAAP 10.47% 10.88% 10.45% 11.52% 11.65%
Tangible equity to tangible assets- Non-GAAP 8.43% 8.69% 8.29% 9.12% 9.17%
At or For the Years Ended
December 31, 2014 December 31, 2013 December 31, 2012 December 31, 2011
Total shareholders' equity $568,223 $544,460 $520,871 $406,309
Less: Goodwill (29,650) (29,650) (29,650) (818)
Less: Identifiable intangible assets, net (813) (1,239) (1,653) (420)
Total tangible shareholders' equity $537,760 $513,571 $489,568 $405,071
Shares outstanding at end of period 40014851 39,938,816 39,612,911 33,700,399
Book value per share- GAAP $14.20 $13.63 $13.15 $12.06
Tangible book value per share- Non-GAAP $13.44 $12.86 $12.36 $12.02
Calculation of Tangible Equity to Tangible Assets:
Total assets $4,164,114 $3,525,232 $3,663,058 $3,180,578
Less: Goodwill (29,650) (29,650) (29,650) (818)
Less: Identifiable intangible assets, net (813) (1,239) (1,653) (420)
Total tangible assets $4,133,651 $3,494,343 $3,631,755 $3,179,340
Equity to assets- GAAP 13.65% 15.44% 14.22% 12.77%
Tangible equity to tangible assets- Non-GAAP 13.01% 14.70% 13.48% 12.74%