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LegacyTexas Financial Group, Inc. Reports Fourth Quarter and Full Year 2017 Earnings

Company Release - 1/23/2018 4:15 PM ET

PLANO, Texas, Jan. 23, 2018 /PRNewswire/ -- LegacyTexas Financial Group, Inc. (Nasdaq: LTXB) (the "Company"), the holding company for LegacyTexas Bank (the "Bank"), today announced net income of $14.7 million for the fourth quarter of 2017, a decrease of $14.0 million from the third quarter of 2017 and $10.6 million from the fourth quarter of 2016.  Net income for the fourth quarter of 2017 included a $13.5 million income tax adjustment to the Company's deferred tax asset related to the December 22, 2017 enactment of the Tax Cuts and Jobs Act.  Net income, excluding this one-time tax adjustment, totaled $28.2 million for the fourth quarter of 2017, a decrease of $556,000 from the third quarter of 2017 and an increase of $2.8 million from the fourth quarter of 2016.

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 report another strong quarter and a strong full year of results for 2017," said President and CEO Kevin Hanigan.  "Our dedicated team continues to execute our strategy and grow our customer base and franchise while actively serving each of our communities.  We look forward to continued success in 2018 and the future."

Fourth Quarter 2017 Performance Highlights

  • Company assets of $9.09 billion generated basic earnings per share for the fourth quarter of 2017 of $0.31 on a GAAP basis and $0.60 on a core (non-GAAP) basis.
  • Average gross loans held for investment for the quarter ended December 31, 2017, excluding Warehouse Purchase Program loans, grew $208.6 million from the quarter ended September 30, 2017, leading to a seven basis point increase in net interest margin to 3.78% for the quarter ended December 31, 2017.
  • The Company's efforts to grow non-interest-bearing demand deposits resulted in a linked-quarter increase in these deposits of $106.6 million, or 7.0%, to $1.64 billion at December 31, 2017. Non-interest-bearing deposits totaled 24.2% of total deposits at December 31, 2017.
  • Return on average assets for the quarter ended December 31, 2017 was 0.66%, compared to 1.29% for the quarter ended September 30, 2017, while core (non-GAAP) return on average assets for the quarter ended December 31, 2017 was 1.27%, compared to 1.28% for the quarter ended September 30, 2017.

Full Year 2017 Performance Highlights

  • Net income for the year ended December 31, 2017 totaled $89.5 million, which included the impact of the above-mentioned $13.5 million income tax adjustment to the Company's deferred tax asset. Excluding this adjustment, net income totaled $103.0 million for the year ended December 31, 2017, an increase of $5.2 million from the year ended December 31, 2016.
  • Basic earnings per share on a GAAP basis for the year ended December 31, 2017 was $1.91, down $0.20 from $2.11 for the year ended December 31, 2016, while core (non-GAAP) basic earnings per share for the year ended December 31, 2017 was $2.19, up $0.11 from $2.08 for the year ended December 31, 2016.
  • GAAP efficiency ratio improved to 45.17% for the year ended December 31, 2017, compared to 46.79% for the year ended December 31, 2016. Core (non-GAAP) efficiency ratio improved to 45.38% for the year ended December 31, 2017, compared to 47.30% for the year ended December 31, 2016.
  • Gross loans held for investment at December 31, 2017, excluding Warehouse Purchase Program loans, grew $584.0 million from December 31, 2016, while total deposits increased by $402.2 million for the same period.

 

Financial Highlights



At or For the Quarters Ended

(unaudited)

Dec 31, 2017


Sep 30, 2017


Dec 31, 2016


(Dollars in thousands, except per share amounts)

Net interest income

$

80,199



$

78,964



$

74,084


Provision for credit losses

3,743



7,157



7,833


Non-interest income

6,901



12,226



12,277


Non-interest expense

40,708



40,295



39,548


Income tax expense

27,989



15,029



13,675


Net income

$

14,660



$

28,709



$

25,305








Basic earnings per common share

$

0.31



$

0.61



$

0.54


Basic core (non-GAAP) earnings per common share1

$

0.60



$

0.61



$

0.55


Weighted average common shares outstanding - basic

46,729,160



46,664,233



46,346,053


Estimated Tier 1 common equity risk-based capital ratio2

9.40

%


9.17

%


9.13

%

Total equity to total assets

10.56

%


10.48

%


10.59

%

Tangible common equity to tangible assets - Non-GAAP1

8.77

%


8.67

%


8.63

%

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 $28.2 million for the quarter ended December 31, 2017, down $319,000 from the third quarter of 2017 and up $2.8 million from the fourth quarter of 2016.  Basic earnings per share for the quarter ended December 31, 2017 was $0.31, a decrease of $0.30 from the third quarter of 2017 and $0.23 from the fourth quarter of 2016.  Basic core (non-GAAP) earnings per share for the fourth quarter of 2017 was $0.60, down $0.01 from the third quarter of 2017 and up $0.05 from the fourth quarter of 2016.


At or For the Years Ended

(unaudited)

Dec 31, 2017


Dec 31, 2016


(Dollars in thousands,

except per share amounts)

Net interest income

$

311,431



$

282,269


Provision for credit losses

39,456



26,900


Non-interest income

43,582



51,931


Non-interest expense

160,344



156,377


Income tax expense

65,719



53,102


Net income

$

89,494



$

97,821






Basic earnings per common share

$

1.91



$

2.11


Basic core (non-GAAP) earnings per common share1

$

2.19



$

2.08


Weighted average common shares outstanding - basic

46,611,780



46,184,074


1

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

Core (non-GAAP) net income totaled $101.9 million for the year ended December 31, 2017, up $5.7 million from the year ended December 31, 2016.  Basic earnings per share for the year ended December 31, 2017 was $1.91, a decrease of $0.20 from the year ended December 31, 2016.  Basic core (non-GAAP) earnings per share for the year ended December 31, 2017 was $2.19, up $0.11 from the year ended December 31, 2016.  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, 2017


Sep 30, 2017


Dec 31, 2016


(Dollars in thousands)

Interest income:






Loans held for investment, excluding Warehouse Purchase Program loans

$

81,134



$

78,986



$

71,090


Warehouse Purchase Program loans

9,998



9,873



9,112


Loans held for sale

202



225



192


Securities

3,979



3,855



3,410


Interest-earning deposit accounts

798



1,524



693


Total interest income

$

96,111



$

94,463



$

84,497


Net interest income

$

80,199



$

78,964



$

74,084


Net interest margin

3.78

%


3.71

%


3.68

%

Selected average balances:






Total earning assets

$

8,426,339



$

8,451,478



$

8,011,431


Total loans held for investment

7,533,172



7,331,173



6,886,696


Total securities

648,917



652,841



620,775


Total deposits

6,759,364



6,632,649



6,282,454


Total borrowings

1,007,747



1,178,031



1,201,004


Total non-interest-bearing demand deposits

1,568,665



1,481,654



1,349,561


Total interest-bearing liabilities

6,198,446



6,329,026



6,133,897


Net interest income for the quarter ended December 31, 2017 was $80.2 million, a $1.2 million increase from the third quarter of 2017 and a $6.1 million increase from the fourth quarter of 2016, which was primarily driven by increased interest income on loans.  The average balance of commercial real estate loans increased by $176.4 million to $3.03 billion from the third quarter of 2017, resulting in a $2.2 million increase in interest income, while the average balance of consumer real estate loans increased by $29.4 million to $1.21 billion for the same period, resulting in a $345,000 increase in interest income.  Interest income earned on commercial and industrial loans declined by $402,000 for the quarter ended December 31, 2017 compared to the third quarter of 2017, primarily due to $295,000 in unamortized loan origination fees that were recognized as interest income during the third quarter of 2017 on the payoff of an energy loan, with no comparable transactions occurring during the fourth quarter of 2017, as well as a $5.0 million decrease in the average balance of the commercial and industrial loan portfolio during the fourth quarter of 2017.  Interest income earned on Warehouse Purchase Program loans increased by $125,000 from the third quarter of 2017, due to a nine basis point increase in the average yield, which offset an $11.0 million decrease in the average balance during the fourth quarter of 2017.  Interest income on loans for the fourth quarter of 2017 included $529,000 in accretion of purchase accounting fair value adjustments on acquired loans, which included $151,000 on acquired commercial real estate loans, $74,000 on acquired commercial and industrial loans, $2,000 on acquired construction and land loans and $302,000 on acquired consumer loans.

The $6.1 million increase in net interest income compared to the fourth quarter of 2016 was primarily due to a $10.9 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 the commercial and industrial portfolio and Warehouse Purchase Program loans.  The average balance of commercial real estate loans increased by $431.8 million from the fourth quarter of 2016, resulting in a $5.6 million increase in interest income.  The average balance of commercial and industrial loans increased by $181.4 million from the fourth quarter of 2016, while the average yield earned on this portfolio increased by 20 basis points for the same period, resulting in a $3.2 million increase in interest income.  The average balance of consumer real estate loans increased by $154.1 million compared to the fourth quarter of 2016, which offset a six basis point decline in the average yield and led to a $1.6 million increase in interest income. Despite a $91.1 million decline in the average balance compared to the prior year period, interest income on Warehouse Purchase Program loans increased by $886,000 due to a 64 basis point increase in the average yield earned for the fourth quarter of 2017, compared to the same quarter last year.

Interest expense for the quarter ended December 31, 2017 increased by $413,000 compared to the linked quarter, which was primarily due to higher average deposit and borrowing rates, as well as increases of $53.9 million and $50.4 million in the average balances of savings and money market and interest-bearing demand deposits, respectively, compared to the third quarter of 2017.  A $170.3 million decrease in the average balance of borrowings was partially offset by a 19 basis point increase in the average rate paid for borrowings, resulting in a $270,000 linked-quarter decrease in interest expense on borrowed funds.

Compared to the fourth quarter of 2016, interest expense for the quarter ended December 31, 2017 increased by $5.5 million, primarily due to higher average deposit and borrowing rates, as well as increases of $224.9 million and $86.9 million in the average balances of savings and money market and interest-bearing demand deposits, respectively, compared to the fourth quarter of 2016.  A $193.3 million decrease in the average balance of borrowings from the fourth quarter of 2016 was partially offset by a 73 basis point increase in the average rate, resulting in a $1.3 million year-over-year decrease in interest expense on borrowed funds.

The net interest margin for the fourth quarter of 2017 was 3.78%, a seven basis point increase from the third quarter of 2017 and a ten basis point increase from the fourth quarter of 2016.  The average yield on earning assets for the fourth quarter of 2017 was 4.53%, a nine basis point increase from the third quarter of 2017 and a 33 basis point increase from the fourth quarter of 2016.  The cost of deposits for the fourth quarter of 2017 was 0.64%, up three basis points from the linked quarter and up 21 basis points from the fourth quarter of 2016.

Non-interest Income

Non-interest income for the fourth quarter of 2017 was $6.9 million, a $5.3 million decrease from the third quarter of 2017 and a $5.4 million decrease from the fourth quarter of 2016.  Gain (loss) on sale and disposition of assets for the fourth quarter of 2017 included a $3.9 million write-down on a foreclosed property.  Service charges and other fees decreased by $1.2 million from the third quarter of 2017, which was primarily due to a $541,000 decrease in title premiums and a $358,000 decrease in commercial loan fee income (consisting of syndication, arrangement, non-usage and pre-payment fees).  The Company recognized $1.6 million in net gains on the sale of mortgage loans held for sale during the fourth quarter of 2017, which included gains recognized on $46.7 million of one-to four-family mortgage loans that were sold or committed for sale during the fourth quarter of 2017 and fair value changes on mortgage derivatives and mortgage fees collected, compared to $2.0 million in comparable net gains recorded during the third quarter of 2017 on $52.4 million of one-to four-family mortgage loans sold or committed for sale.

The $5.4 million decrease in non-interest income from the fourth quarter of 2016 was primarily due to a $3.1 million loss in gain (loss) on sale and disposition of assets due to the above-mentioned write-down on a foreclosed property recorded in the fourth quarter of 2017, compared to a $407,000 loss on the sale of a foreclosed property recorded in the fourth quarter of 2016.  Service charges and other fees decreased by $1.8 million, which was driven by a $695,000 incentive payment received from Mastercard in the fourth quarter of 2016 for 2015 transaction performance, a $577,000 decrease in commercial loan fee income (consisting of syndication, arrangement, non-usage and pre-payment fees), and a $544,000 decrease in title premiums.  Net gains on the sale of mortgage loans held for sale during the fourth quarter of 2017 decreased by $456,000 compared to the fourth quarter of 2016, which included gains recognized on $57.8 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 $46.7 million for the fourth quarter of 2017.

Non-interest Expenses

Non-interest expense for the quarter ended December 31, 2017 was $40.7 million, a $413,000 increase from the third quarter of 2017 and a $1.2 million increase from the fourth quarter of 2016.  Occupancy and equipment expense increased by $477,000 compared to the third quarter of 2017, primarily resulting from an early termination fee collected from a tenant in the third quarter of 2017.   Data processing expense increased by $450,000 on a linked-quarter basis as the Company transitions to outsourcing certain segments of its data processing, while advertising expense increased by $422,000 due to a higher number of events and sponsorships compared to the linked quarter.  These increases in non-interest expense were reduced by a $1.0 million decrease in salaries and employee benefits expense from the third quarter of 2017, which was primarily driven by lower health care costs, as well as a reduction in performance incentive accruals based on increased non-performing assets, and were partially offset by decreased deferred salary costs related to loan originations that will be accounted for over the lives of the related loans.

The $1.2 million increase in non-interest expense from the fourth quarter of 2016 was primarily related to a $746,000 increase in data processing expense as the Company transitions to outsourcing certain segments of its data processing and a $411,000 increase in outside professional services expense related to higher consulting and legal costs. 

Financial Condition - Loans

Gross loans held for investment at December 31, 2017, excluding Warehouse Purchase Program loans, grew $31.6 million from September 30, 2017, 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, 2017 increased by $2.8 million and $18.7 million, respectively, from September 30, 2017, and consumer real estate loans increased by $15.5 million for the same period.  These linked-quarter increases were partially offset by a $4.7 million decline in construction and land loans and a $771,000 decline in other consumer loans.

Compared to December 31, 2016, gross loans held for investment, excluding Warehouse Purchase Program loans, grew $584.0 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 $348.9 million, $122.1 million and $138.5 million, respectively.  These year-over-year increases were partially offset by declines of $17.0 million and $8.5 million in construction and land and other consumer loans, respectively. 

At December 31, 2017, Warehouse Purchase Program loans increased by $26.7 million compared to September 30, 2017 and by $99.2 million compared to December 31, 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 $531.7 million at December 31, 2017, up $4.9 million from $526.8 million at September 30, 2017 and up $4.5 million from $527.2 million at December 31, 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 December 31, 2017, "Midstream and Other" loans had a total outstanding balance of $15.4 million, down $12.4 million from $27.8 million at September 30, 2017 and down $23.6 million from $39.0 million at December 31, 2016.

Financial Condition - Deposits

Total deposits at December 31, 2017 increased by $7.3 million from September 30, 2017, which included growth of $139.7 million and $106.6 million in interest-bearing demand and non-interest-bearing demand deposits, respectively.  These increases were partially offset by declines of $232.4 million and $6.6 million in savings and money market and time deposit balances, respectively.

Compared to December 31, 2016, total deposits increased by $402.2 million, which included growth in all deposit categories with the exception of time deposit balances, which declined by $514,000.  Non-interest-bearing demand and interest-bearing demand deposits increased by $251.7 million and $126.1 million, respectively, while savings and money market deposits increased by $25.0 million from December 31, 2016.

Credit Quality



At or For the Quarters Ended

(unaudited)

Dec 31, 2017


Sep 30, 2017


Dec 31, 2016


(Dollars in thousands)

Net charge-offs

$

2,643



$

12,347



$

242


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

0.16

%


0.78

%


0.02

%

Net charge-offs/Average loans held for investment

0.14



0.67



0.01


Provision for credit losses

$

3,743



$

7,157



$

7,833


Non-performing loans ("NPLs")

94,403



76,915



111,389


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

1.42

%


1.16

%


1.84

%

NPLs/Total loans held for investment

1.21



0.99



1.56


Non-performing assets ("NPAs")

$

102,835



$

90,500



$

122,227


NPAs to total assets

1.13

%


1.00

%


1.46

%

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

1.54



1.36



2.01


NPAs/Loans held for investment and foreclosed assets

1.32



1.17



1.71


Allowance for loan losses

$

71,301



$

70,044



$

64,576


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

1.07

%


1.06

%


1.06

%

Allowance for loan losses/Total loans held for investment

0.91



0.90



0.91


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

1.14



1.13



1.18


Allowance for loan losses/NPLs

75.53



91.07



57.97


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 $3.7 million for the quarter ended December 31, 2017, a decrease of $3.4 million from the quarter ended September 30, 2017 and $4.1 million from the quarter ended December 31, 2016.  The decrease in provision expense on a linked-quarter 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, while the decrease in provision expense on a year-over-year basis was primarily due to increased qualitative factors that were applied during the 2016 period related to some negative migration in asset quality during the fourth quarter of 2016.

The below table shows criticized (rated "special mention") and classified (rated "substandard" or "doubtful") loans at December 31, 2017, September 30, 2017 and December 31, 2016. 


Dec 31, 2017


Sep 30, 2017


Dec 31, 2016


Linked-Quarter

 Change


Year-over-Year

 Change


(Dollars in thousands)

Commercial real estate

$

30,656



$

28,187



$

7,972



$

2,469



$

22,684


Commercial and industrial, excluding energy

15,496



16,300



13,316



(804)



2,180


Energy

27,665



27,754



141,794



(89)



(114,129)


Consumer

1,409



1,491



2,120



(82)



(711)


Total criticized (all performing)

$

75,226



$

73,732



$

165,202



$

1,494



$

(89,976)












Commercial real estate

$

3,893



$

7,094



$

8,446



$

(3,201)



$

(4,553)


Commercial and industrial, excluding energy

1,295



14,516



17,215



(13,221)



(15,920)


Energy

11,352



25,589





(14,237)



11,352


Construction and land





86





(86)


Consumer

2,823



2,391



2,559



432



264


Total classified performing

19,363



49,590



28,306



(30,227)



(8,943)












Commercial real estate

4,134



4,064



5,195



70



(1,061)


Commercial and industrial, excluding energy

25,579



14,548



19,088



11,031



6,491


Energy

58,424



51,012



67,576



7,412



(9,152)


Construction and land





11,385





(11,385)


Consumer

6,266



7,291



8,145



(1,025)



(1,879)


Total classified non-performing

94,403



76,915



111,389



17,488



(16,986)












Total classified loans

$

113,766



$

126,505



$

139,695



$

(12,739)



$

(25,929)


At December 31, 2017, the allowance for loan losses allocated to the Company's $547.1 million energy loan portfolio totaled $20.7 million, while the allowance for loan losses allocated to the Company's $38.0 million corporate healthcare finance portfolio totaled $3.4 million.

Conference Call

The Company will host an investor conference call to review the results on Wednesday, January 24, 2018 at 8 a.m. Central Time.  Participants may pre-register for the call by visiting http://dpregister.com/10115614 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) 1-877-513-4119 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 #10115614.   This replay will be available until February 24, 2018.

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; changes in the regulatory and tax environments in which the Company operates, including the impact of the "Tax Cuts and Jobs Act" (the "TCJA") on the Company's deferred tax asset, and the anticipated impact of the TCJA on the Company's future earnings; and other factors set forth in the Company's filings with the SEC.

The factors listed above could materially affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements.

The Company does not undertake - and specifically declines any obligation - to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.  When considering forward-looking statements, 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


(Dollars in thousands)

December 31,
 2017


September 30,
 2017


June 30,
 2017


March 31,
 2017


December 31,
 2016

ASSETS

(unaudited)


(unaudited)


(unaudited)


(unaudited)



Cash and due from financial institutions

$

61,713



$

58,776



$

61,989



$

60,073



$

59,823


Short-term interest-bearing deposits in other financial institutions

231,743



268,567



256,251



294,955



229,389


Total cash and cash equivalents

293,456



327,343



318,240



355,028



289,212


Securities available for sale, at fair value

419,717



410,450



397,957



381,831



354,515


Securities held to maturity

173,509



180,968



191,578



200,541



210,387


Total securities

593,226



591,418



589,535



582,372



564,902


Loans held for sale

16,707



25,955



19,374



19,315



21,279


Loans held for investment:










Loans held for investment - Warehouse Purchase Program

1,154,588



1,127,929



1,256,742



846,973



1,055,341


Loans held for investment

6,649,450



6,617,892



6,409,259



6,265,263



6,065,423


  Gross loans

7,820,745



7,771,776



7,685,375



7,131,551



7,142,043


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

(64,921)



(64,632)



(70,642)



(67,834)



(66,827)


Net loans

7,755,824



7,707,144



7,614,733



7,063,717



7,075,216


FHLB stock and other restricted securities, at cost

64,790



50,333



56,618



43,156



43,266


Bank-owned life insurance

57,684



57,383



57,078



56,768



56,477


Premises and equipment, net

69,693



70,052



71,068



72,312



74,226


Goodwill

178,559



178,559



178,559



178,559



178,559


Other assets

72,964



86,380



84,544



84,630



80,397


Total assets

$

9,086,196



$

9,068,612



$

8,970,375



$

8,436,542



$

8,362,255












LIABILITIES AND SHAREHOLDERS' EQUITY







Non-interest-bearing demand

$

1,635,622



$

1,529,052



$

1,522,856



$

1,449,656



$

1,383,951


Interest-bearing demand

1,029,375



889,627



893,544



873,085



903,314


Savings and money market

2,735,296



2,967,672



2,685,627



2,679,538



2,710,307


Time

1,367,390



1,374,017



1,460,479



1,377,367



1,367,904


Total deposits

6,767,683



6,760,368



6,562,506



6,379,646



6,365,476


FHLB advances

1,043,163



998,146



1,151,682



830,195



833,682


Repurchase agreements

84,676



81,073



73,433



76,880



86,691


Subordinated debt

134,522



134,400



134,277



134,155



134,032


Accrued expenses and other liabilities

96,278



144,533



123,194



115,749



57,009


Total liabilities

8,126,322



8,118,520



8,045,092



7,536,625



7,476,890


Common stock

481



480



480



479



479


Additional paid-in capital

603,884



598,820



595,730



592,159



589,408


Retained earnings

370,858



363,890



342,384



321,648



310,641


Accumulated other comprehensive income (loss), net

(3,429)



(1,045)



(1,125)



(2,051)



(2,713)


Unearned Employee Stock Ownership Plan (ESOP) shares

(11,920)



(12,053)



(12,186)



(12,318)



(12,450)


Total shareholders' equity

959,874



950,092



925,283



899,917



885,365


Total liabilities and shareholders' equity

$

9,086,196



$

9,068,612



$

8,970,375



$

8,436,542



$

8,362,255



 

LegacyTexas Financial Group, Inc.

Consolidated Quarterly Statements of Income (unaudited)



For the Quarters Ended


Fourth Quarter 2017 Compared to:


Dec 31,
 2017


Sep 30,
 2017


Jun 30,
 2017


Mar 31,
 2017


Dec 31,
 2016


Third Quarter

 2017


Fourth Quarter

2016

Interest and dividend income





(Dollars in thousands)


Loans, including fees

$

91,334



$

89,084



$

83,917



$

83,103



$

80,394



$

2,250


2.5

%


$

10,940


13.6

%

Taxable securities

2,819



2,694



2,725



2,562



2,269



125


4.6



550


24.2


Nontaxable securities

700



713



739



755



756



(13)


(1.8)



(56)


(7.4)


Interest-bearing deposits in other financial institutions

798



1,524



955



732



693



(726)


(47.6)



105


15.2


FHLB and Federal Reserve Bank stock and other

460



448



411



384



385



12


2.7



75


19.5



96,111



94,463



88,747



87,536



84,497



1,648


1.7



11,614


13.7


Interest expense
















Deposits

10,954



10,271



8,359



7,110



6,734



683


6.6



4,220


62.7


FHLB advances

2,647



2,944



2,427



1,632



1,526



(297)


(10.1)



1,121


73.5


Repurchase agreements and other borrowings

2,311



2,284



2,241



2,246



2,153



27


1.2



158


7.3



15,912



15,499



13,027



10,988



10,413



413


2.7



5,499


52.8


Net interest income

80,199



78,964



75,720



76,548



74,084



1,235


1.6



6,115


8.3


Provision for credit losses

3,743



7,157



6,255



22,301



7,833



(3,414)


(47.7)



(4,090)


(52.2)


Net interest income after provision for credit losses

76,456



71,807



69,465



54,247



66,251



4,649


6.5



10,205


15.4


Non-interest income
















Service charges and other fees

8,124



9,291



9,896



8,431



9,912



(1,167)


(12.6)



(1,788)


(18.0)


Net gain on sale of mortgage loans held for sale

1,556



1,982



2,156



1,628



2,012



(426)


(21.5)



(456)


(22.7)


Bank-owned life insurance income

430



435



440



422



436



(5)


(1.1)



(6)


(1.4)


Net gain (loss) on securities transactions



(20)





(19)



(6)



20


N/M



6


N/M


Gain (loss) on sale and disposition of assets

(3,480)



352



157



1,399



(412)



(3,832)


N/M



(3,068)


744.7


Other

271



186



(324)



269



335



85


45.7



(64)


(19.1)



6,901



12,226



12,325



12,130



12,277



(5,325)


(43.6)



(5,376)


(43.8)


















Non-interest expense

(Dollars in thousands)

Salaries and employee benefits

23,126



24,175



23,391



24,444



23,446



(1,049)


(4.3)



(320)


(1.4)


Advertising

1,402



980



1,179



817



1,039



422


43.1



363


34.9


Occupancy and equipment

3,776



3,299



3,656



3,654



3,715



477


14.5



61


1.6


Outside professional services

1,300



1,230



1,203



1,156



889



70


5.7



411


46.2


Regulatory assessments

1,212



1,011



1,271



985



1,316



201


19.9



(104)


(7.9)


Data processing

4,737



4,287



3,877



3,895



3,991



450


10.5



746


18.7


Office operations

2,180



2,378



2,404



2,276



2,524



(198)


(8.3)



(344)


(13.6)


Other

2,975



2,935



2,608



2,525



2,628



40


1.4



347


13.2



40,708



40,295



39,589



39,752



39,548



413


1.0



1,160


2.9


Income before income tax expense

42,649



43,738



42,201



26,625



38,980



(1,089)


(2.5)



3,669


9.4


Income tax expense

27,989



15,029



14,266



8,435



13,675



12,960


86.2



14,314


104.7


Net income

$

14,660



$

28,709



$

27,935



$

18,190



$

25,305



$

(14,049)


(48.9)

%


$

(10,645)


(42.1)

%


N/M - Not meaningful

 

LegacyTexas Financial Group, Inc.

Selected Quarterly Financial Highlights (unaudited)



At or For the Quarters Ended


December 31,
 2017


September 30,
 2017


December 31,
 2016

SHARE DATA:

(Dollars in thousands, except per share amounts)

Weighted average common shares outstanding- basic

46,729,160



46,664,233



46,346,053


Weighted average common shares outstanding- diluted

47,290,308



47,158,729



46,873,215


Shares outstanding at end of period

48,117,390



48,040,059



47,876,198


Income available to common shareholders1

$

14,613



$

28,617



$

25,174


Basic earnings per common share

0.31



0.61



0.54


Basic core (non-GAAP) earnings per common share2

0.60



0.61



0.55


Diluted earnings per common share

0.31



0.61



0.54


Dividends declared per share

0.16



0.15



0.15


Total shareholders' equity

959,874



950,092



885,365


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

19.95



19.78



18.49


Tangible book value per share - Non-GAAP2

16.23



16.05



14.75


Market value per share for the quarter:






High

43.03



39.92



43.81


Low

36.73



34.87



31.59


Close

42.21



39.92



43.06


KEY RATIOS:






Return on average common shareholders' equity

6.09

%


12.21

%


11.50

%

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

11.69



12.11



11.50


Return on average assets

0.66



1.29



1.20


Core (non-GAAP) return on average assets2

1.27



1.28



1.20


Efficiency ratio (GAAP basis)

46.74



44.19



45.79


Core (non-GAAP) efficiency ratio2

46.74



44.37



45.79


Estimated Tier 1 common equity risk-based capital ratio3

9.40



9.17



9.13


Estimated total risk-based capital ratio3

11.87



11.61



11.71


Estimated Tier 1 risk-based capital ratio3

9.54



9.32



9.28


Estimated Tier 1 leverage ratio3

9.17



9.01



8.73


Total equity to total assets

10.56



10.48



10.59


Tangible equity to tangible assets - Non-GAAP2

8.77



8.67



8.63


Number of employees- full-time equivalent

853



864



885


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, 2017


December 31, 2016

SHARE DATA:

(Dollars in thousands, except per share amounts)

Basic earnings per common share

$

1.91



$

2.11


Basic core (non-GAAP) earnings per common share1

2.19



2.08


Diluted earnings per common share

1.89



2.09


Dividends declared per share

0.61



0.58


KEY RATIOS:




Return on average common shareholders' equity

9.62

%


11.52

%

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

10.96



11.34


Return on average assets

1.04



1.24


Core (non-GAAP) return on average assets1

1.18



1.22


Efficiency ratio (GAAP basis)

45.17



46.79


Core (non-GAAP) efficiency ratio1

45.38



47.30


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,
 2017


September 30,
 2017


June 30,
 2017


March 31,
 2017


December 31,
 2016

Loans held for investment:

(Dollars in thousands)

Commercial real estate

$

3,019,339



$

3,016,533



$

2,817,443



$

2,786,477



$

2,670,455


Warehouse Purchase Program

1,154,588



1,127,929



1,256,742



846,973



1,055,341


Commercial and industrial

2,093,307



2,074,635



2,119,678



2,028,347



1,971,160


Construction and land

277,864



282,536



270,050



290,258



294,894


Consumer real estate

1,213,434



1,197,911



1,154,353



1,109,459



1,074,923


Other consumer

45,506



46,277



47,735



50,722



53,991


Gross loans held for investment

$

7,804,038



$

7,745,821



$

7,666,001



$

7,112,236



$

7,120,764


Non-performing assets:










Commercial real estate

$

4,134



$

4,064



$

4,201



$

4,337



$

5,195


Commercial and industrial

84,003



65,560



87,599



94,503



86,664


Construction and land







310



11,385


Consumer real estate

6,190



7,175



7,265



7,193



7,987


Other consumer

76



116



131



1,061



158


  Total non-performing loans

94,403



76,915



99,196



107,404



111,389


Foreclosed assets

8,432



13,585



13,283



13,654



10,838


  Total non-performing assets

$

102,835



$

90,500



$

112,479



$

121,058



$

122,227


Total non-performing assets to total assets

1.13

%


1.00

%


1.25

%


1.43

%


1.46

%

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

1.42

%


1.16

%


1.55

%


1.71

%


1.84

%

Total non-performing loans to total loans held for investment

1.21

%


0.99

%


1.29

%


1.51

%


1.56

%

Allowance for loan losses to non-performing loans

75.53

%


91.07

%


75.70

%


65.79

%


57.97

%

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

1.07

%


1.06

%


1.17

%


1.13

%


1.06

%

Allowance for loan losses to total loans held for investment

0.91

%


0.90

%


0.98

%


0.99

%


0.91

%

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

1.14

%


1.13

%


1.26

%


1.23

%


1.18

%

Troubled debt restructured loans ("TDRs"):


(Dollars in thousands)



Performing TDRs:










Commercial real estate

$

145



$

147



$

150



$

152



$

154


Commercial and industrial

2










Consumer real estate

600



263



265



267



269


Other consumer

21



20



23



27



31


  Total performing TDRs

$

768



$

430



$

438



$

446



$

454


Non-performing TDRs:2










Commercial real estate

$

36



$

37



$

39



$

40



$

808


Commercial and industrial

16,328



7,984



22,946



23,338



9,181


Consumer real estate

916



1,343



1,401



1,618



1,669


Other consumer

14



25



31



38



43


  Total non-performing TDRs

$

17,294



$

9,389



$

24,417



$

25,034



$

11,701


Allowance for loan losses:










Balance at beginning of period

$

70,044



$

75,091



$

70,656



$

64,576



$

57,318


  Provision expense for loans

3,900



7,300



6,200



22,700



7,500


  Charge-offs

(2,840)



(12,496)



(2,160)



(17,246)



(367)


  Recoveries

197



149



395



626



125


Balance at end of period

$

71,301



$

70,044



$

75,091



$

70,656



$

64,576


Net charge-offs (recoveries):










Commercial real estate

$



$



$



$

(189)



$

(5)


Commercial and industrial

2,386



12,215



1,350



16,490



34


Construction and land





(75)



418




Consumer real estate

36



(10)



5



23



20


Other consumer

221



142



485



(122)



193


  Total net charge-offs

$

2,643



$

12,347



$

1,765



$

16,620



$

242


Allowance for off-balance sheet lending-related commitments







Provision expense (benefit) for credit losses

$

(157)



$

(143)



$

55



$

(399)



$

333


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


December 31,
 2017


September 30,
 2017


June 30,
 2017


March 31,
 2017


December 31,
 2016

Loans:

(Dollars in thousands)

Commercial real estate

$

3,030,778



$

2,854,343



$

2,781,472



$

2,724,167



$

2,599,006


Warehouse Purchase Program

1,009,667



1,020,706



896,018



697,316



1,100,723


Commercial and industrial

2,017,909



2,022,859



1,995,882



1,969,766



1,836,519


Construction and land

287,965



279,189



278,986



290,856



300,460


Consumer real estate

1,206,371



1,176,955



1,126,744



1,090,700



1,052,231


Other consumer

46,094



47,169



49,721



52,655



56,480


Less: deferred fees and allowance for loan loss

(65,612)



(70,048)



(68,779)



(65,904)



(58,723)


Total loans held for investment

7,533,172



7,331,173



7,060,044



6,759,556



6,886,696


Loans held for sale

20,642



23,154



22,581



12,667



22,509


Securities

648,917



652,841



645,605



629,366



620,775


Overnight deposits

223,608



444,310



324,406



332,664



481,451


  Total interest-earning assets

$

8,426,339



$

8,451,478



$

8,052,636



$

7,734,253



$

8,011,431


Deposits:










Interest-bearing demand

$

925,506



$

875,097



$

849,633



$

855,075



$

838,631


Savings and money market

2,911,726



2,857,790



2,703,291



2,652,866



2,686,847


Time

1,353,467



1,418,108



1,355,681



1,314,607



1,407,415


FHLB advances and other borrowings

1,007,747



1,178,031



1,142,998



1,040,835



1,201,004


  Total interest-bearing liabilities

$

6,198,446



$

6,329,026



$

6,051,603



$

5,863,383



$

6,133,897












Total assets

$

8,865,517



$

8,889,914



$

8,491,696



$

8,172,072



$

8,445,209


Non-interest-bearing demand deposits

$

1,568,665



$

1,481,654



$

1,410,566



$

1,341,315



$

1,349,561


Total deposits

$

6,759,364



$

6,632,649



$

6,319,171



$

6,163,863



$

6,282,454


Total shareholders' equity

$

963,512



$

940,606



$

914,564



$

900,118



$

880,250












Yields/Rates:










Loans:










Commercial real estate

5.05

%


5.06

%


5.08

%


5.05

%


5.05

%

Warehouse Purchase Program

3.93

%


3.84

%


3.70

%


3.50

%


3.29

%

Commercial and industrial

4.83

%


4.89

%


4.63

%


5.40

%


4.63

%

Construction and land

5.04

%


5.16

%


5.12

%


5.18

%


5.08

%

Consumer real estate

4.54

%


4.54

%


4.59

%


4.54

%


4.60

%

Other consumer

5.67

%


5.64

%


5.57

%


5.51

%


5.66

%

Total loans held for investment

4.81

%


4.81

%


4.75

%


4.97

%


4.64

%

Loans held for sale

3.92

%


3.89

%


3.99

%


3.85

%


3.41

%

Securities

2.45

%


2.36

%


2.40

%


2.35

%


2.20

%

Overnight deposits

1.42

%


1.36

%


1.18

%


0.89

%


0.57

%

  Total interest-earning assets

4.53

%


4.44

%


4.42

%


4.58

%


4.20

%

Deposits:










Interest-bearing demand

0.71

%


0.67

%


0.58

%


0.53

%


0.50

%

Savings and money market

0.70

%


0.68

%


0.56

%


0.46

%


0.39

%

Time

1.21

%


1.10

%


0.99

%


0.91

%


0.86

%

FHLB advances and other borrowings

1.95

%


1.76

%


1.64

%


1.51

%


1.22

%

  Total interest-bearing liabilities

1.02

%


0.97

%


0.86

%


0.76

%


0.68

%

Net interest spread

3.51

%


3.47

%


3.56

%


3.82

%


3.52

%

Net interest margin

3.78

%


3.71

%


3.77

%


4.00

%


3.68

%

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

0.64

%


0.61

%


0.53

%


0.47

%


0.43

%

 

LegacyTexas Financial Group, Inc.

Supplemental Information- Non-GAAP Financial Measures

(unaudited)



At or For the Quarters Ended


December 31,
 2017


September 30,
 2017


June 30,
 2017


March 31,
 2017


December 31,
 2016

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

$

14,613



$

28,617



$

27,837



$

18,111



$

25,174


Distributed and undistributed earnings to participating securities1

47



92



98



79



131


GAAP net income

14,660



28,709



27,935



18,190



25,305


(Gain) loss on one-time tax adjustments2

13,493










(Gain) on sale of branch locations and land



(237)





(847)




Core (non-GAAP) net income

$

28,153



$

28,472



$

27,935



$

17,343



$

25,305


Average shares for basic earnings per share

46,729,160



46,664,233



46,596,467



46,453,658



46,346,053


Basic GAAP earnings per share

$

0.31



$

0.61



$

0.60



$

0.39



$

0.54


Basic core (non-GAAP) earnings per share

$

0.60



$

0.61



$

0.60



$

0.37



$

0.55


Average shares for diluted earnings per share

47,290,308



47,158,729



47,005,554



47,060,306



46,873,215


Diluted GAAP earnings per share

$

0.31



$

0.61



$

0.59



$

0.38



$

0.54


Diluted core (non-GAAP) earnings per share

$

0.60



$

0.60



$

0.59



$

0.37



$

0.54


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










GAAP non-interest income

$

6,901



$

12,226



$

12,325



$

12,130



$

12,277


(Gain) on sale of branch locations and land



(365)





(1,304)




Core (non-GAAP) non-interest income

$

6,901



$

11,861



$

12,325



$

10,826



$

12,277


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

This one-time income tax expense adjustment consists of an adjustment to the Company's deferred tax asset related to the December 22, 2017 enactment of the Tax Cuts and Jobs Act.

 


At or For the Quarters Ended


December 31,
 2017


September 30,
 2017


June 30,
 2017


March 31,
 2017


December 31,
 2016

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

(Dollars in thousands)

GAAP efficiency ratio:










Non-interest expense

$

40,708



$

40,295



$

39,589



$

39,752



$

39,548


Net interest income plus non-interest income

87,100



91,190



88,045



88,678



86,361


Efficiency ratio- GAAP basis

46.74

%


44.19

%


44.96

%


44.83

%


45.79

%

Core (non-GAAP) efficiency ratio:










Non-interest expense

$

40,708



$

40,295



$

39,589



$

39,752



$

39,548


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

87,100



90,825



88,045



87,374



86,361


Efficiency ratio- core (non-GAAP) basis

46.74

%


44.37

%


44.96

%


45.50

%


45.79

%











Calculation of Tangible Book Value per Share:









Total shareholders' equity

$

959,874



$

950,092



$

925,283



$

899,917



$

885,365


Less: Goodwill

(178,559)



(178,559)



(178,559)



(178,559)



(178,559)


Identifiable intangible assets, net

(402)



(463)



(524)



(585)



(665)


Total tangible shareholders' equity

$

780,913



$

771,070



$

746,200



$

720,773



$

706,141


Shares outstanding at end of period

48,117,390



48,040,059



48,009,379



47,940,133



47,876,198












Book value per share- GAAP

$

19.95



$

19.78



$

19.27



$

18.77



$

18.49


Tangible book value per share- Non-GAAP

16.23



16.05



15.54



15.03



14.75












Calculation of Tangible Equity to Tangible Assets:









Total assets

$

9,086,196



$

9,068,612



$

8,970,375



$

8,436,542



$

8,362,255


Less: Goodwill

(178,559)



(178,559)



(178,559)



(178,559)



(178,559)


Identifiable intangible assets, net

(402)



(463)



(524)



(585)



(665)


Total tangible assets

$

8,907,235



$

8,889,590



$

8,791,292



$

8,257,398



$

8,183,031












Equity to assets- GAAP

10.56

%


10.48

%


10.31

%


10.67

%


10.59

%

Tangible equity to tangible assets- Non-GAAP

8.77



8.67



8.49



8.73



8.63



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

Net income

$

14,660



$

28,709



$

27,935



$

18,190



$

25,305


Core (non-GAAP) net income

28,153



28,472



27,935



17,343



25,305


Average total equity

963,512



940,606



914,564



900,118



880,250


Average total assets

8,865,517



8,889,914



8,491,696



8,172,072



8,445,209


Return on average common shareholders' equity

6.09

%


12.21

%


12.22

%


8.08

%


11.50

%

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

11.69



12.11



12.22



7.71



11.50


Return on average assets

0.66



1.29



1.32



0.89



1.20


Core (non-GAAP) return on average assets

1.27



1.28



1.32



0.85



1.20


 


At or For the Years Ended


December 31, 2017


December 31, 2016

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

$

89,176



$

97,324


Distributed and undistributed earnings to participating securities 1

318



497


GAAP net income

89,494



97,821


(Gain) loss on one-time tax adjustments2

13,493




Net (gain) on sale of insurance subsidiary operations3



(39)


(Gain) on sale of branch locations

(1,084)



(2,529)


Loss on sale of FHA loan portfolio



969


Core (non-GAAP) net income

$

101,903



$

96,222


Average shares for basic earnings per share

46,611,780



46,184,074


Basic (GAAP) earnings per share

$

1.91



$

2.11


Basic core (non-GAAP) earnings per share

$

2.19



$

2.08


Average shares for diluted earnings per share

47,138,518



46,484,967


Diluted GAAP earnings per share

$

1.89



$

2.09


Diluted core (non-GAAP) earnings per share

$

2.16



$

2.07






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



GAAP non-interest income

$

43,582



$

51,931


Net (gain) on sale of insurance subsidiary operations



(1,181)


(Gain) on sale of branch locations

(1,669)



(3,891)


Loss on sale of FHA loan portfolio



1,491


Core (non-GAAP) non-interest income

$

41,913



$

48,350






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



Net interest income

$

311,431



$

282,269


GAAP efficiency ratio:




Non-interest expense

$

160,344



$

156,377


Net interest income plus non-interest income

355,013



334,200


Efficiency ratio- GAAP basis

45.17

%


46.79

%

Core (non-GAAP) efficiency ratio:




Core (non-GAAP) non-interest expense

$

160,344



$

156,377


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

353,344



330,619


Efficiency ratio- core (non-GAAP) basis

45.38

%


47.30

%

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

This one-time income tax expense adjustment consists of an adjustment to the Company's deferred tax asset related to the December 22, 2017 enactment of the Tax Cuts and Jobs Act.

3

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

 


At or For the Years Ended


December 31, 2017


December 31, 2016


(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

$

89,494



$

97,821


Core (non-GAAP) net income

101,903



96,222


Average total equity

929,903



848,788


Average total assets

8,607,481



7,881,881


Return on average common shareholders' equity

9.62

%


11.52

%

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

10.96



11.34


Return on average assets

1.04



1.24


Core (non-GAAP) return on average assets

1.18



1.22


 

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SOURCE LegacyTexas Financial Group, Inc.