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LegacyTexas Financial Group, Inc. Reports First Quarter 2015 Earnings

GAAP EPS for Merged Company Increases to $0.35 per Share and Core EPS Increases to $0.39 per Share

LegacyTexas Financial Group, Inc. is the holding company for LegacyTexas Bank, a commercially oriented community bank based in Plano, Texas. LegacyTexas Bank operates 48 banking offices in the Dallas/Fort Worth Metroplex and surrounding counties. For more information, visit www.LegacyTexasFinancialGroup.com.

News provided by

LegacyTexas Financial Group, Inc.

Apr 21, 2015, 04:35 ET

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PLANO, Texas, April 21, 2015 /PRNewswire/ -- LegacyTexas Financial Group, Inc. (NASDAQ: LTXB) (the "Company"), the holding company for LegacyTexas Bank (the "Bank"), today announced net income of $16.3 million, an increase of $10.9 million from the fourth quarter of 2014 and an increase of $8.6 million from the first quarter of 2014.  Core net income (which is net income adjusted for the impact of merger and acquisition costs and certain other items) totaled $17.7 million for the quarter ended March 31, 2015, up $6.6 million from the fourth quarter of 2014 and up $9.9 million from the first quarter of 2014.  Basic earnings per share for the quarter ended March 31, 2015 was $0.35, an increase of $0.21 from the fourth quarter of 2014 and an increase of $0.15 from the first quarter of 2014.  Core earnings per share for the same period was $0.39, up $0.10 from the fourth quarter of 2014 and up $0.18 from the first quarter of 2014.  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.

First Quarter 2015 Performance Highlights

  • Gross loans held for investment at March 31, 2015, excluding Warehouse Purchase Program loans, grew $1.56 billion from December 31, 2014, with $1.40 billion of growth resulting from loans acquired from LegacyTexas Group, Inc.  Excluding loans acquired from LegacyTexas Group, Inc., gross loans held for investment, excluding Warehouse Purchase Program loans, increased by $163.3 million, or 4.0%, from December 31, 2014.
  • Warehouse Purchase Program loans at March 31, 2015 totaled $1.04 billion, a $252.5 million, or 32.1%, increase from December 31, 2014, and a $448.0 million, or 75.8%, increase from March 31, 2014.
  • Deposits increased by $1.74 billion from December 31, 2014, with $1.63 billion of growth resulting from deposits acquired from LegacyTexas Group, Inc.  Excluding deposits acquired from LegacyTexas Group, Inc., deposits increased by $110.6 million, or 2.6%. 
  • Net interest margin for the quarter ended March 31, 2015 was 4.04%, a 20 basis point increase from the linked quarter and a 31 basis point increase compared to the first quarter of 2014, which includes 23 basis points of accretion of interest related to purchase accounting fair value adjustments for the first quarter of 2015.
  • During the first quarter of 2015, the Company repurchased and retired 357,950 shares of its common stock at an average price of $22.32 per share, reducing shareholders' equity by $8.0 million at March 31, 2015.

"We are excited to report our first quarterly results since completing the merger on January 1st," said President and CEO Kevin Hanigan.  "Our impressive operating results are an early sign of the success of this financially attractive deal.  With annualized organic loan growth of 16%, core EPS of $0.39, a net interest margin of 4.04% and a core return on assets of 1.18%, we are well on our way to the successful integration and execution of our strategic plans."

On January 1, 2015, the Company completed its merger with LegacyTexas Group, Inc. ("LegacyTexas") and changed its name from ViewPoint Financial Group, Inc. to LegacyTexas Financial Group, Inc. On January 2, the Company's common stock began trading on the NASDAQ Global Select Market under the ticker symbol LTXB. The Company's bank subsidiary, ViewPoint Bank, N.A., was merged into LegacyTexas Bank, the banking subsidiary of LegacyTexas.  On February 17, 2015, we completed our core system conversion and branch integration, allowing all ViewPoint and LegacyTexas customers to conduct business at any of the Bank's 48 branches and to have access to the Bank's complete line of products and services.

Financial Highlights


At or For the Quarters Ended


March


December


March

(unaudited)

2015


2014


2014


(Dollars in thousands, except per share amounts)

Net interest income

$

56,326



$

35,830



$

29,585


Provision for loan losses

3,000



2,637



376


Non-interest income

8,386



5,294



4,962


Non-interest expense

36,756



29,796



22,155


Income tax expense

8,632



3,225



4,334


Net income

$

16,324



$

5,466



$

7,682








Basic earnings per common share

$

0.35



$

0.14



$

0.20


Basic core (non-GAAP) earnings per common share1

$

0.39



$

0.29



$

0.21


Weighted average common shares outstanding - basic

45,824,812



38,051,511



37,775,677


Estimated Tier 1 common risk-based capital ratio2

10.47

%


15.14

%


17.88

%

Total equity to total assets

11.69

%


13.65

%


15.27

%

Tangible common equity to tangible assets - Non-GAAP 1

9.17

%


13.01

%


14.54

%



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.

Net Interest Income and Net Interest Margin


For the Quarters Ended


March


December


March

(unaudited)

2015


2014


2014


(Dollars in thousands)

Interest income:






Loans held for investment, excluding Warehouse Purchase Program loans

$

52,082



$

31,667



$

26,326


Warehouse Purchase Program loans

5,775



5,440



4,062


Loans held for sale

178



—



—


Securities

3,425



2,808



3,259


Interest-earning deposit accounts

158



64



57


Total interest income

$

61,618



$

39,979



$

33,704


Net interest income

$

56,326



35,830



$

29,585


Net interest margin

4.04

%


3.84

%


3.73

%

Selected average balances:






Total earning assets

$

5,582,041



$

3,732,058



$

3,170,341


Total loans held for investment

4,720,980



3,120,214



2,511,442


Total securities

620,412



505,692



562,607


Total deposits

4,371,462



2,612,125



2,287,496


Total borrowings

820,969



654,396



464,723


Total non-interest-bearing demand deposits

985,596



473,996



414,919


Total interest-bearing liabilities

4,206,835



2,792,525



2,337,300


Net interest income for the quarter ended March 31, 2015 was $56.3 million, a $20.5 million increase from the fourth quarter of 2014 and a $26.7 million increase from the first quarter of 2014.  The $20.5 million increase from the linked quarter was primarily due to an increase in interest income on loans, which was driven by increased volume in all loan categories resulting from loans acquired from LegacyTexas on January 1, 2015, as well as organic growth during the first quarter of 2015.  The average balance of commercial real estate loans increased by $801.4 million to $2.03 billion from the fourth quarter of 2014, resulting in a $10.5 million increase in interest income.  The $801.4 million in growth includes $737.3 million in commercial real estate and commercial construction and land loans acquired from LegacyTexas; excluding these loans, the average balance of commercial real estate loans increased by $64.1 million from the linked quarter.  The average balance of commercial and industrial loans increased by $404.2 million to $1.13 billion from the fourth quarter of 2014, resulting in a $5.9 million increase in interest income.  The $404.2 million in growth includes $337.1 million in commercial and industrial loans acquired from LegacyTexas; excluding these loans, the average balance of commercial and industrial loans increased by $67.1 million from the linked quarter.  The average balance of consumer real estate loans increased by $289.5 million to $813.5 million from the fourth quarter of 2014, resulting in a $3.4 million increase in interest income.  The $289.5 million in growth includes $276.0 million in consumer real estate loans acquired from LegacyTexas; excluding these loans, the average balance of consumer real estate loans increased by $13.5 million from the linked quarter.  The average balance of Warehouse Purchase Program loans increased by $67.8 million, or 10.9%, to $687.5 million from the fourth quarter of 2014, which resulted in a $335,000 increase in interest income.

Interest income on loans was impacted by $3.1 million in accretion of purchase accounting fair value adjustments recorded during the first quarter of 2015 on loans acquired from LegacyTexas, which included $1.5 million in accretion income recorded on acquired commercial and industrial loans, $852,000 in accretion income recorded on acquired commercial real estate loans and $701,000 recorded on acquired consumer real estate loans.  Accretion of purchase accounting fair value adjustments related to the LegacyTexas acquisition, as well as a smaller amount related to the Highlands Bank acquisition in 2012, increased the average yields on commercial real estate, commercial and industrial and consumer real estate loans by approximately 18 basis points, 53 basis points and 34 basis points, respectively, for the three months ended March 31, 2015.

The $26.7 million increase in net interest income compared to the first quarter of 2014 was primarily due to a $27.6 million increase in interest income on loans, which was driven by higher loan balances resulting from the merger with LegacyTexas and organic growth.  For the quarter ended March 31, 2015, the average balance of commercial and industrial loans increased by $667.0 million compared to the quarter ended March 31, 2014, which resulted in a $9.0 million increase in interest income.  Additionally, the average balance of commercial real estate loans increased by $901.1 million for the quarter ended March 31, 2015, compared to the same period in 2014, contributing $12.0 million of the increase in interest income.  Increased volume in all other loan categories also added to the growth in interest income on a year-over-year basis, which was partially offset by reductions in yields earned on commercial real estate and Warehouse Purchase Program loans.

Interest expense for the quarter ended March 31, 2015 increased by $1.1 million compared to the linked quarter, primarily due to an increase in interest expense on deposits, which was driven by increased volume in all deposit categories resulting from deposits acquired from LegacyTexas on January 1, 2015, as well as organic growth during the first quarter of 2015 in interest-bearing demand, savings and money market deposit balances.  The average balance of savings and money market deposits increased by $635.8 million to $1.8 billion from the fourth quarter of 2014, resulting in a $342,000 increase in interest expense.  The $635.8 million in growth includes $546.8 million in savings and money market deposits acquired from LegacyTexas; excluding these deposits, the average balance of savings and money market deposits increased by $89.0 million from the linked quarter.  The average balance of interest-bearing demand deposits increased by $340.4 million to $795.6 million from the fourth quarter of 2014, resulting in a $177,000 increase in interest expense.  The $340.4 million in growth includes $271.2 million in interest-bearing demand deposits acquired from LegacyTexas; excluding these deposits, the average balance of interest-bearing demand deposits increased by $69.2 million from the linked quarter. The average balance of time deposits increased by $271.5 million to $785.3 million from the fourth quarter of 2014, resulting in a $443,000 increase in interest expense.  The $271.5 million in growth includes $312.1 million in time deposits acquired from LegacyTexas; excluding these deposits, the average balance of time deposits decreased by $40.6 million from the linked quarter. The increased interest expense attributable to higher volume was partially offset by linked quarter decreases in the average rate paid on interest-bearing demand, savings and money market deposits.

Compared to the first quarter of 2014, interest expense for the quarter ended March 31, 2015 increased by $1.2 million, which was primarily due to increased average balances in all deposit categories resulting from the merger with LegacyTexas.  The increase in deposit balances was partially offset by lower rates paid on interest-bearing demand and time deposits.      

The net interest margin for the first quarter of 2015 was 4.04%, a 20 basis point increase from the fourth quarter of 2014 and a 31 basis point increase from the first quarter of 2014.  Accretion of interest related to the merger with LegacyTexas on January 1, 2015, as well as the 2012 Highlands acquisition, contributed 23 basis points to the net interest margin and average yield on earning assets for the quarter ended March 31, 2015, compared to three basis points for the quarter ended December 31, 2014, and five basis points for the quarter ended March 31, 2014.  The average yield on earning assets for the first quarter of 2015 was 4.42%, a 14 basis point increase from the fourth quarter of 2014 and a 17 basis point increase from the first quarter of 2014.  The cost of deposits for the first quarter of 2015 was 0.29%, down four basis points from the fourth quarter of 2014 and down six basis points from the first quarter of 2014.

Non-interest Income

Non-interest income for the first quarter of 2015 was $8.4 million, a $3.1 million increase from the fourth quarter of 2014 and a $3.4 million increase from the first quarter of 2014.  Core non-interest income for the first quarter of 2015, excluding one-time gains and losses on assets, was $9.0 million, up $3.8 million from the fourth quarter of 2014 and up $4.1 million from the first quarter of 2014.  The Company recognized $2.1 million in net gains on the sale of mortgage loans, which includes the gain recognized on $54.5 million of one-to four-family mortgage loans that were sold or committed for sale during the first quarter of 2015, fair value changes on mortgage derivatives and mortgage fees collected.  Prior to the January 1, 2015 merger with LegacyTexas, the Company did not originate or sell mortgage loans to outside investors; therefore, a comparable gain was not recorded in the fourth quarter of 2014.  A $924,000 increase in service charges and fees was driven by a $673,000 increase in non-sufficient funds fees and debit card income and a $215,000 increase in service charges related to accounts acquired from LegacyTexas. These increases were partially offset by a $364,000 decrease in other non-interest income, which was primarily caused by a $674,000 net decrease in the value of investments in community development-oriented private equity funds used for Community Reinvestment Act purposes (the "CRA Funds") recorded in the first quarter of 2015.

The $3.4 million increase in non-interest income from the first quarter of 2014 was primarily due to the $2.1 million in net gains recognized on the sale of mortgage loans described above. Additionally, compared to the first quarter of 2014, services charges and fees increased by $1.4 million, which was driven by a $413,000 increase in non-sufficient funds fees and debit card income, a $298,000 increase in commercial loan pre-payment fees, a $170,000 increase in Warehouse Purchase Program fees and a $256,000 increase in service charges related to accounts acquired from LegacyTexas.  These increases were partially offset by the $674,000 net decrease from the first quarter of 2014 in the value of the CRA Funds.

Non-interest Expenses

Non-interest expense for the quarter ended March 31, 2015 was $36.8 million, a $7.0 million increase from the fourth quarter of 2014 and a $14.6 million increase from the first quarter of 2014.  The linked-quarter comparison includes a $6.7 million decrease in merger and acquisition costs related to the merger with LegacyTexas, which was completed on January 1, 2015.  Excluding the impact of these merger costs, core non-interest expense, which totaled $35.2 million for the quarter ended March 31, 2015, increased by $13.7 million, which was driven by an $8.8 million increase in salaries and employee benefits expense, primarily due to the addition of 277 full-time equivalent employees related to the merger with LegacyTexas.  Additionally, shortly following the completion of the LegacyTexas merger, certain senior managers from LegacyTexas who joined the Company received immediately-vested stock awards, which resulted in $600,000 of share-based compensation expense recognized during the first quarter of 2015.  Compared to the fourth quarter of 2014, occupancy and equipment expense increased by $2.1 million and office operations expense increased by $721,000, primarily due to the addition of LegacyTexas' 11 owned buildings and 14 leased spaces.  Data processing expense increased by $1.0 million on a linked-quarter basis, as the Company added LegacyTexas into their information technology infrastructure and upgraded various systems to enhance customer service and increase efficiency. 

The increase in non-interest expense from the first quarter of 2014 includes a $1.4 million increase in merger and acquisition costs related to the merger with LegacyTexas.  Excluding the impact of these merger costs, core non-interest expense increased by $13.2 million, which was driven by a $7.8 million increase in salaries and employee benefits expense, primarily due to the addition of employees and grants of share-based compensation related to the merger with LegacyTexas. Compared to the quarter ended March 31, 2014, non-interest expense increased due to the merger with LegacyTexas, including increases in occupancy and equipment expense ($2.1 million), data processing expense ($1.1 million) and office operations expense ($662,000.)  

Financial Condition - Loans

Gross loans held for investment at March 31, 2015, excluding Warehouse Purchase Program loans, grew $1.56 billion from December 31, 2014 and by $1.99 billion from March 31, 2014, with $1.40 billion of growth resulting from loans acquired from LegacyTexas.  Excluding loans acquired from LegacyTexas and Warehouse Purchase Program loans, gross loans held for investment increased by $163.3 million, or 4.0%, from December 31, 2014 and by $589.4 million, or 16.3%, from March 31, 2014.  The below table breaks out the growth in gross loans held for investment, excluding Warehouse Purchase Program, compared to December 31, 2014:


Acquired from LegacyTexas Group, Inc.


Organic Growth


Total

Linked-Quarter Growth


% Change excluding Acquired Loans


% Change including Acquired Loans

Commercial real estate

$

737,252



$

59,298



$

796,550



2.9

%


62.2

%

Commercial and industrial

337,057



93,349



430,406



8.3



55.1


Consumer

325,469



10,605



336,074



1.2



58.8


Total linked-quarter growth

$

1,399,778



$

163,252



$

1,563,030



4.0



59.3


The below table breaks out the growth in gross loans held for investment, excluding Warehouse Purchase Program, compared to March 31, 2014:


Acquired from LegacyTexas Group, Inc.


Organic Growth


Total

Year-over-Year Growth


% Change excluding Acquired Loans


% Change including Acquired Loans

Commercial real estate

$

737,252



$

187,038



$

924,290



9.9

%


80.2

%

Commercial and industrial

337,057



331,593



668,650



37.7



123.0


Consumer

325,469



70,721



396,190



8.4



77.5


Total year-over-year growth

$

1,399,778



$

589,352



$

1,989,130



16.3



90.1


Energy loans, which are reported as commercial and industrial loans, totaled $371.1 million at March 31, 2015, up $11.5 million from $359.6 million at December 31, 2014 and up $158.3 million from March 31, 2014.  The growth includes $5.6 million in energy loans acquired from LegacyTexas.  In May 2013, the Company formed its Energy Finance group, which is comprised of a group of seasoned lenders, executives and credit risk professionals with more than 100 years of combined Texas energy experience, to focus on providing loans to private and public oil and gas companies throughout the United States. The group also offers the Bank's full array of commercial services, including Treasury Management and letters of credit, to its customers.  Substantially all of the loans in the Energy portfolio are reserve based loans, secured by deeds of trust on properties containing proven oil and natural gas reserves. Two loans managed by the Energy Finance group are not secured by oil and gas reserves. These loans, with a combined commitment of $29.5 million and a total outstanding balance of $12.7 million at March 31, 2015, are categorized as "Midstream and Other" loans. Loans in this category are typically related to the transmission of oil and natural gas and would have only an indirect impact from declining commodity prices.

Financial Condition - Deposits

The below table breaks out the growth in deposits compared to December 31, 2014:


Acquired from LegacyTexas Group, Inc.


Organic Change


Total Linked-Quarter Growth


% Change excluding Acquired Deposits


% Change including Acquired Deposits

Non-interest-bearing demand

$

499,684



$

(87,626)



$

412,058



(8.8)

%


83.3

%

Interest-bearing demand

271,157



142,887



414,044



19.2



87.6


Savings and money market

546,802



115,207



662,009



6.7



56.3


Time

312,139



(59,883)



252,256



(7.2)



49.1


Total linked-quarter growth

$

1,629,782



$

110,585



$

1,740,367



2.6



65.5


The below table breaks out the growth in deposits compared to March 31, 2014:


Acquired from LegacyTexas Group, Inc.


Organic Change


Total Year-over-Year Growth


% Change excluding Acquired Deposits


% Change including Acquired Deposits

Non-interest-bearing demand

$

499,684



$

(27,713)



$

471,971



(3.0)

%


108.6

%

Interest-bearing demand

271,157



136,158



407,315



18.1



85.0


Savings and money market

546,802



346,910



893,712



23.3



94.6


Time

312,139



(56,207)



255,932



(6.8)



50.2


Total year-over-year growth

$

1,629,782



$

399,148



$

2,028,930



10.0



85.6


Credit Quality


At or For the Quarters Ended


March


December


March

(unaudited)

2015


2014


2014


(Dollars in thousands)

Net charge-offs (recoveries)

$

273



$

(327)



$

332


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

0.03

%


(0.05)

%


0.06

%

Net charge-offs (recoveries)/Average loans held for investment

0.02



(0.04)



0.05


Provision for loan losses

$

3,000



$

2,637



$

376


Non-performing loans ("NPLs")

22,869



23,507



22,829


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

0.54

%


0.89

%


1.03

%

NPLs/Total loans held for investment

0.44



0.69



0.82


Non-performing assets ("NPAs")

$

29,034



$

24,058



$

23,216


NPAs to total assets

0.45

%


0.58

%


0.64

%

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

0.69



0.91



1.05


NPAs/Loans held for investment and foreclosed assets

0.55



0.70



0.83


Allowance for loan losses

$

28,276



$

25,549



$

19,402


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

0.67

%


0.97

%


0.88

%

Allowance for loan losses/Total loans held for investment

0.54



0.75



0.69


Allowance for loan losses/Total Loans held for investment, excluding acquired loans & Warehouse Purchase Program loans 1

1.00



1.00



0.92


Allowance for loan losses/NPLs

123.64



108.69



84.99




1 Excludes loans acquired from Highlands Bank and LegacyTexas Bank, which were initially recorded at fair value.

The Company recorded a provision for loan losses of $3.0 million for the quarter ended March 31, 2015, compared to $2.6 million for the quarter ended December 31, 2014 and $376,000 for the quarter ended March 31, 2014.  The increase in the provision for loan losses on a linked-quarter basis, as well as compared to the first quarter of 2014, was primarily related to increased organic loan production, as well as loans acquired from LegacyTexas that were re-underwritten during the first quarter of 2015.  Once an acquired loan undergoes new underwriting and meets the criteria for a new loan, any remaining fair value adjustments are taken to interest income and the loan becomes subject to the Company's allowance for loan loss methodology.   

Consistent with the fourth quarter of 2014, the Company continued to apply qualitative reserve factors to provide for additional allowance for loan losses due to the economic uncertainty in Texas related to the recent decline in the price of oil.  To date, the Company has not recognized a loss from loans in the Energy portfolio, which we believe is a reflection of prudent risk mitigation techniques.  These techniques include sound underwriting (reasonable advance rates based on number and diversification of wells), sound policy (requiring hedges on production sales) and conservative collateral valuations (frequent borrowing base determinations at prices below NYMEX posted rates).  All borrowing base valuations are performed by experienced and nationally recognized third party firms intimately familiar with the properties and their production history.  At March 31, 2015, less than 1% of the Company's loan portfolio (excluding Warehouse Purchase Program loans) consisted of criticized energy loans, and all energy loans were performing.

Subsequent Events

The Company is required, under generally accepted accounting principles, to evaluate subsequent events through the filing of its consolidated financial statements for the quarter ended March 31, 2015 on Form 10-Q.  As a result, the Company will continue to evaluate the impact of any subsequent events on critical accounting assumptions and estimates made as of March 31, 2015 and will adjust amounts preliminarily reported, if necessary.

Conference Call

The Company will host an investor conference call to review the results on Wednesday, April 22, 2015 at 8 a.m. Central Time.  Participants may pre-register for the call by visiting http://dpregister.com/10063456 and will receive a unique pin number, which 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 1-877-344-7529, Conference #10063456.   This replay, as well as the webcast, will be available until May 13, 2015.

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 48 banking offices in the Dallas/Fort Worth Metroplex and surrounding counties. For more information, please visit www.legacytexasfinancialgroup.com or www.legacytexas.com.

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 the Company-LegacyTexas Group, Inc. merger (the "Merger") 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.

LegacyTexas Financial Group, Inc.

Consolidated Balance Sheets



March 31, 2015


December 31, 2014


September 30, 2014


June 30, 2014


March 31, 2014


(Dollars in thousands)

ASSETS

(unaudited)




(unaudited)


(unaudited)


(unaudited)

Cash and due from financial institutions

$

53,739



$

28,416



$

27,669



$

35,276



$

33,627


Short-term interest-bearing deposits in other financial institutions

230,175



103,605



62,616



130,632



88,238


Total cash and cash equivalents

283,914



132,021



90,285



165,908



121,865


Securities available for sale, at fair value

290,615



199,699



211,364



224,184



236,062


Securities held to maturity

261,670



241,920



254,665



267,614



280,490


Total securities

552,285



441,619



466,029



491,798



516,552


Loans held for sale

23,983



—



—



—



—


Loans held for investment:










Loans held for investment - Warehouse Purchase Program

1,038,886



786,416



736,624



769,566



590,904


Loans held for investment

4,196,710



2,633,680



2,489,063



2,349,509



2,207,580


Gross loans

5,259,579



3,420,096



3,225,687



3,119,075



2,798,484


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

(31,565)



(28,476)



(24,773)



(22,139)



(21,291)


Net loans

5,228,014



3,391,620



3,200,914



3,096,936



2,777,193


FHLB and Federal Reserve Bank stock, at cost

65,470



44,084



41,473



44,532



33,632


Bank-owned life insurance

54,339



36,193



36,010



35,863



35,718


Premises and equipment, net

81,757



48,743



51,118



51,955



52,736


Goodwill

179,258



29,650



29,650



29,650



29,650


Other assets

67,471



40,184



35,045



34,602



36,242


Total assets

$

6,512,508



$

4,164,114



$

3,950,524



$

3,951,244



$

3,603,588












LIABILITIES AND SHAREHOLDERS' EQUITY







Non-interest-bearing demand

$

906,434



$

494,376



$

483,784



$

433,194



$

434,463


Interest-bearing demand

886,747



472,703



454,416



476,203



479,432


Savings and money market

1,838,758



1,176,749



1,057,912



1,032,496



945,046


Time

766,237



513,981



500,356



493,833



510,305


Total deposits

4,398,176



2,657,809



2,496,468



2,435,726



2,369,246


FHLB advances

1,171,623



862,907



799,704



874,866



607,996


Repurchase agreement

25,000



25,000



25,000



25,000



25,000


Other borrowings

91,612



—



—



—



—


Accrued expenses and other liabilities

65,038



50,175



65,225



58,240



51,247


Total liabilities

5,751,449



3,595,891



3,386,397



3,393,832



3,053,489


Shareholders' equity










Common stock

476



400



400



400



399


Additional paid-in capital

568,396



386,549



383,779



381,808



379,578


Retained earnings

205,431



195,327



194,663



190,150



186,126


Accumulated other comprehensive income, net

1,372



930



635



770



78


Unearned Employee Stock Ownership Plan (ESOP) shares

(14,616)



(14,983)



(15,350)



(15,716)



(16,082)


Total shareholders' equity

761,059



568,223



564,127



557,412



550,099


Total liabilities and shareholders' equity

$

6,512,508



$

4,164,114



$

3,950,524



$

3,951,244



$

3,603,588


LegacyTexas Financial Group, Inc.

Consolidated Quarterly Statements of Income (unaudited)



For the Quarters Ended


First Quarter 2015 Compared to:


Mar 31, 2015


Dec 31, 2014


Sep 30, 2014


Jun 30, 2014


Mar 31, 2014


Fourth Quarter 2014


First Quarter

 2014

Interest and dividend income

(Dollars in thousands)

Loans, including fees

$

58,035



$

37,107



$

35,872



$

33,888



$

30,388



$

20,928


56.4

%


$

27,647


91.0

%

Taxable securities

2,499



2,109



2,225



2,453



2,565



390


18.5



(66)


(2.6)


Nontaxable securities

718



561



562



561



564



157


28.0



154


27.3


Interest-bearing deposits in other financial institutions

158



64



57



71



57



94


146.9



101


177.2


FHLB and Federal Reserve Bank stock and other

208



138



139



136



130



70


50.7



78


60.0



61,618



39,979



38,855



37,109



33,704



21,639


54.1



27,914


82.8


Interest expense
















Deposits

3,127



2,165



2,021



2,035



1,991



962


44.4



1,136


57.1


FHLB advances

1,706



1,778



1,957



1,948



1,927



(72)


(4.0)



(221)


(11.5)


Repurchase agreement and other borrowings

459



206



207



204



201



253


122.8



258


128.4



5,292



4,149



4,185



4,187



4,119



1,143


27.5



1,173


28.5


Net interest income

56,326



35,830



34,670



32,922



29,585



20,496


57.2



26,741


90.4


Provision for loan losses

3,000



2,637



2,511



1,197



376



363


13.8



2,624


697.9


Net interest income after provision for loan losses

53,326



33,193



32,159



31,725



29,209



20,133


60.7



24,117


82.6


Non-interest income
















Service charges and other fees

5,887



4,963



4,798



5,113



4,508



924


18.6



1,379


30.6


Net gain on sale of mortgage loans

2,072



—



—



—



—



2,072


N/M 1



2,072


N/M 1


Bank-owned life insurance income

419



183



147



145



153



236


129.0



266


173.9


Gain on sale of available for sale securities

211



—



—



—



—



211


N/M 1



211


N/M 1


Gain (loss) on sale and disposition of assets

28



15



(85)



727



1



13


86.7



27


N/M 1


Other

(231)



133



198



(556)



300



(364)


N/M 1



(531)


N/M 1



8,386



5,294



5,058



5,429



4,962



3,092


58.4



3,424


69.0


















Non-interest expense
















Salaries and employee benefits

21,938



13,137



13,661



14,127



14,132



8,801


67.0



7,806


55.2


Merger and acquisition costs

1,545



8,282



1,188



652



169



(6,737)


(81.3)



1,376


814.2


Advertising

915



425



262



493



355



490


115.3



560


157.7


Occupancy and equipment

3,991



1,856



1,807



1,819



1,892



2,135


115.0



2,099


110.9


Outside professional services

747



711



569



486



525



36


5.1



222


42.3


Regulatory assessments

822



700



698



687



628



122


17.4



194


30.9


Data processing

2,787



1,753



1,739



1,708



1,662



1,034


59.0



1,125


67.7


Office operations

2,342



1,621



1,566



1,717



1,680



721


44.5



662


39.4


Other

1,669



1,311



1,301



1,661



1,112



358


27.3



557


50.1



36,756



29,796



22,791



23,350



22,155



6,960


23.4



14,601


65.9


Income before income tax expense

24,956



8,691



14,426



13,804



12,016



16,265


187.1



12,940


107.7


Income tax expense

8,632



3,225



5,114



4,986



4,334



5,407


167.7



4,298


99.2


Net income

$

16,324



$

5,466



$

9,312



$

8,818



$

7,682



$

10,858


198.6

%


$

8,642


112.5

%


1N/M - not meaningful

LegacyTexas Financial Group, Inc.

Selected Financial Highlights (unaudited)



At or For the Quarters Ended


March 31,
 2015


December 31,
 2014


March 31,
 2014


(Dollars in thousands, except per share amounts)

SHARE DATA:






Weighted average common shares outstanding- basic

45,824,812



38,051,511



37,775,677


Weighted average common shares outstanding- diluted

46,002,821



38,275,814



38,019,519


Shares outstanding at end of period

47,602,721



40,014,851



39,946,560


Income available to common shareholders1

$

16,186



$

5,412



$

7,592


Basic earnings per common share

0.35



0.14



0.20


Basic core (non-GAAP) earnings per common share2

0.39



0.29



0.21


Diluted earnings per common share

0.35



0.14



0.20


Dividends declared per share

0.13



0.12



0.12


Total shareholders' equity

761,059



568,223



550,099


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

15.99



14.20



13.77


Tangible book value per share- Non-GAAP2

12.20



13.44



13.00


Market value per share for the quarter:






High

25.09



27.61



28.85


Low

19.82



21.33



23.73


Close

22.73



23.85



28.85


KEY RATIOS:






Return on average common shareholders' equity

8.66

%


3.83

%


5.62

%

Core return on average common shareholders' equity2

9.42



7.85



5.70


Return on average assets

1.09



0.56



0.92


Core return on average assets2

1.18



1.14



0.93


Efficiency ratio3

53.87



52.22



63.39


Estimated Tier 1 common risk-based capital ratio4

10.47



15.14



17.88


Estimated total risk-based capital ratio4

11.46



15.87



18.55


Estimated Tier 1 leverage ratio4

10.41



13.86



15.66


Total equity to total assets

11.69



13.65



15.27


Tangible equity to tangible assets- Non-GAAP2

9.17



13.01



14.54


Number of employees- full-time equivalent

794



517



549














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 by dividing total non-interest expense by net interest income plus non-interest income, excluding gain (loss) on foreclosed and fixed assets, changes in value of the CRA Funds, amortization of intangible assets, gains (losses) from securities transactions and merger and acquisition costs.

4 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


March 31, 2015


December 31,

 2014


September 30,

 2014


June 30,

 2014


March 31,

 2014

Loans:

(Dollars in thousands)

Commercial real estate

$

1,890,607



$

1,265,868



$

1,219,436



$

1,162,035



$

1,118,059


Warehouse Purchase Program loans

1,038,886



786,416



736,624



769,566



590,904


Commercial and industrial loans:










Commercial

1,182,842



741,678



668,421



579,561



517,247


Warehouse lines of credit

29,388



40,146



27,122



31,426



26,333


Total commercial and industrial loans

1,212,230



781,824



695,543



610,987



543,580


Construction and land loans:










Commercial construction and land

186,207



14,396



13,206



28,496



34,465


Consumer construction and land

29,554



6,902



3,694



3,445



2,604


Total construction and land loans

215,761



21,298



16,900



31,941



37,069


Consumer:










Consumer real estate

792,995



524,199



515,706



501,328



463,857


Other consumer loans

85,117



40,491



41,478



43,218



45,015


Total consumer

878,112



564,690



557,184



544,546



508,872


Gross loans held for investment

$

5,235,596



$

3,420,096



$

3,225,687



$

3,119,075



$

2,798,484


Non-performing assets:










Commercial real estate

$

6,745



$

6,703



$

7,452



$

7,386



$

8,110


Commercial and industrial

5,691



5,778



6,328



6,245



5,990


Construction and land

141



149



150



213



—


Consumer real estate

9,946



10,591



10,106



9,304



8,203


Other consumer loans

346



286



346



457



526


Total non-performing loans

22,869



23,507



24,382



23,605



22,829


Foreclosed assets

6,165



551



106



240



387


Total non-performing assets

$

29,034



$

24,058



$

24,488



$

23,845



$

23,216


Total non-performing assets to total assets

0.45

%


0.58

%


0.62

%


0.60

%


0.64

%

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

0.54

%


0.89

%


0.98

%


1.00

%


1.03

%

Total non-performing loans to total loans held for investment

0.44

%


0.69

%


0.76

%


0.76

%


0.82

%

Allowance for loan losses to non-performing loans

123.64

%


108.69

%


92.63

%


86.59

%


84.99

%

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

0.67

%


0.97

%


0.91

%


0.87

%


0.88

%

Allowance for loan losses to total loans held for investment

0.54

%


0.75

%


0.70

%


0.66

%


0.69

%

Allowance for loan losses to total loans held for investment, excluding acquired loans and Warehouse Purchase Program loans 1

1.00

%


1.00

%


0.94

%


0.90

%


0.92

%

Troubled debt restructured loans ("TDRs"):









Performing TDRs:










Commercial real estate

$

738



$

702



$

706



$

666



$

—


Commercial and industrial

147



153



158



162



167


Construction and land

—



—



—



—



2


Consumer real estate

203



204



407



729



732


Other consumer loans

37



39



41



43



44


  Total performing TDRs

$

1,125



$

1,098



$

1,312



$

1,600



$

945


Non-performing TDRs:2










Commercial real estate

$

6,616



$

6,569



$

6,646



$

6,694



$

7,401


Commercial and industrial

1,985



2,031



2,125



2,194



2,333


Construction and land

101



103



104



—



—


Consumer real estate

3,936



4,034



3,606



3,199



3,024


Other consumer loans

201



245



300



411



471


  Total non-performing TDRs

$

12,839



$

12,982



$

12,781



$

12,498



$

13,229


Allowance for loan losses:










Balance at beginning of period

$

25,549



$

22,585



$

20,440



$

19,402



$

19,358


Provision expense

3,000



2,637



2,511



1,197



376


Charge-offs

(504)



(203)



(493)



(294)



(471)


Recoveries

231



530



127



135



139


  Balance at end of period

$

28,276



$

25,549



$

22,585



$

20,440



$

19,402


Net charge-offs (recoveries):










Commercial real estate

$

(17)



$

(435)



$

—



$

—



$

—


Commercial and industrial

5



77



152



53



192


Construction and land

—



—



50



—



—


Consumer real estate

142



(1)



69



54



77


Other consumer loans

143



32



95



52



63


  Total net charge-offs

$

273



$

(327)



$

366



$

159



$

332












1 Excludes loans acquired from Highlands Bank and LegacyTexas Bank, 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


March 31, 2015


December 31, 2014


September 30, 2014


June 30, 2014


March 31, 2014

Loans:

(Dollars in thousands)

Commercial real estate

$

2,031,363



$

1,229,962



$

1,187,982



$

1,169,484



$

1,130,304


Warehouse Purchase Program loans

687,496



619,736



645,148



571,922



446,935


Commercial and industrial loans:










  Commercial

1,102,446



703,326



633,208



561,026



449,867


  Warehouse lines of credit

32,405



27,303



29,296



29,327



17,988


Consumer real estate

813,474



523,998



513,768



480,512



440,662


Other consumer loans

90,219



41,169



42,308



44,162



46,453


Less: deferred fees and allowance for loan loss

(36,423)



(25,280)



(22,663)



(21,683)



(20,767)


Total loans held for investment

4,720,980



3,120,214



3,029,047



2,834,750



2,511,442


Loans held for sale

19,379



—



—



—



—


Securities

620,412



505,692



532,950



545,944



562,607


Overnight deposits

221,270



106,152



90,246



118,529



96,292


  Total interest-earning assets

$

5,582,041



$

3,732,058



$

3,652,243



$

3,499,223



$

3,170,341


Deposits:










Interest-bearing demand

$

795,641



$

455,210



$

460,192



$

468,283



$

460,745


Savings and money market

1,804,916



1,169,133



1,060,311



1,000,243



918,636


Time

785,309



513,786



492,864



503,035



493,196


FHLB advances and other borrowings

820,969



654,396



733,615



678,817



464,723


  Total   interest-bearing liabilities

$

4,206,835



$

2,792,525



$

2,746,982



$

2,650,378



$

2,337,300












Total assets

$

6,015,890



$

3,910,111



$

3,837,424



$

3,683,042



$

3,354,668


Non-interest-bearing demand deposits

$

985,596



$

473,996



$

456,115



$

414,746



$

414,919


Total deposits

$

4,371,462



$

2,612,125



$

2,469,482



$

2,386,307



$

2,287,496


Total shareholders' equity

$

753,792



$

570,120



$

562,022



$

554,501



$

547,201












Yields/Rates:










Loans:










Commercial real estate

5.36

%


5.43

%


5.47

%


5.47

%


5.38

%

Warehouse Purchase Program loans

3.36

%


3.51

%


3.56

%


3.56

%


3.64

%

Commercial and industrial loans:










  Commercial

4.94

%


4.41

%


4.21

%


4.21

%


4.24

%

  Warehouse lines of credit

3.68

%


3.59

%


3.55

%


3.64

%


3.60

%

Consumer real estate

4.80

%


4.83

%


4.92

%


4.97

%


4.98

%

Other consumer loans

5.24

%


6.23

%


6.03

%


6.07

%


5.95

%

Total loans held for investment

4.90

%


4.76

%


4.74

%


4.78

%


4.84

%

Loans held for sale

3.67

%


—

%


—

%


—

%


—

%

Securities

2.21

%


2.22

%


2.20

%


2.31

%


2.32

%

Overnight deposits

0.29

%


0.24

%


0.25

%


0.24

%


0.24

%

  Total interest-earning assets

4.42

%


4.28

%


4.26

%


4.24

%


4.25

%

Deposits:










Interest-bearing demand

0.29

%


0.35

%


0.35

%


0.37

%


0.37

%

Savings and money market

0.29

%


0.32

%


0.31

%


0.30

%


0.28

%

Time

0.65

%


0.64

%


0.65

%


0.69

%


0.75

%

FHLB advances and other borrowings

1.05

%


1.21

%


1.18

%


1.27

%


1.83

%

  Total interest-bearing liabilities

0.50

%


0.59

%


0.61

%


0.63

%


0.70

%

Net interest spread

3.92

%


3.69

%


3.65

%


3.61

%


3.55

%

Net interest margin

4.04

%


3.84

%


3.80

%


3.76

%


3.73

%

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

0.29

%


0.33

%


0.33

%


0.34

%


0.35

%

LegacyTexas Financial Group, Inc.

Supplemental Information- Non-GAAP Financial Measures

(unaudited and net of tax, calculated using a 35% estimated tax rate)



At or For the Quarters Ended


March 31,
 2015


December 31,
 2014


September 30,
 2014


June 30,
 2014


March 31,
 2014

Reconciliation of Core (non-GAAP) to GAAP Net Income and Earnings per Share:

(Dollars in thousands, except per share amounts)

GAAP net income available to common shareholders 1

$

16,186



$

5,412



$

9,215



$

8,721



$

7,592


Distributed and undistributed earnings to participating securities 1

138



54



97



97



90


GAAP net income

16,324



5,466



9,312



8,818



7,682












Merger and acquisition costs

1,004



5,765



772



424



110


One-time payroll and severance costs

—



—



—



234



—


One-time (gain) loss on assets

554



(45)



(58)



415



7


Gain on sale of available for sale securities

(137)



—



—



—



—


Core (non-GAAP) net income

$

17,745



$

11,186



$

10,026



$

9,891



$

7,799


Average shares for basic earnings per share

45,824,812



38,051,511



37,971,790



37,873,671



37,775,677


GAAP basic earnings per share

$

0.35



$

0.14



$

0.24



$

0.23



$

0.20


Core (non-GAAP) basic earnings per share

$

0.39



$

0.29



$

0.26



$

0.26



$

0.21


Average shares for diluted earnings per share

46,002,821



38,275,814



38,203,508



38,121,374



38,019,519


GAAP diluted earnings per share

$

0.35



$

0.14



$

0.24



$

0.23



$

0.20


Core (non-GAAP) diluted earnings per share

$

0.39



$

0.29



$

0.26



$

0.26



$

0.21












Calculation of Tangible Book Value per Share:









Total shareholders' equity

$

761,059



$

568,223



$

564,127



$

557,412



$

550,099


Less: Goodwill

(179,258)



(29,650)



(29,650)



(29,650)



(29,650)


  Identifiable intangible assets, net

(1,042)



(813)



(910)



(1,005)



(1,127)


Total tangible shareholders' equity

$

580,759



$

537,760



$

533,567



$

526,757



$

519,322


Shares outstanding at end of period

47,602,721



40,014,851



40,006,941



39,995,720



39,946,560












Book value per share- GAAP

$

15.99



$

14.20



$

14.10



$

13.94



$

13.77


Tangible book value per share- Non-GAAP

$

12.20



$

13.44



$

13.34



$

13.17



$

13.00












Calculation of Tangible Equity to Tangible Assets:









Total assets

$

6,512,508



$

4,164,114



$

3,950,524



$

3,951,244



$

3,603,588


Less: Goodwill

(179,258)



(29,650)



(29,650)



(29,650)



(29,650)


  Identifiable intangible assets, net

(1,042)



(813)



(910)



(1,005)



(1,127)


Total tangible assets

$

6,332,208



$

4,133,651



$

3,919,964



$

3,920,589



$

3,572,811












Equity to assets- GAAP

11.69

%


13.65

%


14.28

%


14.11

%


15.27

%

Tangible equity to tangible assets- Non-GAAP

9.17

%


13.01

%


13.61

%


13.44

%


14.54

%


At or For the Quarters Ended

(Dollars in thousands)

March 31,
 2015


December 31,
 2014


September 30,
 2014


June 30,
 2014


March 31,
 2014

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

Net income

$

16,324



$

5,466



$

9,312



$

8,818



$

7,682


Core (non-GAAP) net income

17,745



11,186



10,026



9,891



7,799


Average total equity

753,792



570,120



562,022



554,501



547,201


Average total assets

6,015,890



3,910,111



3,837,424



3,683,042



3,354,668


Return on average common shareholders' equity

8.66

%


3.83

%


6.63

%


6.36

%


5.62

%

Core return on average common shareholders' equity

9.42



7.85



7.14



7.14



5.70


Return on average assets

1.09



0.56



0.97



0.96



0.92


Core return on average assets

1.18



1.14



1.05



1.07



0.93



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.

Logo - http://photos.prnewswire.com/prnh/20150421/200140LOGO

SOURCE LegacyTexas Financial Group, Inc.

Related Links

https://www.legacytexas.com

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