Greetings, and welcome to the Independent Bank Group Q2 2022 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Paul Langdale, Vice President, Investor Relations. Thank you, Paul. You may begin. Good morning, everyone. I am Paul Langdale, Executive Vice President of Corporate Development and Strategy for Independent Bank Group, and I would like to welcome you to the Independent Bank Group Q2 2022 earnings call. We appreciate you joining us. The related earnings press release and the slide presentation can be accessed on our website at ibtx.com. I would like to remind you that remarks made today may include forward-looking statements. Those statements are subject to risks and uncertainties that could cause actual unexpected results to differ. We intend such statements to be covered by safe harbor provisions for forward-looking statements. Please see page five of the text in the release or page two of the slide presentation for our safe harbor statement. All comments made during today's call are subject to that statement. Please note that if we give guidance about future results, that guidance is a statement of management's beliefs at the time the statement is made, and we assume no obligation to publicly update guidance. In this call, we will discuss several financial measures considered to be non-GAAP under the SEC's rules. Reconciliations of these financial measures to the most directly comparable GAAP financial measures are included in our release. I am joined this morning by David Brooks, our Chairman and CEO, Dan Brooks, Vice Chairman, and Michelle Hickox, Executive Vice President and CFO. At the end of their remarks, David will open the call to questions. With that, I will turn it over to David. Thanks, Paul. Good morning, everyone, and thanks for joining the call today. For the Q2, we announced adjusted earnings of $1.27 per diluted share, as well as exceptional loan growth of 36% annualized for the quarter, excluding mortgage warehouse and the PPP. This record growth was driven by strong demand from our relationship borrowers across Texas and Colorado as our markets continue to experience strong economic and demographic growth. Dan will provide some additional color on the geographic and product type breakdown of the loan growth, while Michelle will touch on rates and sensitivity impacts. On the whole, though, this record growth was propelled by substantial investments we've made in attracting seasoned lenders to our bank over the past few years. These lenders have in turn built and developed strong teams of producers underneath them. At the same time, we've also greatly enhanced our infrastructure in both credit and lending support to ensure our producers have been able to pursue new lending opportunities while maintaining our long-standing credit culture that has guided us through previous downturns. Today, we have the strongest talent bench we have ever had in the history of our company, and this exceptional growth quarter is a direct result of that fact. During the quarter, we were also encouraged by the resilience of our core deposit base in the face of successive Fed hikes. Net interest income grew by 5.2% versus the prior quarter, while the NIM expanded by 29 basis points to 3.51%, aided by the granularity of our funding coupled with a rise in loan yields. In addition, the volatility in equity markets gave us the opportunity to repurchase over 1.6 million shares of our common stock during the quarter, consistent with our long-standing philosophy of returning excess capital to our shareholders. With that overview, I'll now turn the call over to Michelle for more detail on the operating results for the quarter. Thank you, David. Good morning, everyone. Note that slide six shows selected financial data for the quarter. Q2 adjusted net income totaled $53.3 million or $1.27 per diluted share, an increase of $1.2 million over the linked quarter. Net interest income was $138 million for the quarter, which increased $6.9 million from the linked quarter. This increase was primarily due to the significant loan growth during the quarter, which saw the redeployment of much of our excess liquidity sooner than anticipated. The NIM, excluding purchase loan accretion, was 3.45%, up 32 basis points from the linked quarter. This increase was driven by deployment of liquidity from significant loan growth during the quarter and slightly offset by a rise in deposit costs. While our balance sheet is still somewhat asset sensitive, this deployment of cash to loans has reduced asset sensitivity as compared to previous quarters. Total non-interest income was $13.9 million for the Q2, an increase of $1 million versus the linked quarter. The change was due to Q1 having included a $1.5 million loss on sale of loan, offset by a $536,000 decrease in mortgage banking revenue in Q2. Mortgage production and mortgage warehouse revenues continue to be adversely impacted by lower volumes due to the rising rate environment. Non-interest expense totaled $85.9 million for the Q2. The increase of $3.5 million versus the linked quarter was mostly driven by an increase in salaries and benefits expense, which includes $1.1 million of termination expenses for the departure of an executive officer, as well as elevated health insurance and recruitment expense. Slide 19 shows our deposit mix and cost. Deposits totaled $15.1 billion at quarter end, which is a slight increase over the linked quarter. The chart on Slide 20 illustrates the change by vertical and shows the stability of our core deposit accounts with the year-to-date decrease coming from brokered and specialty treasury deposits, as well as seasonality in public funds. Capital ratios are presented on Slide 22. The company's consolidated capital ratios remain within our target levels with a common equity tier one capital ratio of 9.81% and a total capital ratio of 12.24%. Tangible common equity was 7.63% at quarter end. These ratios are down from March 31st due to the execution of our stock buyback plan, acquiring $115 million during the Q2. That concludes my comments. I will turn it over to Dan to discuss the loan portfolio. Thanks, Michelle. Overall, loans held for investment, excluding mortgage warehouse purchase loans, were $13 billion at quarter end compared to $12 billion in the linked quarter. Excluding the impact of PPP loans, core loans held for investment increased by $1.1 billion over the linked quarter, which represents a 36% annualized rate of loan growth. Growth in real estate lending categories accounted for the majority of new loans booked during the quarter, with energy and C&I accounting for about 11% and 7% of new commitments greater than $1 million, respectively. Of new real estate loans, no category accounted for more than 17% of growth in new commitments greater than $1 million, with the largest drivers and their approximate shares being retail at 17%, multifamily at 15%, and single family residential at 13%. Geographically, new loan production was well distributed between our markets, with none of our four regions accounting for more than one-third of total growth. Average mortgage warehouse purchase loans decreased to $467.8 million in the Q2, down from $549.6 million in the prior quarter. This decrease was primarily driven by upward pressure on mortgage rates resulting in decreased demand, lower volumes, and shorter hold times across the mortgage industry. Credit quality metrics remain healthy. Total non-performing assets increased to $82.9 million, or 0.46% of total assets at quarter end. Other real estate owned increased to $12.9 million during the quarter due to the addition of an office property in the Houston market that had been discussed on last quarter's call. Net charge-offs totaled 9 basis points annualized during the quarter. On June 30th, 2022, the allowance for credit losses on loans is $144.2 million or 1.11% of loans held for investment, excluding mortgage warehouse loans. There was no provision expense for the quarter, primarily due to changes in the COVID-related economic factors in our CECL model, offset by strong loan growth. These are all the comments I have related to the loan portfolio this morning. With that, I'll turn it back over to David. Thanks, Dan. While our loan growth was exceptionally strong in the Q2, we are anticipating growth to moderate in the Q3. Given this, we expect to grow our core loan portfolio at the high single digit level for the remainder of 2022. I am grateful to our teams across Texas and Colorado for their strong performance this quarter in achieving record loan growth. As I mentioned earlier, the talent across our organization has never been as strong as it is today. Over the past several years, we have made significant investments not only in our production areas, but in our teams across the organization to strengthen our infrastructure and ensure sustainable growth. Looking across our markets, the economies that we serve continue to exhibit both resilience and rapid growth. We remain encouraged by these tailwinds as a significant number of companies and talented individuals continue to relocate to Texas and Colorado. Building a high-performance bank in growth markets has been the hallmark of our strategy since the IPO, and we look forward to continuing our disciplined execution and pursuit of new opportunities in the road ahead. Thank you for taking the time to join us today. We'll now open the line to questions. Operator? Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. Our first question is from Brad Milsaps with Piper Sandler. Please proceed with your question. Hey, good morning. Hey, good morning, Brad. Thanks for taking my question. Michelle, maybe just wanted to start with the margin, you know, some nice expansion. It looks like you guys, you know, benefited quite a bit from mix change. Just wanted to kind of see what your outlook was there, maybe specifically around loan yields. Looks like core were maybe up seven basis points or so. I think you've mentioned in the past maybe 15% of your loans reprice immediately. Can you just kind of talk about that and what that kind of means for, you know, kind of for the NIM going forward? Yeah, actually that's increased a bit. It's probably closer to 17% now, Brad, of loans that would reprice immediately. You know, looking at our modeling and then you can tell our betas have lagged a bit from where they have been historically, so that's been beneficial for us. You know, given where we are on liquidity, you know, we expect that those will most likely, as we continue to have loan growth, and need funding, that those betas will return to probably normal levels, which is closer to 30%-35% on interest-bearing deposits. Our modeling shows that we'll still get some benefit, probably a few basis points of expansion, third and fourth quarters. You know, of course, the risk there is that, you know, our betas could be higher, and that would be the risk to that outlook. Loan yields, Brad, are, you know, we've been able to push loan rates up, you know, over 200 basis points from the start of the year. Obviously, that's a competitive battle out there. You know, we have a good strong so far in July. You know, the average rate of loans coming on was over 5%. You know, we expect that to continue to go up during the year. Our modeling indicates, as Michelle said, that, you know, we'll continue to get some benefit from the rising rate environment and, you know, knowing what we know now. Great. Just as a follow-up to that, just in terms of the bond portfolio, Michelle, do you think that's sort of reached a peak and you'll sort of use that to kind of fund growth over the near term, you know, absent you know any deposits coming in? Just, you know, given the loan growth we had this quarter, we discontinued growing the bond portfolio and it's remained flat. We could reinvest some cash flows for the remainder of the year, but I expect it probably will be a bit smaller by the end of the year. Okay, great. Thank you, guys. I'll hop back in queue. Hey, thanks, Brad. Thank you. Our next question is from Brady Gailey with KBW. Please proceed with your question. Thank you. Good morning, guys. Good morning, Brady. It's great to see you all so active on the buybacks in the quarter. Maybe just thoughts on, you know, how you're thinking about the buyback for the back half of the year. Yeah, we were pleased with the opportunity to, you know, actively repurchase our stock at prices that we felt were disproportionately low. You know, we still have some authorization left for the year. I think we'll be, given what's going on with prices now and TBV, we'll probably be a little less active in the back in the H2 of the year is the way we think about it. We still have availability if we need it. I would think we did a lot of our buying for the year in the Q2. If you look at expenses, they came a little heavier than my estimate. I know the $1.1 million is non-recurring, so that'll come out next quarter. Any thoughts on kind of the forward run rate of expenses? Yeah. Our health insurance has been running, you know, higher than we anticipated, which I think has been consistent with some others that I've heard, just kind of post-pandemic claims. We also made some opportunistic hires on our production team and, you know, so that required some recruitment, signing bonus expense that we had not anticipated in our original plan. Having said that, I think if you pull out that non-recurring termination expense, that run rate is good for the rest of the year, for Q3 and Q4. Around $85 million or so? Yeah, maybe a little less than that, but that's probably a good number to use. Okay. All right. As you look at the provision, you know, your reserve with the great loan growth, your reserve is now, you know, close to 115 basis points, ex-PPP, ex-warehouse. You know, how should we think about that going forward? I mean, it's, you know, credit is still so clean for y'all, but at the same time, the economic outlook is fairly uncertain. You know, should the percentage ratio be flat from here, or do you think there could be some more downside? I think we'll continue. Obviously, we used, or as you said, the ratio dropped down that 110-115 range. You know, I think anything, Brady, you know, 110- 120 is a broad range probably is good given our asset quality. That said, you know, we're paying attention to the economy, and I think the way to think about it going forward is we're expecting, you know, high single-digit growth for the back half of the year. In our planning, we're thinking 1%, you know, as we think about a loan loss provision for the H2, 1% of kind of whatever our growth is a good way to think about it. Okay. All right, great. Thank you, guys. Hey, thanks, Brady. Thank you. Our next question is from Brandon King with Truist Securities. Please proceed with your question. Hey, good morning. Good morning, Brandon. Morning. Yes. I wanted to get a better sense of your expectations for deposit growth in the back half of the year, and was wondering if, potentially if loan growth exceeds deposit growth, what is the capacity or willingness to use borrowings to fund loan growth? Yeah. In our plan, you know, we plan that we'll be able to fund the loan growth with deposits. You know, we've made significant investments in our treasury teams and our retail teams, and they have, I mean, if you look at our core deposits, they have grown a bit this year. We still do have access to our specialty treasury deposits that, you know, we let some of those run off in the Q1, and we can access those if we need to, but, you know, they are more expensive, so that's not our preference. We have plenty of borrowing capacity to FHLB if that was where we needed to go, you know, sort of as the last resort. I think our philosophy, Brandon, would be to continue to take care of our customers and our markets. You know, if that leads us to, you know, growing loans at, you know, 8%-9% or whatever that level is, yes, we will fund that growth. We're gonna continue to take care of our clients and our markets. Okay. And then on the loan growth side of things, energy loans increased in the quarter. I just wanted to get a sense of where you think that could go in the H2 of the year and what you're seeing in your markets and with your customers within that segment. Yeah, Brandon, this is Dan. I'll take that one. We certainly expect continuing broad-based growth in the H2 of the year. If you look at the growth we had in the Q2, just at a high level, it was really a continuation of what we do well in our strong markets. You know, the production was granular and diversified across asset class and geography. We expect that to be the same as we go through the H2 of the year. Mm-hmm. Specifically on energy, as well, you know, we have been very successful at lending to well-established upstream E&P, a little bit of midstream as well. We made a hire, you might note from previous calls, of a senior energy lender in Houston and really had some nice traction in the Q2, who've added seven new relationships through that officer in the last, or in the first part of the year. We expect we'll continue to get traction there with the others. As you'll know, current outstandings are about $450 million, which is still less than 4% of the loan book. I do think that that'll continue to grow, and we expect to see some nice opportunities as the year plays out. Okay. Thanks for answering my questions. Hey, thanks, Brandon. Thank you. Our next question comes from Matt Olney with Stephens. Please proceed with your question. Hey, thanks. Good morning. I was gonna ask about the mortgage warehouse. I think the average balances were down around 15%, which would be a little bit below some of your peers this quarter. Any color on the underperformance in 2Q, and what's the outlook from here? Hey, Matt, this is Dan. I'll take that one as well. We expect at this point the volume to be essentially flat for the balance of the year. Yeah, I think it has come down as we've seen in many cases, just given the current environment of rates. We continue to hold our own and expect that to be flat as we play out the year. Just to follow up on that, flat from these average balances or the end of period balances. Then you also mentioned, I think in prepared remarks, some shorter hold times. Was that a comparison from quarter of this year or from last year you're seeing shorter hold times? Yeah. I think that's a comparison to last year, Matt. In terms of yes, for the balance of the year, our average balances for the Q2, we expect that to be flat through the balance of the year. The retail mortgage also, you know, has been soft, softer than we expected. That's why the fee income is down for Q2. We expect that to be flat for the balance of the year, both mortgage warehouse and retail mortgage to be flat at their Q2 levels in the third and fourth quarter. Okay. Got it. As far as the interest rate sensitivity, I think you mentioned in the prepared remarks that, as the excess liquidity levels have come down, then the benefits of higher rates as you kind of model that have also come down. Anything more specific as far as the 100 basis point shock analysis? I think it called for 6% growth of NII as of March 31st. Anything preliminary you can disclose as far as the June 30th numbers? Yeah. We're actually filing our Q today. I think it's a little over 4% is what we're reporting that in there. Okay. Thanks for that, Michelle. Just to clarify something, Michelle, you mentioned before, as far as the funding plan for the back half of the year. It sounds like you don't expect to access the wholesale deposit markets. If the loan growth exceeds the guidance of the highest single digit, then that becomes more of a reality. Am I getting that right? Yeah. That would be accurate or fair. If, you know, if we exceed where we're guiding to for loan growth, we might have to access either brokered or go back and get more specialty treasury. Again, we could use that FHLB advances. Given our current outlook, I think we can fund it, you know, with our core deposit customers. Okay. Thank you, guys. Hey, thanks, Matt. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. Our next question comes from Michael Rose with Raymond James. Please proceed with your question. Hey, good morning. I'm just following up on some of the deposit questions. Your loan deposit ratio is about 86%. You know, you've run higher than kind of that in the past. Obviously a good growth in the treasury deposits this quarter. I know the public funds is a little bit of a seasonal headwind, but where do you start to get a little bit uncomfortable? I mean, would you be comfortable running it back to where you had historically in the high 90s, low 100% range. Or is the goal to keep it kind of around these levels just based on, you know, some of the verticals you've built out, like Treasury? Thanks. Good morning, Michael. I think we believe that a more normal run rate for us is in the, you know, 85-90% range, loan to deposit. You know, we don't know, you know, what's coming down the road economically, et cetera. We can certainly sustain a higher loan to deposit than 85-86%. It would not be our strategy. Let me say it this way. It would not be our strategy to run the bank at a 100% loan to deposit. You know, we'd much rather feel more comfortable around 90%. That said, as Michelle said a moment ago, we have access to tremendous amounts of liquidity if we need it. It's just a matter of, obviously, you know, funding at the, you know, at the best part of the curve that we can, and that generally is with core deposits. We're working hard on the core deposit side. We've invested, as Michelle said, heavily in that, you know, treasury. We think we can fund it with core deposits and keep our loan to deposit ratio around, you know, 90%. Very helpful. Maybe just going back to the buyback. I think you have about $44 million left after this quarter. Would you expect to use that, or are you at a point where you might fall short just given cash to assets is fairly low at this point? You know, we certainly have the cash. I think it's really more kind of watching the economy and, you know, what's coming down the pike. You know, because we bought back so much stock, our capital ratios were down a little bit this quarter. We expect that to build back over the course of the year. You know, again, I don't know what's going to happen in the markets and how the markets are going to trade. It's a little hard for me to predict. I would say our bias would be less toward buying our stock back at this point, just given how much we have already repurchased, our desire to have our capital ratios continue to grow this year and, you know, and to fund the growth that we have. We certainly have the liquidity to repurchase our stock. Right now it looks to us like there'll be, you know, little activity in the s H2 on that. Okay, perfect. Maybe finally for me, just stuff for Dan, can you just give us an update on the commercial credit that moved to OREO? I assume that this property is being marketed and, you know, should be out of OREO here in the next quarter or so. Is that fair? Yeah, Michael. This was the asset that we talked about in the last call where it was already a non-performing credit. It was adequately fully reserved for the amount of charge down that you saw we took was on that particular building. I think the potential of getting it sold is always difficult to determine the timing on that. Obviously, we're in processing or have a firm that's working the leasing side of that and the potential sale of that, but there's nothing imminent on that. I would say, because there are other non-performing loans in there, you see it's up just slightly for the quarter. We expect some of those to resolve here in the back half of the year, which I think will reduce those numbers is our expectation at this point based on what we know. Perfect. Thanks for taking all my questions. Hey, thanks, Michael. Thank you. Our next question is from Brett Rabatin with Piper Sandler. Please proceed with your question. Hey, good morning, David and Michelle. It's Jeff Yabuki. Hey. Good morning, Brett. Hi, Brett. Wanted to ask on the loan production this quarter, you know, what your rates might have been on fixed and floating rate production. Just thinking about spread compression, if that's something that, you know, you're worried about as we think about additional rate hikes from here and how you're planning on making loans relative to the competitive landscape. Yes. Our rates were, you know, going up rapidly during the quarter, Brett. As I said, you know, the loans we've put on so far in July have been, you know, north of 5%. I think our, you know, fixed rate loans came on average in the Q2, mid-fours, you know. The floating rates probably a hair below that. Obviously, they'll float, and so we're not concerned about those loans at all. The trends are good, and we think that we'll be able to continue to bring on loans at increasingly higher rates as the quarter goes along. You know, the pipeline. There's always a lag effect, right? In the pipeline on the loans because you start working with a borrower on a project and, you know, it's sometimes 30-90 days later before you're funding. We've, you know, we're dealing with that with, you know, floating commitments and things like that. You know, that's been the challenge. It continues to be the challenge. As Michelle said, I think we're not worried about compression. The loans, you know, the loan book itself now, Michelle's yielding about 4.30%. Yeah, 4.35%-4.40%, close to that. Yeah. You know, 4.35%, 4.40%. We're putting on loans at 70, more than 70 basis higher than our book rate. We're gonna drive up the, you know, the loan yields as the year goes along. Then, you know, obviously balancing that with the generation of core deposits and funding, you know. Michelle voiced earlier that we think, you know, we've got a few basis points of increases in NIM coming each quarter for the balance of the year. Okay. That's great color. Good to hear. The other thing, maybe a question for David Brooks. You know, I think a lot of people are trying to figure out what credit risk might look like, you know, as this quote, recession looms. You know, I guess some folks have talked about, you know, Class B office space and site loops and things like that. I'm curious if there were any loan categories that you might be less inclined to be aggressive with adding to the portfolio going forward, just given how you see credit risk from here for the environment. This is Dan. I'll take that one. I think in general, as I described earlier, our production is always diversified by asset class. While we have primarily that growth within CRE, as you may note, in regards to asset classes, you know, the office space is one that I suspect all the banks, including us, are keeping a close eye on. That book for us has performed really well. Obviously, we took a property back, but in general, that book is really solid. Again, we don't do downtown office buildings in the big metros, places like that have been ones that have created even more concern in the market. Beyond that, I think we're keeping an eye on the assisted living memory care space. I think it has continued to lag. I think the pandemic certainly made that even more challenging for banks who are very active in that space. We have, you know, minor exposure in there, but we're keeping an eye on that as well. Beyond that, I don't know of any specific asset classes I would say that we would be interested in curtailing. I think that just goes to the way that we approach credit all the time, right? We're always preparing for what might be a downturn. Okay, great. Appreciate all the color. Hey, thanks, Brett. Thank you. There are no further questions at this time. I'd like to turn the floor back over to management for any closing comments. Well, thanks for joining the call this morning. We're excited about the balance of the year. Kind of watching anxiously as others are developments on the macroeconomic front, but happy, very pleased with where we are. Feel great about our credit quality, as Dan was alluding to a moment ago. You know, we're optimistic about the continued performance in the markets we're in. Appreciate everyone joining today and hope you have a great day. Thanks. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.