Independent Bank Group, Inc.

Net income was $24.2 million, or $0.58 per diluted share, while adjusted net income was $26.0 million, or $0.63 per diluted share, excluding a $2.1 million FDIC special assessment and a $345,000 OREO impairment. NIM was 2.42% for the quarter, down 7 basis points sequentially; loan yields expanded by 10 basis points; adjusted noninterest income was $12.8 million versus $12.4 million in Q4; and adjusted noninterest expense was $86 million versus $83.8 million in Q4. Loans held for investment were $14.1 billion, down $101.3 million linked quarter, and deposits declined as wholesale and brokered funding ran off, though core deposits grew. For Q2 and beyond, management expects NIM and NII to inflect higher in the second quarter if current trends hold, noninterest expense to remain around $86 million per quarter, and loan growth to improve from slow Q1 levels. David Brooks said loan growth could be about 3% to 5% in the second quarter and around 5% for the second half of the year, with deposits growing at or above loan growth.

David Brooks emphasized disciplined expense control, funding optimization, and through-cycle growth rather than chasing faster balance-sheet expansion. He said the slower pace of Q1 loan growth let the bank reduce borrowings and remix liabilities, while San Antonio represents a key strategic expansion with a strong team already recruited. His tone was constructive on markets, credit quality, and pipeline momentum, and he said the bank is focused on controlling what it can and letting macro conditions work through the system.

Paul Langdale focused on margin recovery, funding costs, and capital. He said Q1 NIM compression was driven by the rate-market reversal and noninterest-bearing deposit attrition, but noninterest-bearing balances stabilized and averaged $3.41 billion month-to-date in April versus $3.35 billion in March, supporting an expected Q2 inflection in NIM and NII. He highlighted liquidity actions, including paying FHLB liabilities down to 0 and reducing brokered deposits by $97 million, and said adjusted noninterest expense should stay around $86 million per quarter for the rest of the year. Capital improved as CET1 rose to 9.60%, Tier 1 to 9.94%, total capital to 11.68%, and tangible common equity to 7.62%.

Analysts pressed on how much NIM expansion is still achievable in a higher-for-longer rate environment, and Paul said the ramp is slower at higher rates but the bank still expects meaningful expansion as earning assets reprice and deposit costs normalize. Questions also focused on loan growth, deposit costs, and the mix of C&I, SBA, and CRE; management said C&I and energy are gaining traction, SBA is already embedded, and owner-occupied CRE production was strong. On competition in mortgage warehouse, Dan Brooks said balances should hold around current levels, possibly rise a bit next quarter, helped by competitors exiting the business.