10 Best Railroad Stocks For 2015

10 Best Railroad Stocks For 2015: Independent Bank Group Inc (IBTX)

Independent Bank Group, Inc., incorporated on September 20, 2002, is bank holding company. Through its wholly owned subsidiary, Independent Bank (Bank), a state chartered bank, the Company provides a range of commercial banking products and services for businesses, professionals and individuals. Commercial lending products includes owner-occupied commercial real estate loans, interim construction loans, commercial loans (such as Small Business Administration (SBA) guaranteed loans, business term loans, equipment financing and lines of credit) to a diversified mix of small and midsized businesses, and loans to professionals, particularly medical practices. Retail lending products include residential first and second mortgage loans, and consumer installment loans such as loans to purchase cars, boats and other recreational vehicles. On April 1, 2012, it acquired I Bank Holding Company and its bank subsidiary, and on October 1, 2012, it acquired The Community Group and its ba nk subsidiary. As of March 18, 2013, it operated 30 banking offices in 26 communities in two market regions located in the Dallas-Fort Worth metropolitan area and in the greater Austin area. Independent Bank operates 30 banking offices throughout North and Central Texas. In December 2013, the Company announced that it has completed the acquisition of Collin Bank, Plano, Texas. In January 2014, Independent Bank Group, Inc. acquired Live Oak Financial Corp. and its subsidiary, Live Oak State Bank.

Lending Activities

Its loans are primarily real estate secured loans spread among a variety of types of borrowers, including owner occupied offices for small businesses, medical practices and offices, retail operations, and multi-family properties. Its loans are diversified geographically throughout its Dallas/North Texas region (approximately 55%) and its Au! stin/Central Texas region (approximately 45%). As of December 31, 2012, it had total loans of approxi mately $1.4 billion

The Company is primarily a real es! tate secured lender. It originates real estate loans to finance commercial property that is owner-occupied, as well as commercial property owned by real estate investors. The total amount of owner-occupied commercial real estate loans outstanding as of December 31, 2012, was $353.5 million, or 25.6% of its loan portfolio. The total amount of commercial real estate loans outstanding as of December 31, 2012, excluding owner-occupied properties, was $295 million, or 21.4% of its loan portfolio. The real estate securing its existing commercial real estate loans includes a variety of property types, such as owner-occupied offices/warehouses/production facilities, office buildings, healthcare facilities, hotels, mixed-use residential/commercial, retail centers, multifamily properties, restaurants, churches and assisted living facilities.

The Company's construction portfolio includes loans to small and midsized businesses to construct owner-user properties, and, to a much lesser extent, loans to developers of commercial real estate investment properties and residential developments. These loans are typically disbursed as construction progresses and carry interest rates that vary with the prime rate. As of December 31, 2012, the outstanding balance of its construction loans was $97.3 million, or 7.1% of its total loan portfolio. It offers first and second mortgage loans to its individual customers primarily for the purchase of primary and secondary residences. As of December 31, 2012, the outstanding balance of one-to four-family real estate secured loans, including home equity loans, represented $315.3 million, or 22.9%, of its total loan portfolio. Residential real estate loans held for sale of $9.2 million at December 31, 2012, were also included in this category.

The Company makes single-family interim construction! loans to! home builders and individuals to fund the construction of single family residences. Such loans are secured by the real property being built and are made based! on its a! ssessment of the value of the property on an as-completed basis. As of December 31, 2012, the outstanding balance of its single-family interim construction loans was $67.9 million, or 4.9% of its total loan portfolio. The Company originates commercial loans to small businesses and professionals, in particular, medical practices, located in its market areas. These loans are primarily term loans to purchase capital equipment and small loans for working capital and operational purposes. As of December 31, 2012, it had outstanding commercial loans, of $169.9 million, or 12.3% of its total loan portfolio.

The Company's agricultural loan portfolio primarily includes loans secured by real property used for agricultural purposes. It provides loans for the acquisition of farm and ranch land, as well as the construction of buildings upon agricultural real estate. On a more limited basis, it offers agricultural equipment financing and crop production loans which are sec ured by crops, equipment, and crop insurance. The total amount of agricultural loans outstanding at December 31, 2012, was $40.1 million, or 2.9% of its total loan portfolio. The Company offers a variety of consumer loans, such as installment loans to purchase cars, boats and other recreational vehicles. Its consumer loans typically are part of an overall customer relationship designed to support the individual consumer borrowing needs of its commercial loan and deposit customers. As of December 31, 2012, it had outstanding $39.5 million of consumer loans, or 2.9% of its total loan portfolio. The Company also engages in the origination of residential loans sold into the secondary market. Its mortgage originations were $177.1 million during the year ended December 31, 2012. It sells all of the originated mortgages to institutional purchasers shortly after clos! ing.

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Investment Activities

The types and maturities of securities purchased are primarily b ased on its liquidity and interest rate sensitivity position! s. As of ! December 31, 2012, investment securities held were United States Treasury securities, government agency securities, obligations of state and municipal subdivisions, Residential mortgage backed securities, and corporate bonds.

Sources of Funds

Deposits are the Company's principal source of funds for use in lending and other general banking purposes. The Company provides a range of deposit products and services, including a variety of checking and savings accounts, debit cards, online banking, mobile banking, eStatements and bank-by-mail and direct deposit services. It also offers business accounts and management services, including analyzed business checking, business savings, and treasury management services. As of December 31, 2012, it had total deposits of approximately $1.4 billion. In addition to deposits, it utilizes Federal Home Loan Bank (FHLB) advances either as a short-term funding source or a longer-term funding source and to manage its interest rate risks on its loan portfolio. The maximum amount of short-term FHLB advances it had outstanding at any month end during the year ended December 31, 2012, was $16.0 million. The Company's FHLB borrowings totaled $164.6 million as of December 31, 2012. Its FHLB advances are collateralized by assets, including a blanket pledge of certain loans with a carrying value of $524.8 million and FHLB stock. As of December 31, 2012, it had $92.7 million in undisbursed advance commitments (letters of credit) with the FHLB.

Advisors' Opinion:

• [By Markus Aarnio]

  2. Independent Bank Group (IBTX) operates as a bank holding company for Independent Bank that provides commercial banking products and services for small to medium size businesses, professionals, and individuals in North and Central Texas.

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