LegacyTexas Financial Group Inc. (NASDAQ:LTXB) Q2 2018 Earnings Conference Call - Final Transcript

Jul 18, 2018 • 09:00 am ET

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LegacyTexas Financial Group Inc. (NASDAQ:LTXB) Q2 2018 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Welcome to the LegacyTexas Financial Group Bank Q2 2018 Earnings Call and Webcast. [Operator Instructions]. Please note that today's event is being recorded.

And now, I'd like to turn the conference over to Scott Almy, Executive Vice President and COO. Mr. Almy, please go ahead.

Executive
Scott Almy

Thanks, Keith. Good morning, everyone, and welcome to the call. Before getting started, I'd like to remind you that this presentation may include forward-looking statements. Those statements are subject to risks and uncertainties that could cause actual and anticipated results to differ. The company undertakes no obligation to publicly revise any forward-looking statement.

At this time, if you're logged into our webcast, please refer to the slide presentation available online, including our Safe Harbor statement on Slide 2. For those of you joining by phone, please note that the Safe Harbor statement and presentation are available on our website at legacytexasfinancialgroup.com. All comments made during today's call are subject to that safe harbor statement.

I'm joined this morning by LegacyTexas' President and CEO, Kevin Hanigan; and Chief Financial Officer, Mays Davenport. After the presentation, we'll be happy to address questions that you may have as time permits.

With that, I'll turn it over to Kevin.

Executive
Kevin Hanigan

Thanks, Scott, and thank you, all for joining us on the call this morning. I will make some general comments on the quarter and cover the first few pages of the slide deck before turning the call over to Mays. After he completes his prepared remarks, we'll open up the call and entertain your questions. During the quarter, we took the opportunity to put the healthcare and oil and gas credit issues behind us, which elevated our loan losses and provisioning.

Outside of this credit cleanup, we continued to grow revenue, expand margin and control our expenses. Based on the actions we took during the quarter, we believe we have put the company in a position to perform at the top quartile or better in terms of NIM, ROA, ROE and efficiency ratio. With that as a backdrop, let's turn to Page 4 of the slide deck.

Our net income for the quarter totaled $27.8 million yielding both GAAP and core EPS of $0.59. As we suggested on the first quarter call, our efficiency ratio improved to an all-time best, 44.4%. Loans grew $102 million for the quarter, despite our electing to exit $92 million of loans, which included $83 million of energy-related shared national credits. Despite the elevated charge-offs and related provisionings to clean up the last of the healthcare and energy credits, we were still able to produce a very respectable ROA of 1.24%. I think this speaks well to the earnings capacity of our company.

Non performing loans declined by $30.2 million for the quarter and now total only $19.6 million or 0.29% of gross loans held for investments. Additionally, total classified loans dropped $40.6 million from the Q1 totals. More on our credit statistics later. We closed Q2 with TCE to total assets of 9.07%, and Tier