Cautionary Note Regarding Forward Looking Statements



The Quarterly Report on Form 10-Q, our other filings with the SEC, and other
press releases, documents, reports and announcements that we make, issue or
publish may contain statements that we believe are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995 that
are subject to risks and uncertainties and are made pursuant to the safe harbor
provisions of Section 27A of the Securities Act, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended, and other related federal
security laws. These forward-looking statements include information about our
possible or assumed future results of operations, including our future revenues,
income, expenses, provision for taxes, effective tax rate, earnings per share
and cash flows, our future capital expenditures and dividends, our future
financial condition and changes therein, including changes in our loan portfolio
and allowance for credit losses, our future capital structure or changes
therein, the plan and objectives of management for future operations, our future
or proposed acquisitions, the future or expected effect of acquisitions on our
operations, results of operations and financial condition, our future economic
performance and the statements of the assumptions underlying any such statement.
Such statements are typically, but not exclusively, identified by the use in the
statements of words or phrases such as "aim," "anticipate," "estimate,"
"expect," "goal," "guidance," "intend," "is anticipated," "is estimated," "is
expected," "is intended," "objective," "plan," "projected," "projection," "will
affect," "will be," "will continue," "will decrease," "will grow," "will
impact," "will increase," "will incur," "will reduce," "will remain," "will
result," "would be," variations of such words or phrases (including where the
word "could," "may" or "would" is used rather than the word "will" in a phrase)
and similar words and phrases indicating that the statement addresses some
future result, occurrence, plan or objective. The forward-looking statements
that we make are based on the Company's current expectations and assumptions
regarding its business, the economy, and other future conditions. Because
forward-looking statements relate to future results and occurrences, they are
subject to inherent uncertainties, risks, and changes in circumstances that are
difficult to predict. The Company's actual results may differ materially from
those contemplated by the forward looking statements, which are neither
statements of historical fact nor guarantees or assurances of future
performance. Many possible events or factors could affect our future financial
results and performance and could cause those results or performance to differ
materially from those expressed in the forward-looking statements. These
possible events or factors include, but are not limited to:

•the effects of infectious disease outbreaks, including the ongoing COVID-19
pandemic and the significant impact that the COVID-19 pandemic and associated
efforts to limit its spread have had and may continue to have on economic
conditions and the Company's business, employees, customers, asset quality and
financial performance;
•our ability to sustain our current internal growth rate and total growth rate;
•changes in geopolitical, business and economic events, occurrences and
conditions, including changes in rates of inflation or deflation, nationally,
regionally and in our target markets, particularly in Texas and Colorado;
•worsening business and economic conditions nationally, regionally and in our
target markets, particularly in Texas and Colorado, and the geographic areas in
those states in which we operate;
•our dependence on our management team and our ability to attract, motivate and
retain qualified personnel;
•the concentration of our business within our geographic areas of operation in
Texas and Colorado;
•changes in asset quality, including increases in default rates on loans and
higher levels of nonperforming loans and loan charge-offs generally;
•concentration of the loan portfolio of the Bank, before and after the
completion of acquisitions of financial institutions, in commercial and
residential real estate loans and changes in the prices, values and sales
volumes of commercial and residential real estate;
•the ability of the Bank to make loans with acceptable net interest margins and
levels of risk of repayment and to otherwise invest in assets at acceptable
yields and that present acceptable investment risks;
•inaccuracy of the assumptions and estimates that the managements of our Company
and the financial institutions that we acquire make in establishing reserves for
credit losses and other estimates generally;
•lack of liquidity, including as a result of a reduction in the amount of
sources of liquidity we currently have;
•material increases or decreases in the amount of deposits held by the Bank or
other financial institutions that we acquire and the cost of those deposits;
•our access to the debt and equity markets and the overall cost of funding our
operations;
•regulatory requirements to maintain minimum capital levels or maintenance of
capital at levels sufficient to support our anticipated growth;

                                       41
--------------------------------------------------------------------------------


  Table of Contents
•changes in market interest rates that affect the pricing of the loans and
deposits of each of the Bank and the financial institutions that we acquire and
that affect the net interest income, other future cash flows, or the market
value of the assets of each of the Bank and the financial institutions that we
acquire, including investment securities;
•fluctuations in the market value and liquidity of the securities we hold for
sale, including as a result of changes in market interest rates;
•effects of competition from a wide variety of local, regional, national and
other providers of financial, investment and insurance services;
•changes in economic and market conditions that affect the amount and value of
the assets of the Bank and of financial institutions that we acquire;
•the institution and outcome of, and costs associated with, litigation and other
legal proceedings against one or more of the Company, the Bank and financial
institutions that we acquire or to which any of such entities is subject;
•the occurrence of market conditions adversely affecting the financial industry
generally;
•the impact of recent and future legislative regulatory changes, including
changes in banking, securities, and tax laws and regulations and their
application by the Company's regulators, and changes in federal government
policies, as well as regulatory requirements applicable to, and resulting from
regulatory supervision of, the Company and the Bank as a financial institution
with total assets greater than $10 billion;
•changes in accounting policies, practices, principles and guidelines, as may be
adopted by the bank regulatory agencies, the Financial Accounting Standards
Board, the SEC and the Public Company Accounting Oversight Board, as the case
may be; including changes resulting from the implementation of the Current
Expected Credit Loss accounting standard;
•governmental monetary and fiscal policies;
•changes in the scope and cost of FDIC insurance and other coverage;
•the effects of war or other conflicts, including, but not limited to, the
current conflict between Russia and the Ukraine, acts of terrorism (including
cyber attacks) or other catastrophic events, including natural disasters such as
storms, droughts, tornadoes, hurricanes and flooding, that may affect general
economic conditions;
•our actual cost savings resulting from previous or future acquisitions are less
than expected, we are unable to realize those cost savings as soon as expected,
or we incur additional or unexpected costs;
•our revenues after previous or future acquisitions are less than expected;
•the liquidity of, and changes in the amounts and sources of liquidity available
to us, before and after the acquisition of any financial institutions that we
acquire;
•deposit attrition, operating costs, customer loss and business disruption
before and after our completed acquisitions, including, without limitation,
difficulties in maintaining relationships with employees, may be greater than we
expected;
•the effects of the combination of the operations of financial institutions that
we have acquired in the recent past or may acquire in the future with our
operations and the operations of the Bank, the effects of the integration of
such operations being unsuccessful, and the effects of such integration being
more difficult, time consuming, or costly than expected or not yielding the cost
savings we expect;
•the impact of investments that the Company or the Bank may have made or may
make and the changes in the value of those investments;
•the quality of the assets of financial institutions and companies that we have
acquired in the recent past or may acquire in the future being different than we
determined or determine in our due diligence investigation in connection with
the acquisition of such financial institutions and any inadequacy of credit loss
reserves relating to, and exposure to unrecoverable losses on, loans acquired;
•our ability to continue to identify acquisition targets and successfully
acquire desirable financial institutions to sustain our growth, to expand our
presence in our markets and to enter new markets;
•changes in general business and economic conditions in the markets in which we
currently operate and may operate in the future;
•changes occur in business conditions and inflation generally;
•an increase in the rate of personal or commercial customers' bankruptcies
generally;
•technology-related changes are harder to make or are more expensive than
expected;
•attacks on the security of, and breaches of, the Company's and the Bank's
digital information systems, the costs we or the Bank incur to provide security
against such attacks and any costs and liability the Company or the Bank incurs
in connection with any breach of those systems;
•the potential impact of technology and "FinTech" entities on the banking
industry generally;
•the potential impact of climate change and related government regulation on the
Company and its customers;
•other economic, competitive, governmental, regulatory, technological and
geopolitical factors affecting the Company's operations, pricing and services;
and

                                       42
--------------------------------------------------------------------------------


  Table of Contents
•the other factors that are described or referenced in Part I, Item 1A, of the
Company's Annual Report on Form 10-K filed with the SEC on February 25, 2022,
under the caption "Risk Factors".

We urge you to consider all of these risks, uncertainties and other factors
carefully in evaluating all such forward-looking statements made by us. As a
result of these and other matters, including changes in facts and assumptions
not being realized or other factors, the actual results relating to the subject
matter of any forward-looking statement may differ materially from the
anticipated results expressed or implied in that forward-looking statement. Any
forward-looking statement made in this filing or made by us in any report,
prospectus, document or information incorporated by reference in this filing,
speaks only as of the date on which it is made. The Company undertakes no
obligation to update any such forward-looking statement, whether as a result of
new information, future developments or otherwise, except as may be required by
law.

A forward-looking statement may include a statement of the assumptions or bases
underlying the forward-looking statement. The Company believes that these
assumptions or bases have been chosen in good faith and that they are
reasonable. However, the Company cautions you that assumptions as to future
occurrences or results almost always vary from actual future occurrences or
results, and the differences between assumptions and actual occurrences and
results can be material. Therefore, the Company cautions you not to place undue
reliance on the forward-looking statements contained in this filing or
incorporated by reference herein.


                                       43
--------------------------------------------------------------------------------



  Table of Contents

Overview

This Management's Discussion and Analysis (MD&A) of Financial Condition and
Results of Operations analyzes the major elements of the Company's financial
condition and results of operation as reflected in the interim consolidated
financial statements and accompanying notes appearing in this Quarterly Report
on Form 10-Q. This section should be read in conjunction with the Company's
interim consolidated financial statements and accompanying notes included
elsewhere in this report and with the consolidated financial statements included
in the Annual Report on Form 10-K for the year ended December 31, 2021.

The Company was organized as a bank holding company in 2002. On January 1, 2009,
the Company was merged with Independent Bank Group Central Texas, Inc., and,
since that time, has pursued a strategy to create long-term shareholder value
through organic growth of our community banking franchise in our market areas
and through selective acquisitions of complementary banking institutions with
operations in the Company's market areas or in new market areas. On April 8,
2013, the Company consummated the initial public offering, or IPO, of its common
stock which is traded on the Nasdaq Global Select Market.

As of March 31, 2022, the Company operated 93 full service banking locations in
north, central and southeast Texas regions, and along the Colorado Front Range
region, with 61 Texas locations and 32 Colorado locations.

The Company's headquarters are located at 7777 Henneman Way, McKinney, Texas
75070 and its telephone number is (972) 562-9004. The Company's website address
is www.ifinancial.com. Information contained on the Company's website is not
incorporated by reference into this Quarterly Report on Form 10-Q and is not
part of this or any other report.

The Company's principal business is lending to and accepting deposits from
businesses, professionals and individuals. The Company conducts all of the
Company's banking operations through its principal bank subsidiary. The Company
derives its income principally from interest earned on loans and, to a lesser
extent, income from securities available for sale. The Company also derives
income from non-interest sources, such as fees received in connection with
various deposit services, mortgage banking operations and investment advisory
services. From time to time, the Company also realizes gains or losses on the
sale of assets. The Company's principal expenses include interest expense on
interest-bearing customer deposits, advances from the Federal Home Loan Bank of
Dallas (FHLB) and other borrowings, operating expenses such as salaries,
employee benefits, occupancy costs, communication and technology costs, expenses
associated with other real estate owned, other administrative expenses,
amortization of intangibles, acquisition expenses, provisions for credit losses
and the Company's assessment for FDIC deposit insurance.


                                       44
--------------------------------------------------------------------------------

Table of Contents

Discussion and Analysis of Results of Operations for the Three Months Ended March 31, 2022 and 2021



The following discussion and analysis of the Company's results of operations
compares the operations for the three months ended March 31, 2022 with the three
months ended March 31, 2021. The results of operations for the three months
ended March 31, 2022 are not necessarily indicative of the results of operations
that may be expected for all of the year ending December 31, 2022.

Results of Operations



For the three months ended March 31, 2022, net income was $50.7 million ($1.18
per common share on a diluted basis) compared with net income of $60.0 million
($1.39 per common share on a diluted basis) for the three months ended March 31,
2021. The Company posted annualized returns on average equity of 7.99% and
9.78%, returns on average assets of 1.12% and 1.37% and efficiency ratios of
55.07% and 48.52% for the three months ended March 31, 2022 and 2021,
respectively. The efficiency ratio is calculated by dividing total noninterest
expense (which excludes the provision for credit losses and the amortization of
other intangible assets) by net interest income plus noninterest income.

Net Interest Income



The Company's net interest income is its interest income, net of interest
expenses. Changes in the balances of the Company's interest-earning assets and
its interest-bearing liabilities, as well as changes in the market interest
rates, affect the Company's net interest income. The difference between the
Company's average yield on earning assets and its average rate paid for
interest-bearing liabilities is its net interest spread. Noninterest-bearing
sources of funds, such as demand deposits and stockholders' equity, also support
the Company's earning assets. The impact of the noninterest-bearing sources of
funds is reflected in the Company's net interest margin, which is calculated as
annualized net interest income divided by average earning assets.

Net interest income was $131.1 million for the three months ended March 31,
2022, an increase of $1.4 million, or 1.1%, from $129.7 million for the three
months ended March 31, 2021. This increase in net interest income was driven by
lower funding costs as well as higher earnings on taxable securities due to
growth of the portfolio, offset by lower earnings on loans due to lower yields
and accretion. Average interest earning assets increased $533.8 million or 3.3%,
to $16.5 billion for the three months ended March 31, 2022 compared to $16.0
billion for the three months ended March 31, 2021. The increase is primarily due
to increases in average securities by $802.3 million and interest bearing cash
balances by $292.5 million, offset by a net decrease in average loan balances of
$561.0 million, due primarily to lower mortgage warehouse loans and the
forgiveness of Paycheck Protection Program (PPP) loans over the year. The yield
on average interest earning assets decreased 29 basis points from 3.75% for the
three months ended March 31, 2021 to 3.46% for the three months ended March 31,
2022. The decrease from the prior year was due to overall lower yields on both
loans and securities. The average cost of interest-bearing liabilities decreased
31 basis points to 0.36% for the three months ended March 31, 2022 compared to
0.67% for the three months ended March 31, 2021. The decrease is primarily due
to lower rates offered on our deposit products. The aforementioned changes
resulted in a seven basis point decrease in the net interest margin for the
three months ended March 31, 2022 at 3.22% compared to 3.29% for the three
months ended March 31, 2021. The decrease was primarily due to the lower asset
yields, increased liquidity and a decrease of $2.6 million in acquired loan
accretion income, offset by the lower cost of funds on interest bearing
liabilities.


                                       45
--------------------------------------------------------------------------------

Table of Contents



Average Balance Sheet Amounts, Interest Earned and Yield Analysis. The following
table presents average balance sheet information, interest income, interest
expense and the corresponding average yields earned and rates paid for the three
months ended March 31, 2022 and 2021. The average balances are principally daily
averages and, for loans, include both performing and nonperforming balances.

                                                                                        Three Months Ended March 31,
                                                                     2022                                                           2021
                                               Average                                                        Average
                                             Outstanding                                Yield/              Outstanding                                Yield/
(dollars in thousands)                         Balance             Interest            Rate (4)               Balance             Interest            Rate (4)
Interest-earning assets:
Loans (1)                                  $ 12,319,734          $ 129,179                  4.25  %       $ 12,880,741          $ 140,152                  4.41  %
Taxable securities                            1,689,214              8,359                  2.01               946,206              4,757                  2.04
Nontaxable securities                           411,761              2,333                  2.30               352,445              2,069                  2.38
Interest bearing deposits and other           2,114,246                994                  0.19             1,821,787                793               

0.18


Total interest-earning assets                16,534,955            140,865                  3.46            16,001,179            147,771                  3.75
Noninterest-earning assets                    1,904,397                                                      1,786,683
Total assets                               $ 18,439,352                                                   $ 17,787,862
Interest-bearing liabilities:
Checking accounts                          $  6,237,403          $   3,082                  0.20  %       $  5,491,549          $   6,074                  0.45  %
Savings accounts                                780,380                 94                  0.05               670,500                260                  0.16
Money market accounts                         2,337,951              1,703                  0.30             2,702,886              4,026                  0.60
Certificates of deposit                         973,494                731                  0.30             1,391,037              2,647                  0.77
Total deposits                               10,329,228              5,610                  0.22            10,255,972             13,007                  0.51
FHLB advances                                   150,000                179                  0.48               375,000                533                  0.58
Other borrowings - short-term                     3,478                 17                  1.98                 4,245                 21               

2.01


Other borrowings - long-term                    266,483              3,465                  5.27               305,789              4,039               

5.36


Junior subordinated debentures                   54,253                446                  3.33                54,055                442               

3.32


Total interest-bearing liabilities           10,803,442              9,717                  0.36            10,995,061             18,042                  0.67
Noninterest-bearing checking
accounts                                      4,959,264                                                      4,225,459
Noninterest-bearing liabilities                 100,862                                                         80,332
Stockholders' equity                          2,575,784                                                      2,487,010
Total liabilities and equity               $ 18,439,352                                                   $ 17,787,862
Net interest income                                              $ 131,148                                                      $ 129,729
Interest rate spread                                                                        3.10  %                                                        3.08  %
Net interest margin (2)                                                                     3.22                                                           3.29
Net interest income and margin (tax
equivalent basis) (3)                                            $ 132,179                  3.24                                $ 130,689

3.31


Average interest-earning assets to
interest-bearing liabilities                                                              153.05                                                         145.53




___________

(1) Average loan balances include nonaccrual loans.
(2) Net interest margins for the periods presented represent: (i) the difference
between interest income on interest-earning assets and the interest expense on
interest-bearing liabilities, divided by (ii) average interest-earning assets
for the period.
(3) A tax-equivalent adjustment has been computed using a federal income tax
rate of 21%.
(4) Yield and rates for the three month periods are annualized.

                                       46
--------------------------------------------------------------------------------



  Table of Contents

Provision for Credit Losses

The measurement of expected credit losses under the current expected credit loss
(CECL) methodology is applicable to financial assets measured at amortized cost.
Provision for credit losses is determined by management as the amount to be
added to the allowance for credit loss accounts for various types of financial
instruments including loans, held to maturity debt securities and off-balance
sheet credit exposure, after net charge-offs have been deducted, to bring the
allowance to a level deemed appropriate by management to absorb expected credit
losses over the lives of the respective financial instruments. Management
actively monitors the Company's asset quality and provides appropriate
provisions based on such factors as historical loss experience, current
conditions and reasonable and supportable forecasts.

Financial instruments are charged-off against the allowance for credit losses
when appropriate. Although management believes it uses the best information
available to make determinations with respect to the provision for credit
losses, future adjustments may be necessary if economic conditions differ from
the assumptions used in making the determination.

The following table presents the components of provision for credit losses:

© Edgar Online, source Glimpses