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Veritex Holdings, Inc. Reports First Quarter Operating Results

DALLAS, April 28, 2020 (GLOBE NEWSWIRE) -- Veritex Holdings, Inc. (“Veritex” or the “Company”) (Nasdaq: VBTX), the holding company for Veritex Community Bank, today announced the results for the quarter ended March 31, 2020.

“The COVID-19 pandemic has affected millions of people and changed our lives in ways we could not have anticipated,” said C. Malcolm Holland, III, the Company’s Chairman and Chief Executive Officer.  “Our thoughts and prayers go out to all of those people personally affected and dealing with this awful virus.  Needless to say, we have focused on maintaining a safe work environment while continuing to meet the needs of our clients.  Our company was an active participant in the Payroll Protection Plan.  I am very proud of how our team embraced this challenge and delivered much needed financial help to our small business community.  Despite the challenging environment we find ourselves in, our company continues to operate profitably, efficiently and with a spirit of commitment to our shareholders and other key stakeholders.”

First Quarter Highlights

  • Net income of $4.1 million, or $0.08 diluted earnings per share (“EPS”), compared to $29.1 million, or $0.56 diluted EPS, for the quarter ended December 31, 2019 and $7.4 million, or $0.13 diluted EPS, for the quarter ended March 31, 2019;
  • Pre-tax, pre-provision operating earnings1 totaled $39.1 million, compared to $42.1 million for the quarter ended December 31, 2019 and $46.4 million or the quarter ended March 31, 2019;
  • Provision for credit losses and unfunded commitments was $35.7 million as a result of disruptions in the global economy from the COVID-19 pandemic and its impact on economic forecasts that drive the Company’s current expected credit loss model;
  • Net loans held for investment, excluding mortgage warehouse, increased $116.2 million, or 8.1% annualized;
  • Efficiency ratio was 47.61% for the first quarter of 2020;
  • On March 16, 2020, Veritex suspended its stock buyback program; however, in the first quarter of 2020, Veritex repurchased 2,002,211 shares of its outstanding common stock under its stock buyback program for an aggregate of $49.6 million; and
  • Declared quarterly cash dividend of $0.17 payable on May 21, 2020.

Financial Highlights

  Q1 2020   Q4 2019
  (Dollars in thousands)
GAAP      
Net income $ 4,134     $ 29,051  
Diluted EPS 0.08     0.56  
Return on average assets2 0.20 %   1.43 %
Efficiency ratio 47.61     47.12  
Book value per common share $ 23.19     $ 23.32  
Non-GAAP1      
Operating net income $ 4,134     $ 30,294  
Diluted operating EPS 0.08     0.58  
Pre-tax, pre-provision operating net revenue 39,107     42,068  
Pre-tax, pre-provision operating return on average assets 1.94     2.07  
Operating return on average assets2 0.20     1.49  
Operating efficiency ratio 47.61     45.67  
Tangible book value per common share $ 14.39     $ 14.73  
1 Refer to the section titled “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures.
2 Annualized ratio.

Recent Developments

The COVID-19 pandemic has caused significant disruptions to the global economy and the communities which we serve. In response to the pandemic, we have implemented our operational response and preparedness plan which includes dispersion of critical operational processes, increased monitoring focused on higher risk operations, enhanced remote access security and further restricted internet access, enhanced security around wire transfer execution and flexible scheduling provided to those that are unable to work from home. Additionally, we are focused on taking care of our clients and communities who may be experiencing financial hardship due to the pandemic, including our loan deferment program and participation in the Paycheck Protection Program designed to provide a direct incentive for small businesses.

Results of Operations for the Three Months Ended March 31, 2020

Net Interest Income

For the three months ended March 31, 2020, net interest income before provision for loan losses was $67.4 million and net interest margin was 3.67% compared to $69.9 million and 3.81%, respectively, for the three months ended December 31, 2019. The $2.5 million decrease in net interest income was primarily due to a $4.6 million decrease in interest income on loans offset by a $1.7 million decrease in interest expense on transaction and savings deposits. Net interest margin decreased 14 basis points from the three months ended December 31, 2019 primarily due to a decrease in yields earned on loan balances, partially offset by decreases in the average rates paid on interest-bearing demand and savings deposits and certificate and other time deposits during the three months ended March 31, 2020. As a result, the average cost of interest-bearing deposits decreased 20 basis points to 1.39% for the three months ended March 31, 2020 and December 31, 2019.

Net interest income before provision for credit losses decreased by $5.5 million from $72.9 million to $67.4 million and net interest margin decreased by 50 basis points from 4.17% to 3.67% for the three months ended March 31, 2020 as compared to the same period in 2019. The decrease in net interest income before provision for credit losses was primarily due to a $7.9 million decrease in interest income on loans, partially offset by a $3.8 million decrease in interest earned on  interest-bearing demand and savings deposits during the three months ended March 31, 2020 compared to the three months ended March 31, 2019. Net interest margin decreased 50 basis points from the three months ended March 31, 2019 primarily due to a decrease in yields earned on loan balances, partially offset by decreases in the average rate paid on interest-bearing demand and savings deposits for the three months ended March 31, 2020 compared to the three months ended March 31, 2019. As a result, the average cost of interest-bearing deposits decreased 23 basis points to 1.39% for the three months ended March 31, 2020 from 1.62% for the three months ended March 31, 2019.

Noninterest Income

Noninterest income for the three months ended March 31, 2020 was $7.2 million, an increase of $115 thousand, or 1.6%, compared to the three months ended December 31, 2019. The increase was primarily due to a $751 thousand increase in gain on asset disposals and a $438 thousand decrease in loss on sales of investment securities, partially offset by a $1.1 million decrease in loan fees earned during the three months ended March 31, 2020.

Compared to the three months ended March 31, 2019, noninterest income for the three months ended March 31, 2020 decreased by $1.2 million, or 14.6%. The decrease was primarily due to a $1.6 million decrease in gain on sales of loans and a $832 thousand decrease in loan fees, partially offset by a $772 thousand decrease in loss on sales of investment securities during the three months ended March 31, 2020.

Noninterest Expense

Noninterest expense was $35.5 million for the three months ended March 31, 2020, compared to $36.3 million for the three months ended December 31, 2019, a decrease of $739 thousand, or 2.0%. The decrease was primarily driven by a $918 thousand decrease in merger and acquisition expenses. Merger and acquisition expenses recognized during the three months ended December 31, 2019 were primarily related to residual legal, retention, taxes, and other expenses following our acquisition of Green Bancorp, Inc. (“Green”).  There were no merger and acquisition expenses for the three months ended March 31, 2020.

Compared to the three months ended March 31, 2019, noninterest expense for the three months ended March 31, 2020 decreased by $31.4 million, or 46.9%. The decrease was primarily driven by a $31.2 million decrease in merger and acquisition expenses. Merger and acquisition expenses recognized during the three months ended March 31, 2019 were mainly driven by an increase in stock-based compensation due to the accelerated vesting of outstanding restricted stock units and stock options of $17.7 million, severance payments of $7.6 million and legal and professional fees of $4.8 million in connection with our acquisition of Green.  There were no merger and acquisition expenses for the three months ended March 31, 2020.

Financial Condition

Total loans were $6.2 billion at March 31, 2020, an increase of $304.7 million, or 20.53% annualized, compared to December 31, 2019. The net increase was the result of Veritex's growth strategy and a $187.5 million increase in mortgage warehouse driven by low interest rates.

Total deposits were $5.8 billion at March 31, 2020, a decrease of $94.4 million, or 1.6%, compared to December 31, 2019. The decrease was primarily the result of decreases of $118.1 million and $7.2 million in interest-bearing accounts and noninterest-bearing demand deposits, respectively, offset by an increase of $30.9 million in certificates and other time deposits, due to normal course of business.

Asset Quality and Adoption of ASU 2016-13

Credit quality remains strong. Nonperforming assets totaled $51.3 million, or 0.60% of total assets at March 31, 2020, compared to $39.4 million, or 0.50% of total assets, at December 31, 2019. The Company had a net recovery of $236 thousand for the quarter.

On January 1, 2020, the Company adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor in accordance with ASU 2016-02, Leases (Topic 842). In addition, ASU 2016-13 made changes to the accounting for available-for-sale debt securities. One such change is to require credit losses to be presented as an allowance rather than as a write-down on available-for-sale debt securities that management does not intend to sell or believes that it is more likely than not they will be required to sell.

The Company adopted ASU 2016-13 using the modified retrospective method for all financial assets measured at amortized cost, net investments in leases and off-balance sheet credit exposures. Results for reporting periods beginning after January 1, 2020 are presented under ASU 2016-13 while prior period amounts continue to be reported in accordance with previously applicable GAAP. The Company recorded a net increase in the allowance for credit losses of $39.1 million on January 1, 2020, which was primarily driven by the allowance for credit loss required on recently acquired non-purchased credit deteriorated loans that have not required an allowance under the incurred loss model.

We recorded a provision for credit losses for the three months ended March 31, 2020 of $31.8 million, compared to $3.5 million and $5.0 million for the three months ended December 31, 2019 and March 31, 2019, respectively. The increase in the recorded provision for credit losses for the three months ended March 31, 2020 was primarily attributable to the incorporated change in the economic forecasts used in the CECL model late in the first quarter of 2020 to reflect the expected impact of the COVID-19 pandemic as of March 31, 2020, as compared to our initial adoption of CECL. In the first quarter of 2020, we also recorded a $3.9 million provision for unfunded commitments which was also attributable to the change in the economic forecasts as a result of the COVID-19 pandemic. Allowance for credit losses as a percentage of loans held for investment, excluding mortgage warehouse, was 1.73%, 0.52% and 0.38% of total loans at March 31, 2020, December 31, 2019 and March 31, 2019, respectively.

Income Taxes

Income tax benefit for the three months ended March 31, 2020 totaled $684 thousand, compared to an income tax expense of $8.2 million for the three months ended December 31, 2019. The Company’s effective tax rate was approximately (19.8)% and 21.9% for the three months ended March 31, 2020 and December 31, 2019, respectively. The decrease in the effective tax rate was primarily due to a net discrete tax benefit of $1.4 million primarily associated with the recognition of excess tax benefit realized on share-based payment awards. The effective tax rate prior to discrete tax adjustments was 22.1% for the three months ended March 31, 2020.

Dividend Information

On April 28, 2020, Veritex’s Board of Directors declared a quarterly cash dividend of $0.17 per share on its outstanding shares of common stock.  The dividend will be paid on or after May 21, 2020 to stockholders of record as of the close of business on May 7, 2020.

Non-GAAP Financial Measures

Veritex’s management uses certain non-GAAP (generally accepted accounting principles) financial measures to evaluate its operating performance and provide information that is important to investors. However, non-GAAP financial measures are supplemental and should be viewed in addition to, and not as an alternative for, Veritex’s reported results prepared in accordance with GAAP. Specifically, Veritex reviews and reports tangible book value, tangible book value per common share, operating net income, tangible common equity to tangible assets, return on average tangible common equity, pre-tax, pre-provision operating earnings, pre-tax, pre-provision operating return on average assets, diluted operating earnings per share, operating return on average assets, operating return on average tangible common equity and operating efficiency ratio. Veritex has included in this earnings release information related to these non-GAAP financial measures for the applicable periods presented. Please refer to “Reconciliation of Non-GAAP Financial Measures” after the financial highlights at the end of this earnings release for a reconciliation of these non-GAAP financial measures.

Conference Call

The Company will host an investor conference call to review the results on Wednesday, April 29, 2020 at 8:30 a.m. Central Time. Participants may pre-register for the call by visiting https://edge.media-server.com/mmc/p/aqy7st3q and will receive a unique PIN, which can be used when dialing in for the call. This will allow attendees to access the call immediately. Alternatively, participants may call toll-free at (877) 703-9880.

The call and corresponding presentation slides will be webcast live on the home page of the Company's website, https://ir.veritexbank.com/. An audio replay will be available one hour after the conclusion of the call at (855) 859-2056, Conference #7880587. This replay, as well as the webcast, will be available until May 6, 2020.

About Veritex Holdings, Inc.

Headquartered in Dallas, Texas, Veritex is a bank holding company that conducts banking activities through its wholly owned subsidiary, Veritex Community Bank, with locations throughout the Dallas-Fort Worth metroplex and in the Houston metropolitan area. Veritex Community Bank is a Texas state chartered bank regulated by the Texas Department of Banking and the Board of Governors of the Federal Reserve System. For more information, visit www.veritexbank.com.

Forward-Looking Statements

This earnings release contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on various facts and derived utilizing assumptions, current expectations, estimates and projections and are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.  Forward-looking statements include, without limitation, statements relating to the expected payment date of Veritex’s quarterly cash dividend impact of certain changes in Veritex’s accounting policies, standards and interpretations, the effects of COVID-19 pandemic and actions taken in response thereto, Veritex’s future financial performance, business and growth strategy, projected plans and objectives, as well as other projections based on macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact broader economic and industry trends, and any such variations may be material.  Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing words. We refer you to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Veritex’s Annual Report on Form 10-K for the year ended December 31, 2019 and any updates to those risk factors set forth in Veritex’s Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings with the Securities and Exchange Commission (“SEC”), which are available on the SEC’s website at www.sec.gov.  If one or more events related to these or other risks or uncertainties materialize, or if Veritex’s underlying assumptions prove to be incorrect, actual results may differ materially from what Veritex anticipates.  Accordingly, you should not place undue reliance on any such forward-looking statements.  Any forward-looking statement speaks only as of the date on which it is made.  Veritex does not undertake any obligation, and specifically declines any obligation, to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by law. All forward-looking statements, expressed or implied, included in this earnings release are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that Veritex or persons acting on Veritex’s behalf may issue.

VERITEX HOLDINGS, INC. AND SUBSIDIARY
Financial Highlights
(Unaudited)

  For the Three Months Ended
  Mar 31,
2020
  Dec 31,
2019
  Sep 30,
2019
  Jun 30,
2019
  Mar 31,
2019
  (Dollars and shares in thousands)
Per Share Data (Common Stock):                  
Basic EPS $ 0.08     $ 0.56     $ 0.52     $ 0.50     $ 0.14  
Diluted EPS 0.08     0.56     0.51     0.49     0.13  
Book value per common share 23.19     23.32     23.02     22.55     21.88  
Tangible book value per common share1 14.39     14.73     14.61     14.27     13.76  
                   
Common Stock Data:                  
Shares outstanding at period end 49,557     51,064     52,373     53,457     54,563  
Weighted average basic shares outstanding for the period 50,725     51,472     52,915     53,969     54,293  
Weighted average diluted shares outstanding for the period 51,056     52,263     53,873     54,929     55,439  
                   
Summary of Credit Ratios:                  
Nonperforming assets to total assets 0.60 %   0.50 %   0.21 %   0.54 %   0.29 %
Net charge-offs to average total outstanding         0.14         0.05  
                   
Summary Performance Ratios:                  
Return on average assets2 0.20 %   1.43 %   1.36 %   1.36 %   0.38 %
Return on average equity2 1.41     9.63     8.98     8.98     2.52  
Return on average tangible common equity1, 2 3.27     16.22     15.15     15.26     5.09  
Efficiency ratio 47.61     47.12     43.67     51.49     82.30  
                   
Selected Performance Metrics - Operating:                  
Diluted operating EPS1 $ 0.08     $ 0.58     $ 0.53     $ 0.59     $ 0.59  
Pre-tax, pre-provision operating return on average assets1, 2 1.94 %   2.07 %   2.26 %   2.22 %   2.40 %
Operating return on average assets1, 2 0.20     1.49     1.42     1.63     1.69  
Operating return on average tangible common equity1, 2 3.27     16.87     15.78     18.09     18.81  
Operating efficiency ratio1 47.61     45.67     42.36     43.66     43.54  
                   
Veritex Holdings, Inc. Capital Ratios:                  
Average stockholders' equity to average total assets 14.56 %   14.88 %   15.11 %   15.13 %   15.92 %
Tier 1 capital to average assets (leverage) 9.49     10.17     10.33     10.47     10.57  
Common equity tier 1 capital 9.53     10.60     10.82     11.32     11.07  
Tier 1 capital to risk-weighted assets 9.92     11.02     11.26     11.77     11.50  
Total capital to risk-weighted assets 12.48     13.10     12.26     12.80     12.45  
Tangible common equity to tangible assets1 8.81     10.01     10.17     10.08     10.02  
                   
Veritex Bank Capital Ratios:                  
Tier 1 capital to average assets (leverage) 10.83 %   11.08 %   10.64 %   10.80 %   10.65 %
Common equity tier 1 capital 11.31     12.00     11.61     12.16     11.61  
Tier 1 capital to risk-weighted assets 11.31     12.00     11.61     12.16     11.61  
Total capital to risk-weighted assets 12.37     12.44     12.00     12.54     11.93  
1Refer to the section titled “Reconciliation of Non-GAAP Financial Measures” after the financial highlights for a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures.
2Annualized ratio.
 

VERITEX HOLDINGS, INC. AND SUBSIDIARY
Financial Highlights
(In thousands)

  Mar 31, 2020   Dec 31, 2019   Sep 30, 2019   Jun 30, 2019   Mar 31, 2019
  (unaudited)       (unaudited)   (unaudited)   (unaudited)
ASSETS                  
Cash and cash equivalents $ 430,842     $ 251,550     $ 252,592     $ 265,822     $ 339,473  
Securities   1,117,804       997,330       1,023,393       1,020,279       950,671  
Other securities   112,775       84,063       85,007       76,016       70,429  
                   
Loans held for sale 15,048     14,080     10,715     7,524     8,002  
Loans held for investment, mortgage warehouse 371,161     183,628     233,577     200,017     114,158  
Loans held for investment 5,853,735     5,737,577     5,654,027     5,731,833     5,663,721  
Total loans 6,239,944     5,935,285     5,898,319     5,939,374     5,785,881  
Allowance for credit losses (100,983 )   (29,834 )   (26,243 )   (24,712 )   (21,603 )
Bank-owned life insurance 81,395     80,915     80,411     79,899     79,397  
Bank premises, furniture and equipment, net 116,056     118,536     118,449     115,373     119,354  
Other real estate owned 7,720     5,995     4,625     1,748     151  
Intangible assets, net 69,444     72,263     75,363     78,347     81,245  
Goodwill 370,840     370,840     370,463     370,221     368,268  
Other assets 85,787     67,994     80,504     87,739     74,965  
Branch assets held for sale                 83,516  
Total assets $ 8,531,624     $ 7,954,937     $ 7,962,883     $ 8,010,106     $ 7,931,747  
LIABILITIES AND STOCKHOLDERS’ EQUITY                  
Deposits:                  
Noninterest-bearing deposits $ 1,549,260     $ 1,556,500     $ 1,473,126     $ 1,476,668     $ 1,439,630  
Interest-bearing transaction and savings deposits 2,536,865     2,654,972     2,528,293     2,646,154     2,617,117  
Certificates and other time deposits 1,713,820     1,682,878     1,876,427     2,042,266     2,240,968  
Total deposits 5,799,945     5,894,350     5,877,846     6,165,088     6,297,715  
Accounts payable and other liabilities 56,339     37,427     45,475     44,414     42,621  
Accrued interest payable 5,407     6,569     6,054     7,069     6,846  
Advances from Federal Home Loan Bank 1,377,832     677,870     752,907     512,945     252,982  
Subordinated debentures and subordinated notes 140,406     145,571     72,284     72,486     72,719  
Securities sold under agreements to repurchase 2,426     2,353     2,787     2,811     2,778  
Branch liabilities held for sale                 62,381  
Total liabilities 7,382,355     6,764,140     6,757,353     6,804,813     6,738,042  
Commitments and contingencies                  
Stockholders’ equity:                  
Common stock 554     549     524     535     546  
Additional paid-in capital 1,119,757     1,117,879     1,114,659     1,112,238     1,109,386  
Retained earnings 127,812     147,911     125,344     104,652     84,559  
Accumulated other comprehensive income 45,306     19,061     23,837     17,741     7,016  
Treasury stock (144,160 )   (94,603 )   (58,834 )   (29,873 )   (7,802 )
Total stockholders’ equity 1,149,269     1,190,797     1,205,530     1,205,293     1,193,705  
Total liabilities and stockholders’ equity $ 8,531,624     $ 7,954,937     $ 7,962,883     $ 8,010,106     $ 7,931,747  
 

VERITEX HOLDINGS, INC. AND SUBSIDIARY
Financial Highlights
(In thousands, except per share data)

  For the Three Months Ended
  Mar 31,
2020
  Dec 31,
2019
  Sep 30,
2019
  Jun 30,
2019
  Mar 31,
2019
Interest income:                  
Loans, including fees $ 77,861     $ 82,469     $ 85,811     $ 86,786     $ 85,747  
Investment securities 7,397     7,168     7,687     7,397     7,232  
Deposits in financial institutions and Fed Funds sold 871     1,285     1,329     1,372     1,554  
Other investments 850     820     816     622     691  
Total interest income 86,979     91,742     95,643     96,177     95,224  
Interest expense:                  
Transaction and savings deposits 6,552     8,203     10,381     11,405     10,366  
Certificates and other time deposits 8,240     9,455     10,283     10,145     8,792  
Advances from FHLB 2,879     2,661     3,081     2,187     2,055  
Subordinated debentures and subordinated notes 1,903     1,559     1,024     998     1,094  
Total interest expense 19,574     21,878     24,769     24,735     22,307  
Net interest income 67,405     69,864     70,874     71,442     72,917  
Provision for credit losses 31,776     3,493     9,674     3,335     5,012  
Provision for unfunded commitments 3,881                  
Net interest income after provisions 31,748     66,371     61,200     68,107     67,905  
Noninterest income:                  
Service charges and fees on deposit accounts 3,642     3,728     3,667     3,422     3,517  
Loan fees 845     1,921     2,252     1,932     1,677  
Loss on sales of investment securities     (438 )       (642 )   (772 )
Gain on sales of loans 746     536     853     1,104     2,370  
Rental income 551     371     369     373     368  
Other 1,463     1,014     1,289     (155 )   1,324  
Total noninterest income 7,247     7,132     8,430     6,034     8,484  
Noninterest expense:                  
Salaries and employee benefits 18,870     18,917     17,530     17,459     18,885  
Occupancy and equipment 4,273     4,198     4,044     4,014     4,129  
Professional and regulatory fees 2,196     2,615     2,750     2,814     3,418  
Data processing and software expense 2,089     1,880     2,252     2,309     1,924  
Marketing 1,083     971     708     961     619  
Amortization of intangibles 2,696     2,696     2,712     2,719     2,760  
Telephone and communications 319     466     361     625     395  
Merger and acquisition expense     918     1,035     5,790     31,217  
Other 4,019     3,623     3,238     3,205     3,646  
Total noninterest expense 35,545     36,284     34,630     39,896     66,993  
Income before income tax expense 3,450     37,219     35,000     34,245     9,396  
Income tax (benefit) expense (684 )   8,168     7,595     7,369     1,989  
Net income $ 4,134     $ 29,051     $ 27,405     $ 26,876     $ 7,407  
                   
Basic EPS $ 0.08     $ 0.56     $ 0.52     $ 0.50     $ 0.14  
Diluted EPS $ 0.08     $ 0.56     $ 0.51     $ 0.49     $ 0.13  
Weighted average basic shares outstanding 50,725     51,472     52,915     53,969     54,293  
Weighted average diluted shares outstanding 51,056     52,263     53,873     54,929     55,439  
 

VERITEX HOLDINGS, INC. AND SUBSIDIARY
Financial Highlights
(In thousands except percentages)

  For the Three Months Ended
  March 31, 2020   December 31, 2019   March 31, 2019
  Average
Outstanding
Balance
  Interest
Earned/
Interest
Paid
  Average
Yield/
Rate
  Average
Outstanding
Balance
  Interest
Earned/
Interest
Paid
  Average
Yield/
Rate
  Average
Outstanding
Balance
  Interest
Earned/
Interest
Paid
  Average
Yield/
Rate
Assets                                  
Interest-earning assets:                                  
Loans1 $ 5,784,965     $ 76,527     5.32 %   $ 5,692,773     $ 80,779     5.63 %   $ 5,731,062     $ 84,194     5.96 %
Loans held for investment, mortgage warehouse 163,646     1,334     3.28     191,132     1,690     3.51     119,781     1,553     5.26  
Securities 1,038,954     7,397     2.86     1,004,342     7,168     2.83     926,347     7,232     3.17  
Interest-bearing deposits in other banks 308,546     871     1.14     312,530     1,285     1.63     264,138     1,554     2.39  
Other investments2 91,917     850     3.72     71,791     820     4.53     56,909     691     4.92  
Total interest-earning assets 7,388,028     86,979     4.74     7,272,568     91,742     5.00     7,098,237     95,224     5.44  
Allowance for loan losses (44,270 )           (27,564 )           (20,065 )        
Noninterest-earning assets 782,024             798,501             763,095          
Total assets $ 8,125,782             $ 8,043,505             $ 7,841,267          
                                   
Liabilities and Stockholders’ Equity                                  
Interest-bearing liabilities:                                  
Interest-bearing demand and savings deposits $ 2,638,633     $ 6,552     1.00 %   $ 2,621,163     $ 8,203     1.24 %   $ 2,562,304     $ 10,366     1.64 %
Certificates and other time deposits 1,650,678     8,240     2.01     1,789,544     9,455     2.10     2,244,194     8,792     1.59  
Advances from FHLB 937,901     2,879     1.23     726,352     2,661     1.45     310,697     2,055     2.68  
Subordinated debentures and subordinated notes 145,189     1,903     5.27     118,193     1,559     5.23     75,813     1,094     5.85  
Total interest-bearing liabilities 5,372,401     19,574     1.47     5,255,252     21,878     1.65     5,193,008     22,307     1.74  
                                   
Noninterest-bearing liabilities:                                  
Noninterest-bearing deposits 1,523,702             1,540,406             1,427,970          
Other liabilities 46,563             50,656             30,023          
Total liabilities 6,942,666             6,846,314             6,651,001          
Stockholders’ equity 1,183,116             1,197,191             1,190,266          
Total liabilities and stockholders’ equity $ 8,125,782             $ 8,043,505             $ 7,841,267          
                                   
Net interest rate spread3         3.27 %           3.35 %           3.70 %
Net interest income     $ 67,405             $ 69,864             $ 72,917      
Net interest margin4         3.67 %           3.81 %           4.17 %
 
1 Includes average outstanding balances of loans held for sale of $10,995, $10,643 and $7,709 for the three months ended March 31, 2020, December 31, 2019, and March 31, 2019, respectively, and average balances of loans held for investment, excluding mortgage warehouse.
2 The Company historically reported dividend income in other noninterest income and has re-classed $678 of dividend income into other investments as of March 31, 2019 in order to align with industry peers for comparability purposes.
3 Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
4 Net interest margin is equal to net interest income divided by average interest-earning assets.
 

VERITEX HOLDINGS, INC. AND SUBSIDIARY
Financial Highlights

Yield Trend

  For the Three Months Ended
  March 31, 2020   December 31,
2019
  September 30,
2019
  June 30,
2019
  March 31, 2019
Average yield on interest-earning assets:                  
Loans1 5.32 %   5.63 %   5.85 %   5.92 %   5.96 %
Loans held for investment, mortgage warehouse 3.28     3.51     3.88     4.56     5.26  
Securities 2.86     2.83     2.98     3.10     3.17  
Interest-bearing deposits in other banks 1.14     1.63     2.25     2.41     2.39  
Other investments 3.72     4.53     4.50     4.19     4.92  
Total interest-earning assets 4.74 %   5.00 %   5.26 %   5.39 %   5.44 %
                   
Average rate on interest-bearing liabilities:                  
Interest-bearing demand and savings deposits 1.00 %   1.24 %   1.57 %   1.69 %   1.64 %
Certificates and other time deposits 2.01     2.10     2.09     1.93     1.59  
Advances from FHLB 1.23     1.45     1.93     2.62     2.68  
Subordinated debentures and subordinated notes 5.27     5.23     5.43     5.32     5.85  
Total interest-bearing liabilities 1.47 %   1.65 %   1.86 %   1.90 %   1.74 %
                   
Net interest rate spread2 3.27 %   3.35 %   3.40 %   3.49 %   3.70 %
Net interest margin3 3.67 %   3.81 %   3.90 %   4.00 %   4.17 %
 
1Includes average outstanding balances of loans held for sale of $10,995, $10,643, $8,525, $8,140 and $7,709 for the three months ended March 31, 2020, December 31, 2019, September 30, 2019, June 30, 2019 and March 31, 2019, respectively, and average balances of loans held for investment, excluding mortgage warehouse.
2 Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
3 Net interest margin is equal to net interest income divided by average interest-earning assets.

Supplemental Yield Trend

  For the Three Months Ended
  March 31, 2020   December 31,
2019
  September 30,
2019
  June 30,
2019
  March 31, 2019
Average cost of interest-bearing deposits 1.39 %   1.59 %   1.79 %   1.79 %   1.62 %
Average costs of total deposits, including noninterest-bearing 1.02     1.18     1.36     1.38     1.25  
                             

VERITEX HOLDINGS, INC. AND SUBSIDIARY
Financial Highlights
(In thousands except percentages)

Loans Held for Investment (“LHI”) and Deposit Portfolio Composition

  March 31,
2020
  December 31,
2019
  September 30,
2019
  June 30,
2019
  March 31,
2019
  (Dollars in thousands)
LHI1                                      
Commercial $ 1,777,603     30.4 %   $ 1,712,838     29.9 %   $ 1,711,256     30.3 %   $ 1,788,044     31.2 %   $ 1,812,670     32.0 %
Real Estate:                                      
Owner occupied commercial 723,839     12.4     706,782     12.3     716,130     12.7     746,768     13.0     745,114     13.2  
Commercial 1,828,386     31.2     1,784,201     31.1     1,710,510     30.3     1,727,525     30.1     1,701,443     30.0  
Construction and land 566,470     9.7     629,374     11.0     623,622     11.0     543,850     9.5     514,709     9.1  
Farmland 14,930     0.3     16,939     0.3     7,986     0.1     17,472     0.3     10,028     0.2  
1-4 family residential 536,892     9.2     549,811     9.6     559,310     9.9     557,056     9.7     570,599     10.1  
Multi-family residential 388,374     6.6     320,041     5.6     306,966     5.4     330,877     5.8     287,713     5.1  
Consumer 15,771     0.2     17,457     0.2     18,113     0.3     20,562     0.4     21,767     0.3  
Total acquired LHI $ 5,852,265     100 %   $ 5,737,443     100 %   $ 5,653,893     100 %   $ 5,732,154     100 %   $ 5,664,043     100 %
                                       
Mortgage warehouse 373,161         183,628         233,577         200,017         114,158      
                                       
Total LHI2 $ 6,225,426         $ 5,921,071         $ 5,887,470         $ 5,932,171         $ 5,778,201      
                                       
Deposits1                                      
Noninterest-bearing $ 1,549,260     26.7 %   $ 1,556,500     26.4 %   $ 1,473,126     25.1 %   $ 1,476,668     24.0 %   $ 1,439,630     22.9 %
Interest-bearing transaction 306,641     5.3     388,877     6.6     373,997     6.4     373,982     6.1     334,868     5.3  
Money market 2,143,874     37.0     2,180,017     37.0     2,066,315     35.2     2,178,274     35.3     2,169,049     34.4  
Savings 86,350     1.5     86,078     1.5     87,981     1.5     93,898     1.5     113,200     1.8  
Certificates and other time deposits 1,713,820     29.5     1,682,878     28.6     1,876,427     31.8     2,042,266     33.1     2,240,968     35.6  
Total deposits $ 5,799,945     100 %   $ 5,894,350     100 %   $ 5,877,846     100 %   $ 6,165,088     100 %   $ 6,297,715     100 %
                                       
Loan to Deposit Ratio 107.3 %       100.5 %       100.2 %       96.2 %       91.8 %    
                                       
Loan to Deposit Ratio, excluding mortgage warehouse 100.9 %       97.3 %       96.2 %       93.0 %       89.9 %    
 
1 LHI and deposit portfolio composition exclude assets and liabilities held for sale as of March 31, 2019.
2 Total LHI does not include deferred costs of $1.5 million at March 31, 2020, $134 thousand at December 31, 2019 and September 30, 2019, respectively, and deferred fees of $321 thousand at June 30, 2019 and March 31, 2019, respectively.
 

VERITEX HOLDINGS, INC. AND SUBSIDIARY
Financial Highlights
(In thousands except percentages)

Asset Quality

  For the Three Months Ended
  Mar 31, 2020   Dec 31, 2019   Sep 30, 2019   Jun 30, 2019   Mar 31, 2019
  (Dollars in thousands)
Nonperforming Assets (“NPAs”):                  
Nonaccrual loans $ 38,836       $ 29,779       $ 10,172       $ 15,733       $ 18,683    
Accruing loans 90 or more days past due1 4,764       3,660       2,194       25,774       4,303    
Total nonperforming loans held for investment (“NPLs”) 43,600       33,439       12,366       41,507       22,986    
Other real estate owned 7,720       5,995       4,625       1,748       151    
Total NPAs $ 51,320       $ 39,434       $ 16,991       $ 43,255       $ 23,137    
                   
Charge-offs:                  
Residential $       $       $       $ (157 )     $    
Commercial             (8,101 )     (143 )     (2,654 )  
Consumer (68 )     (48 )     (113 )     (30 )     (74 )  
Total charge-offs (68 )     (48 )     (8,214 )     (330 )     (2,728 )  
                   
Recoveries:                  
Residential 1       5             54       8    
Commercial 29       135       71       10       10    
Consumer 274       6             40       46    
Total recoveries 304       146       71       104       64    
                   
Net charge-offs $ 236       $ 98       $ (8,143 )     $ (226 )     $ (2,664 )  
                   
CECL transition adjustment $ 39,137       $       $       $       $    
                   
Allowance for credit  losses (“ACL”) at end of period $ 100,983       $ 29,834        $ 26,243        $ 24,712        $ 21,603     
                   
Asset Quality Ratios:                  
NPAs to total assets 0.60   %   0.50   %   0.21   %   0.54   %   0.29   %
NPLs to total LHI, excluding mortgage warehouse 0.75       0.58       0.22       0.72       0.41    
ACL to total LHI, excluding mortgage warehouse 1.73       0.52       0.46       0.43       0.38    
Net charge-offs to average loans outstanding             0.14             0.05    
 
1 Accruing loans greater than 90 days past due exclude purchase credit deteriorated loans greater than 90 days past due.
 

VERITEX HOLDINGS, INC. AND SUBSIDIARY
Reconciliation of Non-GAAP Financial Measures
(Unaudited)

We identify certain financial measures discussed in this earnings release as being “non-GAAP financial measures.” In accordance with SEC rules, we classify a financial measure as being a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles as in effect from time to time in the United States (“GAAP”), in our statements of income, balance sheets or statements of cash flows. Non-GAAP financial measures do not include operating and other statistical measures or ratios calculated using exclusively either one or both of (i) financial measures calculated in accordance with GAAP and (ii) operating measures or other measures that are not non-GAAP financial measures.

The non-GAAP financial measures that we present in this earnings release should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which we calculate the non-GAAP financial measures that we present in this earnings release may differ from that of other companies reporting measures with similar names. You should understand how such other financial institutions calculate their financial measures that appear to be similar or have similar names to the non-GAAP financial measures we have discussed in this earnings release when comparing such non-GAAP financial measures.

Tangible Book Value Per Common Share. Tangible book value is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) tangible common equity as total stockholders’ equity less goodwill and core deposit intangibles, net of accumulated amortization; and (b) tangible book value per common share as tangible common equity (as described in clause (a)) divided by number of common shares outstanding. For tangible book value per common share, the most directly comparable financial measure calculated in accordance with GAAP is book value per common share.

We believe that this measure is important to many investors in the marketplace who are interested in changes from period to period in book value per common share exclusive of changes in core deposit intangibles. Goodwill and other intangible assets have the effect of increasing total book value while not increasing our tangible book value.

The following table reconciles, as of the dates set forth below, total stockholders’ equity to tangible common equity and presents our tangible book value per common share compared with our book value per common share:

  As of
  Mar 31, 2020   Dec 31, 2019   Sep 30, 2019   Jun 30, 2019   Mar 31, 2019
  (Dollars in thousands, except per share data)
Tangible Common Equity                  
Total stockholders' equity $ 1,149,269     $ 1,190,797     $ 1,205,530     $ 1,205,293     $ 1,193,705  
Adjustments:                  
Goodwill (370,840 )   (370,840 )   (370,463 )   (370,221 )   (368,268 )
Core deposit intangibles (65,112 )   (67,563 )   (70,014 )   (72,465 )   (74,916 )
Tangible common equity $ 713,317     $ 752,394     $ 765,053     $ 762,607     $ 750,521  
Common shares outstanding 49,557     51,064     52,373     53,457     54,563  
                   
Book value per common share $ 23.19     $ 23.32     $ 23.02     $ 22.55     $ 21.88  
Tangible book value per common share $ 14.39     $ 14.73     $ 14.61     $ 14.27     $ 13.76  
                                       

VERITEX HOLDINGS, INC. AND SUBSIDIARY
Reconciliation of Non-GAAP Financial Measures
(Unaudited)

Tangible Common Equity to Tangible Assets. Tangible common equity to tangible assets is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) tangible common equity as total stockholders’ equity, less goodwill and core deposit intangibles, net of accumulated amortization; (b) tangible assets as total assets less goodwill and core deposit intangibles, net of accumulated amortization; and (c) tangible common equity to tangible assets as tangible common equity (as described in clause (a)) divided by tangible assets (as described in clause (b)). For tangible common equity to tangible assets, the most directly comparable financial measure calculated in accordance with GAAP is total stockholders’ equity to total assets.

We believe that this measure is important to many investors in the marketplace who are interested in the relative changes from period to period in common equity and total assets, in each case, exclusive of changes in core deposit intangibles. Goodwill and other intangible assets have the effect of increasing both total stockholders’ equity and assets while not increasing our tangible common equity or tangible assets.

The following table reconciles, as of the dates set forth below, total stockholders’ equity to tangible common equity and total assets to tangible assets and presents our tangible common equity to tangible assets:

  As of
  Mar 31, 2020   Dec 31, 2019   Sep 30, 2019   Jun 30, 2019   Mar 31, 2019
  (Dollars in thousands)
Tangible Common Equity                  
Total stockholders' equity $ 1,149,269       $ 1,190,797       $ 1,205,530       $ 1,205,293       $ 1,193,705    
Adjustments:                  
Goodwill (370,840 )     (370,840 )     (370,463 )     (370,221 )     (368,268 )  
Core deposit intangibles (65,112 )     (67,563 )     (70,014 )     (72,465 )     (74,916 )  
Tangible common equity $ 713,317       $ 752,394       $ 765,053       $ 762,607       $ 750,521    
Tangible Assets                  
Total assets $ 8,531,624       $ 7,954,937       $ 7,962,883       $ 8,010,106       $ 7,931,747    
Adjustments:                  
Goodwill (370,840 )     (370,840 )     (370,463 )     (370,221 )     (368,268 )  
Core deposit intangibles (65,112 )     (67,563 )     (70,014 )     (72,465 )     (74,916 )  
Tangible Assets $ 8,095,672       $ 7,516,534       $ 7,522,406       $ 7,567,420       $ 7,488,563    
Tangible Common Equity to Tangible Assets 8.81   %   10.01   %   10.17   %   10.08   %   10.02   %
 

VERITEX HOLDINGS, INC. AND SUBSIDIARY
Reconciliation of Non-GAAP Financial Measures
(Unaudited)

Return on Average Tangible Common Equity. Return on average tangible common equity is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) return as net income available for common stockholders adjusted for amortization of core deposit intangibles as net income, plus amortization of core deposit intangibles, less tax benefit at the statutory rate; (b) average tangible common equity as total average stockholders’ equity less average goodwill and average core deposit intangibles, net of accumulated amortization; and (c) return (as described in clause (a)) divided by average tangible common equity (as described in clause (b)). For return on average tangible common equity, the most directly comparable financial measure calculated in accordance with GAAP is return on average equity.

We believe that this measure is important to many investors in the marketplace who are interested in the return on common equity, exclusive of the impact of core deposit intangibles. Goodwill and core deposit intangibles have the effect of increasing total stockholders’ equity while not increasing our tangible common equity. This measure is particularly relevant to acquisitive institutions that may have higher balances in goodwill and core deposit intangibles than non-acquisitive institutions.

The following table reconciles, as of the dates set forth below, average tangible common equity to average common equity and net income available for common stockholders adjusted for amortization of core deposit intangibles, net of taxes to net income and presents our return on average tangible common equity:

  For the Three Months Ended
  Mar 31, 2020   Dec 31, 2019   Sep 30, 2019   Jun 30, 2019   Mar 31, 2019
  (Dollars in thousands)
Net income available for common stockholders adjusted for amortization of core deposit intangibles                  
Net income $ 4,134       $ 29,051       $ 27,405       $ 26,876       $ 7,407    
Adjustments:                  
Plus: Amortization of core deposit intangibles 2,451       2,451       2,451       2,451       2,477    
Less: Tax benefit at the statutory rate 515       515       515       515       520    
Net income available for common stockholders adjusted for amortization of intangibles $ 6,070       $ 30,987       $ 29,341       $ 28,812       $ 9,364    
                   
Average Tangible Common Equity                  
Total average stockholders' equity $ 1,183,116       $ 1,197,191       $ 1,210,147       $ 1,200,632       $ 1,190,266    
Adjustments:                  
Average goodwill (370,840 )     (370,463 )     (370,224 )     (369,255 )     (366,795 )  
Average core deposit intangibles (66,439 )     (68,913 )     (71,355 )     (73,875 )     (76,727 )  
Average tangible common equity $ 745,837       $ 757,815       $ 768,568       $ 757,502       $ 746,744    
Return on Average Tangible Common Equity (Annualized) 3.27   %   16.22   %   15.15   %   15.26   %   5.09   %
 

VERITEX HOLDINGS, INC. AND SUBSIDIARY
Reconciliation of Non-GAAP Financial Measures
(Unaudited)

Operating Net Income, Pre-tax, Pre-provision Operating Earnings and performance metrics calculated using Operating Earnings and Pre-tax, Pre-provision Operating Net Income, including Diluted Operating Earnings per Share, Operating Return on Average Assets, Pre-tax, Pre-Provision Operating Return on Average Assets, Operating Return on Average Tangible Common Equity and Operating Efficiency Ratio. Operating earnings and pre-tax, pre-provision operating earnings are non-GAAP measures used by management to evaluate the Company’s financial performance. We calculate (a) operating net income as net income plus loss on sale of securities available for sale, net, plus loss (gain) on sale of disposed branch assets, plus lease exit costs, net, plus branch closure expenses, plus one-time issuance of shares to all employees, plus merger and acquisition expenses, less tax impact of adjustments, plus re-measurement of deferred tax assets as a result of the reduction in the corporate income tax rate under the Tax Cuts and Jobs Act, plus other merger and acquisition discrete tax items. We calculate (b) pre-tax, pre-provision operating earnings as operating earnings as described in clause (a) plus provision for income taxes, plus provision for loan losses. We calculate (c) diluted operating earnings per share as operating earnings as described in clause (a) divided by weighted average diluted shares outstanding. We calculate (d) operating return on average tangible common equity as operating earnings as described in clause (a) divided by total average tangible common equity (average stockholders' equity less average goodwill and average core deposit intangibles, net of accumulated amortization.) We calculate (e) operating efficiency ratio as non interest expense plus adjustments to operating non interest expense divided by (i) non interest income plus adjustments to operating non interest income plus (ii) net interest income.

We believe that these measures and the operating metrics calculated utilizing these measures are important to management and many investors in the marketplace who are interested in understanding the ongoing operating performance of the Company and provide meaningful comparisons to its peers.

The following tables reconcile, as of the dates set forth below, operating net income and pre-tax, pre-provision operating earnings and related metrics:

  For the Three Months Ended
  Mar 31, 2020   Dec 31, 2019   Sep 30, 2019   Jun 30, 2019   Mar 31, 2019
  (Dollars in thousands)
Operating Earnings                  
Net income $ 4,134     $ 29,051     $ 27,405     $ 26,876     $ 7,407  
Plus: Loss on sale of securities available for sale, net     438         642     772  
Plus: Loss on sale of disposed branch assets1             359      
Plus: Merger and acquisition expenses     918     1,035     5,431     31,217  
Operating pre-tax income 4,134     30,407     28,440     33,308     39,396  
Less: Tax impact of adjustments     (23 )   217     1,351     6,717  
Plus: Other M&A tax items2     829     406     277      
Plus: Discrete tax adjustments3     (965 )            
Operating earnings $ 4,134     $ 30,294     $ 28,629     $ 32,234     $ 32,679  
                   
Weighted average diluted shares outstanding 51,056     52,263     53,873     54,929     55,439  
Diluted EPS $ 0.08     $ 0.56     $ 0.51     $ 0.49     $ 0.13  
Diluted operating EPS 0.08     0.58     0.53     0.59     0.59  
                             
1 Loss on sale of disposed branch assets for the three months ended June 30, 2019 is included in merger and acquisition expense in the condensed consolidated statements of income.
2 Other M&A tax items of $829 thousand, $406 thousand and $277 thousand recorded during the three months ended December 31, 2019, September 30, 2019 and June 30, 2019, respectively, relate to permanent tax expense recognized by the Company as a result of deduction limitations on compensation paid to covered employees in excess of the 162(m) limitation directly due to change-in-control payments made to covered employees in connection with the Green acquisition.
3 Discrete tax adjustments of $965 thousand were recorded during the fourth quarter of 2019 primarily due to the Company recording a net tax benefit of $1.6 million as a result of the Company settling an audit with the IRS. The Company released an uncertain tax position reserve that was assumed in the Green acquisition resulting in a $2.2 million tax benefit, offset by tax expense totaling $598 thousand that were recorded due to the Tax Cuts and Jobs Act rate change on deferred tax assets resulting from the IRS audit settlement.  The net IRS settlement was offset by various discrete, non-recurring tax expenses totaling $0.6 million.
 


  For the Three Months Ended
  Mar 31, 2020   Dec 31, 2019   Sep 30, 2019   Jun 30, 2019   Mar 31, 2019
  (Dollars in thousands)
Pre-Tax, Pre-Provision Operating Earnings                  
Net income $ 4,134       $ 29,051       $ 27,405       $ 26,876       $ 7,407    
Plus: (Benefit) provision for income taxes (684 )     8,168       7,595       7,369       1,989    
Pus: Provision for credit losses and unfunded commitments 35,657       3,493       9,674       3,335       5,012    
Plus: Loss on sale of securities available for sale, net       438             642       772    
Plus: Loss on sale of disposed branch assets1                   359          
Plus: Merger and acquisition expenses       918       1,035       5,431       31,217    
Pre-tax, pre-provision operating earnings $ 39,107       $ 42,068       $ 45,709       $ 44,012       $ 46,397    
                   
Average total assets $ 8,125,782       $ 8,043,505       $ 8,009,377       $ 7,937,319       $ 7,841,267    
Pre-tax, pre-provision operating return on average assets2 1.94   %   2.07   %   2.26   %   2.22   %   2.40   %
                   
Average total assets $ 8,125,782       $ 8,043,505       $ 8,009,377       $ 7,937,319       $ 7,841,267    
Return on average assets2 0.20   %   1.43   %   1.36   %   1.36   %   0.38   %
Operating return on average assets2 0.20       1.49       1.42       1.63       1.69    
                   
Operating earnings adjusted for amortization of intangibles                  
Operating net income $ 4,134       $ 30,294       $ 28,629       $ 32,234       $ 32,679    
Adjustments:                  
Plus: Amortization of core deposit intangibles 2,451       2,451       2,451       2,451       2,477    
Less: Tax benefit at the statutory rate 515       515       515       515       520    
Operating earnings adjusted for amortization of intangibles $ 6,070       $ 32,230       $ 30,565       $ 34,170       $ 34,636    
                   
Average Tangible Common Equity                  
Total average stockholders' equity $ 1,183,116       $ 1,197,191       $ 1,210,147       $ 1,200,632       $ 1,190,266    
Adjustments:                  
Less: Average goodwill (370,840 )     (370,463 )     (370,224 )     (369,255 )     (366,795 )  
Less: Average core deposit intangibles (66,439 )     (68,913 )     (71,355 )     (73,875 )     (76,727 )  
Average tangible common equity $ 745,837       $ 757,815       $ 768,568       $ 757,502       $ 746,744    
Operating return on average tangible common equity2 3.27   %   16.87   %   15.78   %   18.09   %   18.81   %
                   
Efficiency ratio 47.61   %   47.12   %   43.67   %   51.49   %   82.30   %
Operating efficiency ratio 47.61   %   45.67   %   42.36   %   43.66   %   43.54   %
                                       
1 Loss on sale of disposed branch assets for the three months ended June 30, 2019 is included in merger and acquisition expense in the condensed consolidated statements of income.
2 Annualized ratio.
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Investor Relations:
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972-349-6132
scaudle@veritexbank.com

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Source: Veritex Holdings, Inc.

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