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Veritex Holdings, Inc. Reports Second Quarter Operating Results

DALLAS, July 27, 2022 (GLOBE NEWSWIRE) -- Veritex Holdings, Inc. (“Veritex”, the “Company”, “we” or “our”) (Nasdaq: VBTX), the holding company for Veritex Community Bank, today announced the results for the quarter ended June 30, 2022.

“The second quarter of 2022 was another exceptional quarter for our Company, reporting 1.76% in PTPP operating return,” said President and CEO, C. Malcolm C. Holland, III. “We have remained and will remain focused on the positive momentum we have created by investing in talent and focus on scale in two of the strongest and most resilient markets in the U.S.”

    Quarter to Date   Year to Date
Financial Highlights   Q2 2022   Q1 2022     Q2 2022   Q2 2021
    (Dollars in thousands, except per share data)
(unaudited)
GAAP                  
Net income   $ 29,626     $ 33,470       $ 63,096     $ 61,243  
Diluted EPS     0.54       0.65         1.19       1.22  
Book value per common share     26.50       26.86         26.50       25.72  
Return on average assets2     1.11 %     1.36 %       1.23 %     1.35 %
Efficiency ratio     50.76       52.84         51.76       51.01  
Return on average equity2     8.21       10.00         9.07       9.96  
Non-GAAP1                  
Operating earnings   $ 29,855     $ 34,014       $ 63,869     $ 62,165  
Diluted operating EPS     0.55       0.66         1.20       1.24  
Tangible book value per common share     18.20       18.51         18.20       17.16  
Pre-tax, pre-provision operating earnings     47,000       42,265         89,265       78,707  
Pre-tax, pre-provision operating return on average assets2     1.76 %     1.71 %       1.74 %     1.74 %
Operating return on average assets2     1.12       1.38         1.24       1.37  
Operating efficiency ratio     50.45       52.05         51.22       50.62  
Return on average tangible common equity2     12.68       15.84         14.17       16.15  
Operating return on average tangible common equity2     12.77       16.08         14.34       16.38  

1 Refer to the section titled “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of these non-generally accepted accounting principles (“”GAAP”) financial measures to their most directly comparable GAAP measures.
2 Annualized ratio.

Other Second Quarter Highlights

  • Pre-tax, pre-provision operating return on average assets increased 5 bps from the first quarter of 2022 to 1.76%;
  • Non-performing assets (“NPAs”) to total assets decreased to 0.40%, or 6 bps from March 31, 2022, and decreased to 0.40% or 45 bps from June 30, 2021, respectively;
  • Net charge-offs to average loans outstanding of 1 basis point for the second quarter of 2022;
  • Net interest margin increased to 3.42%, up 20 basis points from the first quarter of 2022;
  • Total loans held for investment (“LHI”), excluding mortgage warehouse (“MW”) and paycheck protection program (“PPP”) loans, grew $790.4 million, or 44.4% annualized, during the three months ended June 30, 2022 from $7.1 billion at the end of the first quarter of 2022;
  • Total deposits grew $628.1 million, or 31.8% annualized, during the three months ended June 30, 2022 from $7.9 billion at the end of the first quarter of 2022; and
  • Declared quarterly cash dividend of $0.20 per share of outstanding common stock payable on August 26, 2022.

Results of Operations for the Three Months Ended June 30, 2022

Net Interest Income

For the three months ended June 30, 2022, net interest income before provision for credit losses was $84.5 million and net interest margin was 3.42% compared to $73.0 million and 3.22%, respectively, for the three months ended March 31, 2022. The $11.4 million increase in net interest income before provision for credit losses was primarily due to a $10.7 million increase in interest income on loans driven by an increase in average balances and loan yields during the three months ended June 30, 2022. Net interest margin increased 20 basis points compared to the three months ended March 31, 2022, primarily due to the increase in yields earned on loans during three months ended June 30, 2022.

Compared to the three months ended June 30, 2021, net interest income before provision for credit losses for the three months ended June 30, 2022 increased by $17.3 million, or 25.8%. The increase was primarily due to a $14.4 million increase in interest income on loans driven by an increase in average balances. The average cost of interest-bearing deposits increased 8 basis points to 0.43% for the three months ended June 30, 2022 from 0.35% for the three months ended June 30, 2021.

Noninterest Income

Noninterest income for the three months ended June 30, 2022 was $10.4 million, a decrease of $4.7 million, or 31.3%, compared to the three months ended March 31, 2022. The decrease was primarily due to a $4.1 million decrease in government guaranteed loan income, net.

Compared to the three months ended June 30, 2021, noninterest income for the three months ended June 30, 2022 decreased by $2.1 million, or 16.7%. The decrease was primarily due to a $2.7 million decrease in government guaranteed loan income, net.

Noninterest Expense

Noninterest expense was $48.2 million for the three months ended June 30, 2022, compared to $46.6 million for the three months ended March 31, 2022, an increase of $1.6 million, or 3.4%. This increase was primarily due to a $1.1 million increase in marketing expenses.

Compared to the three months ended June 30, 2021, noninterest expense for the three months ended June 30, 2022 increased by $6.4 million, or 15.4%. The increase was primarily driven by a $3.5 million increase in salaries and employee benefits as a result of a $3.3 million increase in salaries resulting from continued investment in talent.

Financial Condition

Total LHI, excluding MW and PPP loans, were $7.9 billion at June 30, 2022, an increase of $790.4 million, or 44.4% annualized, compared to March 31, 2022. The increase was the result of the continued execution, and success of our loan growth strategy, including our investment in talent.

Total deposits were $8.5 billion at June 30, 2022, an increase of $628.1 million, or 31.8% annualized, compared to March 31, 2022. The increase was primarily the result of an increase of $319.0 million in interest-bearing transaction and savings deposits, an increase of $181.9 million in noninterest-bearing demand deposits, and an increase of $127.2 million in certificates and other time deposits.

Asset Quality

Nonperforming assets totaled $45.0 million, or 0.40% of total assets at June 30, 2022, compared to $48.0 million, or 0.46% of total assets at March 31, 2022. The Company had net charge-offs of $909 thousand for the quarter, which were fully reserved against in prior quarters under our allowance for credit loss (“ACL”) model.

The Company recorded a provision for credit losses of $9.0 million for the three months ended June 30, 2022, a $500 thousand benefit for credit losses for the three months ended March 31, 2022 and no provision for credit losses for the three months ended June 30, 2021. The recorded provision for credit losses for the three months ended June 30, 2022, compared to the three months ended March 31, 2022, was primarily attributable to an increase in general reserves as a result of loan growth. For the three months ended June 30, 2022, we recorded no provision for unfunded commitments, which was attributable to stable unfunded balances. ACL as a percentage of LHI, excluding MW and PPP loans, was 1.02%, 1.02% and 1.59% at June 30, 2022, March 31, 2022 and June 30, 2021, respectively.

Dividend Information

On July 27, 2022, Veritex’s Board of Directors declared a quarterly cash dividend of $0.20 per share on its outstanding shares of common stock. The dividend will be paid on or after August 26, 2022 to stockholders of record as of the close of business on August 12, 2022.

Non-GAAP Financial Measures

Veritex’s management uses certain non-GAAP (U.S. 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 per common share, operating earnings, 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 and webcast to review the results on Wednesday, July 27, 2022, at 8:30 a.m. Central Time. Participants may pre-register for the call by visiting https://edge.media-server.com/mmc/p/r7rx63qg and will receive a unique PIN, which can be used when dialing in for the call.

Participants may also register via teleconference at:
https://register.vevent.com/register/BI70101fb149e640b7a111c50ba9b1bef1. Once registration is completed, participants will be provided with a dial-in number containing a personalized conference code to access the call. All participants are instructed to dial-in 15 minutes prior to the start time.

A replay will be available within approximately two hours after the completion of the call, and made accessible for one week. You may access the replay via webcast through the investor relations section of Veritex’s website.

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 includes “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, which change over time and are beyond our control, 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 Veritex Holdings, Inc.’s (“Veritex”) proposed acquisition of interLINK, including the expected timing of the completion of the acquisition, the ability to complete the acquisition, the ability to obtain any required regulatory or other approvals, authorizations or consents in connection with the acquisition, disruption from the acquisition making it more difficult to maintain relationships with employees, customers or other parties with whom Veritex or interLINK have business relationships, diversion of management time on acquisition-related issues, the reaction to the acquisition of the companies’ customers, employees and counterparties, any statements regarding the plans and objectives of management for future operations, products or services arising from the acquisition, including integration plans, and the treatment of certain deposits via interLINK as not being brokered deposits for any supervisory purpose; the expected payment date of Veritex’s quarterly cash dividend; the impact of certain changes in Veritex’s accounting policies, standards and interpretations; the effects of the COVID-19 pandemic and actions taken in response thereto; and 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,” “seeks,” “targets,” “outlooks,” “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, 2021 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 supplement, 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 SUBSIDIARIES
Financial Highlights
(Unaudited)

    For the Quarter Ended   For the Six Months Ended
    Jun 30,
2022
  Mar 31,
2022
  Dec 31,
2021
  Sep 30,
2021
  Jun 30,
2021
  Jun 30,
2022
  Jun 30,
2021
    (Dollars and shares in thousands)
Per Share Data (Common Stock):                            
Basic EPS   $ 0.55     $ 0.66     $ 0.84     $ 0.75     $ 0.60     $ 1.21     $ 1.24  
Diluted EPS     0.54       0.65       0.82       0.73       0.59       1.19       1.22  
Book value per common share     26.50       26.86       26.64       26.09       25.72       26.50       25.72  
Tangible book value per common share1     18.20       18.51       17.49       17.53       17.16       18.20       17.16  
Dividends paid per common share outstanding2     0.20       0.20       0.20       0.20       0.20       0.40       0.37  
                             
Common Stock Data:                            
Shares outstanding at period end     53,951       53,907       49,372       49,229       49,498       53,951       49,498  
Weighted average basic shares outstanding for the period     53,949       50,695       49,329       49,423       49,476       52,331       49,435  
Weighted average diluted shares outstanding for the period     54,646       51,571       50,441       50,306       50,331       53,121       50,187  
                             
Summary of Credit Ratios:                            
ACL to total LHI, excluding MW and PPP loans     1.02 %     1.02 %     1.15 %     1.42 %     1.59 %     1.02 %     1.59 %
NPAs to total assets     0.40       0.46       0.51       0.77       0.85       0.40       0.85  
Net charge-offs to average loans outstanding     0.01       0.07       0.19       0.09       0.09       0.08       0.09  
                             
Summary Performance Ratios:                            
Return on average assets3     1.11       1.36       1.68       1.56       1.27       1.23       1.35  
Return on average equity3     8.21       10.00       12.65       11.32       9.42       9.07       9.96  
Return on average tangible common equity1, 3     12.68       15.84       20.06       17.72       15.18       14.17       16.15  
Efficiency ratio     50.76       52.84       48.53       47.55       52.42       51.76       51.01  
Net interest margin     3.42       3.22       3.37       3.26       3.11       3.32       3.16  
                             
Selected Performance Metrics - Operating:                            
Diluted operating EPS1   $ 0.55     $ 0.66     $ 0.84     $ 0.70     $ 0.60     $ 1.20     $ 1.24  
Pre-tax, pre-provision operating return on average assets1, 2     1.76 %     1.71 %     1.97 %     1.85 %     1.66 %     1.74 %     1.74 %
Operating return on average assets1, 3     1.12       1.38       1.72       1.48       1.29       1.24       1.37  
Operating return on average tangible common equity1, 3     12.77       16.08       20.48       16.92       15.42       14.34       16.38  
Operating efficiency ratio1     50.45       52.05       47.64       48.51       51.63       51.22       50.62  
                             
Veritex Holdings, Inc. Capital Ratios:                            
Average stockholders' equity to average total assets     13.51 %     13.58 %     13.30 %     13.75 %     13.46 %     13.54 %     13.57 %
Tangible common equity to tangible assets1     9.04       9.98       9.28       9.43       9.51       9.04       9.51  
Tier 1 capital to average assets (leverage)     10.14       10.66       9.05       9.54       9.38       10.14       9.38  
Common equity tier 1 capital     9.25       9.84       8.58       8.75       9.03       9.25       9.03  
Tier 1 capital to risk-weighted assets     9.52       10.14       8.89       9.06       9.36       9.52       9.36  
Total capital to risk-weighted assets     11.95       12.73       11.60       12.31       12.86       11.95       12.86  

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.
2Dividend amount represents dividend paid per common share subsequent to each respective quarter end.
3Annualized ratio for quarterly metrics.


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

    Jun 30,
2022
  Mar 31,
2022
  Dec 31,
2021
  Sep 30,
2021
  Jun 30,
2021
    (unaudited)   (unaudited)       (unaudited)   (unaudited)
ASSETS                    
Cash and cash equivalents   $ 410,716     $ 551,573     $ 379,784     $ 229,712     $ 390,027  
Debt Securities     1,354,403       1,244,514       1,052,494       1,103,745       1,125,877  
Other investments     202,685       188,699       190,591       191,786       87,558  
                     
Loans held for sale     14,210       18,721       26,007       18,896       12,065  
LHI, PPP loans, carried at fair value     7,339       18,512       53,369       135,842       291,401  
LHI, MW     629,291       542,877       565,645       615,045       559,939  
LHI, excluding MW and PPP     7,915,792       7,125,429       6,766,009       6,615,905       6,272,087  
Total loans     8,566,632       7,705,539       7,411,030       7,385,688       7,135,492  
ACL     (80,576 )     (72,485 )     (77,754 )     (93,771 )     (99,543 )
Bank-owned life insurance     84,097       83,641       83,194       83,781       83,304  
Bank premises, furniture and equipment, net     108,769       109,138       109,271       116,063       123,504  
Other real estate owned (“OREO”)     1,032       1,062                   2,467  
Intangible assets, net of accumulated amortization     59,011       63,986       66,017       54,682       57,143  
Goodwill     404,452       404,452       403,771       370,840       370,840  
Other assets     193,590       173,561       138,851       129,774       72,856  
Total assets   $ 11,304,811     $ 10,453,680     $ 9,757,249     $ 9,572,300     $ 9,349,525  
LIABILITIES AND STOCKHOLDERS’ EQUITY                    
Deposits:                    
Noninterest-bearing deposits   $ 2,947,830     $ 2,765,895     $ 2,510,723     $ 2,302,925     $ 2,388,068  
Interest-bearing transaction and savings deposits     4,007,250       3,688,292       3,276,312       3,228,306       3,112,974  
Certificates and other time deposits     1,562,626       1,435,409       1,576,580       1,647,521       1,477,860  
Total deposits     8,517,706       7,889,596       7,363,615       7,178,752       6,978,902  
Accounts payable and other liabilities     126,116       105,552       69,160       66,571       55,499  
Advances from Federal Home Loan Bank (“FHLB”)     1,000,000       777,522       777,562       777,601       777,640  
Subordinated debentures and subordinated notes     228,272       228,018       227,764       262,761       262,766  
Securities sold under agreements to repurchase     3,275       4,996       4,069       2,455       1,811  
Total liabilities     9,875,369       9,005,684       8,442,170       8,288,140       8,076,618  
Commitments and contingencies                    
Stockholders’ equity:                    
Common stock     606       605       560       559       558  
Additional paid-in capital     1,300,170       1,297,161       1,142,758       1,137,889       1,134,603  
Retained earnings     317,664       298,830       275,273       243,633       216,704  
Accumulated other comprehensive (loss) income     (21,416 )     18,982       64,070       69,661       77,189  
Treasury stock     (167,582 )     (167,582 )     (167,582 )     (167,582 )     (156,147 )
Total stockholders’ equity     1,429,442       1,447,996       1,315,079       1,284,160       1,272,907  
Total liabilities and stockholders’ equity   $ 11,304,811     $ 10,453,680     $ 9,757,249     $ 9,572,300     $ 9,349,525  


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

    For the Quarter Ended   For the Six Months Ended
    Jun 30, 2022   Mar 31, 2022   Dec 31, 2021   Sep 30, 2021   Jun 30, 2021   Jun 30, 2022   Jun 30, 2021
Interest income:                            
Loans, including fees   $ 82,191   $ 71,443     $ 74,174     $ 71,139     $ 67,814   $ 153,634   $ 135,213
Debt securities     9,632     7,762       9,553       7,613       7,529     17,394     14,966
Deposits in financial institutions and Fed Funds sold     714     262       165       130       167     976     294
Equity securities and other investments     1,057     910       1,004       898       672     1,967     1,335
Total interest income     93,594     80,377       84,896       79,780       76,182     173,971     151,808
Interest expense:                            
Transaction and savings deposits     4,094     1,751       1,629       1,588       1,661     5,845     3,641
Certificates and other time deposits     1,465     1,380       1,661       1,934       2,423     2,845     5,484
Advances from FHLB     834     1,547       1,847       1,848       1,829     2,381     3,641
Subordinated debentures and subordinated notes     2,721     2,659       3,018       3,134       3,138     5,380     6,276
Total interest expense     9,114     7,337       8,155       8,504       9,051     16,451     19,042
Net interest income     84,480     73,040       76,741       71,276       67,131     157,520     132,766
Provision (benefit) for credit losses     9,000     (500 )     (3,349 )               8,500    
Provision (benefit) for unfunded commitments         493       (1,040 )     (448 )     577     493     7
Net interest income after provisions     75,480     73,047       81,130       71,724       66,554     148,527     132,759
Noninterest income:                            
Service charges and fees on deposit accounts     5,039     4,710       4,782       4,484       3,847     9,749     7,476
Loan fees     2,385     2,794       2,697       1,746       1,823     5,179     3,164
Loss on sales of investment securities                     (188 )            
Gain on sales of mortgage loans held for sale     223     307       293       407       385     530     892
Government guaranteed loan income, net     789     4,891       3,423       2,341       3,448     5,680     9,996
Equity method investment income     966     367       1,238       4,522           1,333    
Other     976     2,028       3,717       2,315       2,953     3,004     5,100
Total noninterest income     10,378     15,097       16,150       15,627       12,456     25,475     26,628
Noninterest expense:                            
Salaries and employee benefits     26,924     27,513       25,401       22,964       23,451     54,437     46,383
Occupancy and equipment     4,496     4,517       4,398       4,536       4,233     9,013     8,329
Professional and regulatory fees     2,865     3,158       3,017       3,401       3,086     6,023     6,527
Data processing and software expense     3,386     2,921       2,597       2,494       2,536     6,307     4,855
Marketing     2,306     1,187       1,443       1,151       1,841     3,493     2,750
Amortization of intangibles     2,495     2,495       2,494       2,509       2,517     4,990     5,054
Telephone and communications     352     385       380       380       337     737     674
Merger and acquisition (“M&A”) expense     295     700       826                 995    
Other     5,034     3,696       4,521       3,886       3,716     8,730     6,742
Total noninterest expense     48,153     46,572       45,077       41,321       41,717     94,725     81,314
Income before income tax expense     37,705     41,572       52,203       46,030       37,293     79,277     78,073
Income tax expense     8,079     8,102       10,697       9,195       7,837     16,181     16,830
Net income   $ 29,626   $ 33,470     $ 41,506     $ 36,835     $ 29,456   $ 63,096   $ 61,243
Net income available to common stockholders   $ 29,626   $ 33,470     $ 41,506     $ 36,835     $ 29,456   $ 63,096   $ 61,243
                             
Basic EPS   $ 0.55   $ 0.66     $ 0.84     $ 0.75     $ 0.60   $ 1.21   $ 1.24
Diluted EPS   $ 0.54   $ 0.65     $ 0.82     $ 0.73     $ 0.59   $ 1.19   $ 1.22
Weighted average basic shares outstanding     53,949     50,695       49,329       49,423       49,476     52,331     49,435
Weighted average diluted shares outstanding     54,646     51,571       50,441       50,306       50,331     53,121     50,187


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

    For the Quarter Ended
    June 30, 2022   March 31, 2022   June 30, 2021
    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
    (In thousands, expect percentages)
Assets                                    
Interest-earning assets:                                    
Loans1   $ 7,547,564     $ 78,234   4.16 %   $ 6,872,943     $ 68,297   4.03 %   $ 6,108,527     $ 63,427   4.16 %
LHI, MW     479,187       3,929   3.29       421,680       3,069   2.95       455,334       3,476   3.06  
PPP loans     11,402       28   1.00       31,335       77   1.00       364,020       911   1.00  
Debt securities     1,318,502       9,632   2.93       1,140,834       7,762   2.76       1,095,678       7,529   2.76  
Interest-bearing deposits in other banks     369,847       714   0.77       554,864       262   0.19       548,087       167   0.12  
Equity securities and other investments     167,327       1,057   2.53       190,002       910   1.94       87,413       672   3.08  
Total interest-earning assets     9,893,829       93,594   3.79       9,211,658       80,377   3.54       8,659,059       76,182   3.53  
ACL     (74,268 )             (77,843 )             (105,050 )        
Noninterest-earning assets     892,102               865,107               767,270          
Total assets   $ 10,711,663             $ 9,998,922             $ 9,321,279          
                                     
Liabilities and Stockholders’ Equity                                    
Interest-bearing liabilities:                                    
Interest-bearing demand and savings deposits   $ 3,770,098     $ 4,094   0.44 %   $ 3,471,645     $ 1,751   0.20 %   $ 3,191,405     $ 1,661   0.21 %
Certificates and other time deposits     1,459,690       1,465   0.40       1,501,852       1,380   0.37       1,515,092       2,423   0.64  
Advances from FHLB     828,769       834   0.40       777,538       1,547   0.81       777,655       1,829   0.94  
Subordinated debentures and subordinated notes     232,043       2,721   4.70       231,875       2,659   4.65       264,931       3,138   4.75  
Total interest-bearing liabilities     6,290,600       9,114   0.58       5,982,910       7,337   0.50       5,749,083       9,051   0.63  
                                     
Noninterest-bearing liabilities:                                    
Noninterest-bearing deposits     2,870,692               2,591,504               2,266,470          
Other liabilities     102,994               67,060               51,355          
Total liabilities     9,264,286               8,641,474               8,066,908          
Stockholders’ equity     1,447,377               1,357,448               1,254,371          
Total liabilities and stockholders’ equity   $ 10,711,663             $ 9,998,922             $ 9,321,279          
                                     
Net interest rate spread2           3.21 %           3.04 %           2.90 %
Net interest income and margin3         84,480   3.42 %         73,040   3.22 %         67,131   3.11 %

1 Includes average outstanding balances of loans held for sale of $12,112, $12,769 and $14,364 for the three months ended June 30, 2022, March 31, 2022, and June 30, 2021, respectively, and average balances of LHI, excluding MW and PPP loans.
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.


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

    Six Months Ended
    June 30, 2022   June 30, 2021
    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   $ 7,205,954     $ 146,500   4.10 %   $ 6,003,754     $ 126,128   4.24 %
LHI, WH     450,592       6,998   3.13       482,853       7,292   3.05  
PPP loans     27,477       136   1.00       360,209       1,793   1.00  
Debt securities     1,230,159       17,394   2.85       1,079,697       14,966   2.80  
Interest-bearing deposits in other banks     461,844       976   0.43       445,356       294   0.13  
Equity securities and other investments     178,602       1,967   2.22       87,296       1,335   3.08  
Total interest-earning assets     9,554,628       173,971   3.67       8,459,165       151,808   3.62  
ACL     (76,046 )             (105,509 )        
Noninterest-earning assets     878,679               778,691          
Total assets   $ 10,357,261             $ 9,132,347          
                         
Liabilities and Stockholders’ Equity                        
Interest-bearing liabilities:                        
Interest-bearing demand and savings deposits   $ 3,621,697     $ 5,845   0.33 %   $ 3,115,417     $ 3,641   0.24 %
Certificates and other time deposits     1,480,654       2,845   0.39       1,512,479       5,484   0.73  
Advances from FHLB     803,295       2,381   0.60       777,675       3,641   0.94  
Subordinated debentures and subordinated notes     231,959       5,380   4.68       265,142       6,276   4.77  
Total interest-bearing liabilities     6,137,605       16,451   0.54       5,670,713       19,042   0.68  
                         
Noninterest-bearing liabilities:                        
Noninterest-bearing deposits     2,731,869               2,168,396          
Other liabilities     85,126               53,823          
Total liabilities     8,954,600               7,892,932          
Stockholders’ equity     1,402,661               1,239,415          
Total liabilities and stockholders’ equity   $ 10,357,261             $ 9,132,347          
                         
Net interest rate spread2           3.13 %           2.94 %
Net interest income and margin3       $ 157,520   3.32 %       $ 132,766   3.16 %

1 Includes average outstanding balances of loans held for sale of $12,440 and $15,476 for the six months ended June 30, 2022 and June 30, 2021, respectively, and average balances of LHI, excluding MW and PPP loans.
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.


VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights

Yield Trend

    For the Quarter Ended
    Jun 30,
2022
  Mar 31,
2022
  Dec 31,
2021
  Sep 30,
2021
  Jun 30,
2021
Average yield on interest-earning assets:                    
Loans1   4.16 %   4.03 %   4.12 %   4.16 %   4.16 %
LHI, MW   3.29     2.95     2.98     3.15     3.06  
PPP loans   1.00     1.00     1.00     1.00     1.00  
Debt securities   2.93     2.76     3.47     2.70     2.76  
Interest-bearing deposits in other banks   0.77     0.19     0.16     0.15     0.12  
Equity securities and other investments   2.53     1.94     2.09     2.13     3.08  
Total interest-earning assets   3.79 %   3.54 %   3.72 %   3.64 %   3.53 %
                     
Average rate on interest-bearing liabilities:                    
Interest-bearing demand and savings deposits   0.44 %   0.20 %   0.19 %   0.20 %   0.21 %
Certificates and other time deposits   0.40     0.37     0.41     0.50     0.64  
Advances from FHLB   0.40     0.81     0.94     0.94     0.94  
Subordinated debentures and subordinated notes   4.70     4.65     4.62     4.70     4.75  
Total interest-bearing liabilities   0.58 %   0.50 %   0.54 %   0.59 %   0.63 %
                     
Net interest rate spread2   3.21 %   3.04 %   3.18 %   3.05 %   2.90 %
Net interest margin3   3.42 %   3.22 %   3.37 %   3.26 %   3.11 %

  
1Includes average outstanding balances of loans held for sale of $12,112, $12,769, $8,987, $8,542 and $14,364 for the three months ended June 30, 2022,      March 31, 2022, December 31, 2021, September 30, 2021 and June 30, 2021, respectively, and average balances of LHI, excluding MW and PPP loans.
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 Quarter Ended
    Jun 30,
2022
  Mar 31,
2022
  Dec 31,
2021
  Sep 30,
2021
  Jun 30,
2021
Average cost of interest-bearing deposits   0.43 %   0.26 %   0.26 %   0.30 %   0.35 %
Average costs of total deposits, including noninterest-bearing   0.28     0.17     0.18     0.20     0.23  


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

LHI and Deposit Portfolio Composition

    Jun 30,
2022
  Mar 31,
2022
  Dec 31,
2021
  Sep 30,
2021
  Jun 30,
2021
    (In thousands, expect percentages)
LHI1                                        
Commercial   $ 2,450,403     30.9 %   $ 2,125,900     29.8 %   $ 2,006,876     29.6 %   $ 1,793,740     27.1 %   $ 1,771,100     28.2 %
Real Estate:                                        
Owner occupied commercial (“OOCRE”)     646,723     8.2       633,615     8.9       665,537     9.8       711,476     10.7       744,899     11.9  
Non-owner occupied commercial (“NOOCRE”)     2,203,970     27.8       2,145,826     30.0       2,120,309     31.3       2,194,438     33.1       1,986,538     31.6  
Construction and land     1,532,997     19.3       1,297,338     18.2       1,062,144     15.7       936,174     14.1       871,765     13.9  
Farmland     47,319     0.6       48,095     0.7       55,827     0.8       73,550     1.1       13,661     0.2  
1-4 family residential     765,260     9.6       604,408     8.5       542,566     8.0       543,518     8.2       513,635     8.2  
Multi-family residential     276,632     3.5       272,250     3.8       310,241     4.6       356,885     5.4       367,445     5.9  
Consumer     7,520     0.1       9,533     0.1       11,998     0.2       14,266     0.3       10,530     0.1  
Total LHI   $ 7,930,824     100 %   $ 7,136,965     100 %   $ 6,775,498     100 %   $ 6,624,047     100 %   $ 6,279,573     100 %
                                         
MW     629,291           542,877           565,645           615,045           559,939      
PPP loans     7,339           18,512           53,369           135,842           291,401      
                                         
Total LHI1   $ 8,567,454         $ 7,698,354         $ 7,394,512         $ 7,374,934         $ 7,130,913      
                                         
Deposits                                        
Noninterest-bearing   $ 2,947,830     34.6 %   $ 2,765,895     35.1 %   $ 2,510,723     34.1 %   $ 2,302,925     32.1 %   $ 2,388,068     34.1 %
Interest-bearing transaction     660,557     7.8       599,580     7.6       579,408     7.9       514,537     7.2       451,307     6.5  
Money market     3,217,195     37.8       2,958,790     37.5       2,568,843     34.9       2,585,926     36.0       2,539,061     36.4  
Savings     129,498     1.5       129,922     1.6       128,061     1.7       127,843     1.8       122,606     1.8  
Certificates and other time deposits     1,562,626     18.3       1,435,409     18.2       1,576,580     21.4       1,647,521     22.9       1,477,860     21.2  
Total deposits   $ 8,517,706     100 %   $ 7,889,596     100 %   $ 7,363,615     100 %   $ 7,178,752     100 %   $ 6,978,902     100 %
                                         
Loan to Deposit Ratio     100.6 %         97.6 %         100.4 %         102.7 %         102.2 %    
                                         
Loan to Deposit Ratio, excluding MW and PPP loans     93.1 %         90.5 %         92.0 %         92.3 %         90.0 %    

1 Total LHI does not include deferred fees of $15.0 million, $11.5 million, $9.5 million, $8.1 million and $7.5 million at June 30, 2022, March 31, 2022, December 31, 2021, September 30, 2021 and June 30, 2021, respectively.


VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(Unaudited)
Asset Quality

  For the Quarter Ended   For the Six Months Ended
  Jun 30,
2022
  Mar 31,
2022
  Dec 31,
2021
  Sep 30,
2021
  Jun 30,
2021
  Jun 30,
2022
  Jun 30,
2021
  (In thousands)        
NPAs:                          
Nonaccrual loans $ 42,242     $ 46,680     $ 49,687     $ 72,317     $ 76,994     $ 42,242     $ 76,994  
Accruing loans 90 or more days past due1   1,753       264       441       1,711       462       1,753       462  
Total nonperforming loans held for investment (“NPLs”)   43,995       46,944       50,128       74,028       77,456       43,995       77,456  
OREO   1,032       1,062                   2,467       1,032       2,467  
Total NPAs $ 45,027     $ 48,006     $ 50,128     $ 74,028     $ 79,923     $ 45,027     $ 79,923  
                           
Charge-offs:                          
1-4 family residential $     $     $     $ (64 )   $ (300 )   $     $ (315 )
OOCRE   (244 )     (1,341 )     (898 )     (813 )     (689 )     (1,585 )     (689 )
NOOCRE         (553 )     (7,936 )                 (553 )      
Commercial   (528 )     (3,294 )     (4,114 )     (5,508 )     (5,608 )     (3,822 )     (5,954 )
Consumer   (1,091 )     (134 )     (44 )     (17 )     (20 )     (1,225 )     (38 )
Total charge-offs   (1,863 )     (5,322 )     (12,992 )     (6,402 )     (6,617 )     (7,185 )     (6,996 )
                           
Recoveries:                          
1-4 family residential   3             6       26       29       3       32  
OOCRE   245                         500       245       500  
NOOCRE   93       400                         493        
Commercial   572       144       61       596       659       716       885  
Consumer   41       9       257       8       36       50       38  
Total recoveries   954       553       324       630       1,224       1,507       1,455  
                           
Net charge-offs $ (909 )   $ (4,769 )   $ (12,668 )   $ (5,772 )   $ (5,393 )   $ (5,678 )   $ (5,541 )
                           
                           
ACL $ 80,576     $ 72,485     $ 77,754     $ 93,771     $ 99,543     $ 80,576     $ 99,543  
                           
Asset Quality Ratios:                          
NPAs to total assets   0.40 %     0.46 %     0.51 %     0.77 %     0.85 %     0.40 %     0.85 %
NPLs to total LHI, excluding MW and PPP loans   0.55       0.66       0.74       1.12       1.23       0.55       1.23  
ACL to total LHI, excluding MW and PPP loans   1.02       1.02       1.15       1.42       1.59       1.02       1.59  
Net charge-offs to average loans outstanding   0.01       0.07       0.19       0.09       0.09       0.08       0.09  

1 Accruing loans greater than 90 days past due exclude purchase credit deteriorated loans greater than 90 days past due that are accounted for on a pooled basis.


VERITEX HOLDINGS, INC. AND SUBSIDIARIES
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
    Jun 30, 2022   Mar 31, 2022   Dec 31, 2021   Sep 30, 2021   Jun 30, 2021
    (Dollars in thousands, except per share data)
Tangible Common Equity                    
Total stockholders' equity   $ 1,429,442     $ 1,447,996     $ 1,315,079     $ 1,284,160     $ 1,272,907  
Adjustments:                    
Goodwill     (404,452 )     (404,452 )     (403,771 )     (370,840 )     (370,840 )
Core deposit intangibles     (43,122 )     (45,560 )     (47,998 )     (50,436 )     (52,873 )
Tangible common equity   $ 981,868     $ 997,984     $ 863,310     $ 862,884     $ 849,194  
Common shares outstanding     53,951       53,907       49,372       49,229       49,498  
                     
Book value per common share   $ 26.50     $ 26.86     $ 26.64     $ 26.09     $ 25.72  
Tangible book value per common share   $ 18.20     $ 18.51     $ 17.49     $ 17.53     $ 17.16  


VERITEX HOLDINGS, INC. AND SUBSIDIARIES
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
    Jun 30, 2022   Mar 31, 2022   Dec 31, 2021   Sep 30, 2021   Jun 30, 2021
    (Dollars in thousands)
Tangible Common Equity                    
Total stockholders' equity   $ 1,429,442     $ 1,447,996     $ 1,315,079     $ 1,284,160     $ 1,272,907  
Adjustments:                    
Goodwill     (404,452 )     (404,452 )     (403,771 )     (370,840 )     (370,840 )
Core deposit intangibles     (43,122 )     (45,560 )     (47,998 )     (50,436 )     (52,873 )
Tangible common equity   $ 981,868     $ 997,984     $ 863,310     $ 862,884     $ 849,194  
Tangible Assets                    
Total assets   $ 11,304,811     $ 10,453,680     $ 9,757,249     $ 9,572,300     $ 9,349,525  
Adjustments:                    
Goodwill     (404,452 )     (404,452 )     (403,771 )     (370,840 )     (370,840 )
Core deposit intangibles     (43,122 )     (45,560 )     (47,998 )     (50,436 )     (52,873 )
Tangible Assets   $ 10,857,237     $ 10,003,668     $ 9,305,480     $ 9,151,024     $ 8,925,812  
Tangible Common Equity to Tangible Assets     9.04 %     9.98 %     9.28 %     9.43 %     9.51 %


VERITEX HOLDINGS, INC. AND SUBSIDIARIES
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) net income available for common stockholders adjusted for amortization of core deposit intangibles (which we refer to as “return”) 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 Quarter Ended   For the Six Months Ended
    June 30,
2022
  Mar 31,
2022
  Dec 31,
2021
  Sep 30,
2021
  Jun 30,
2021
  June 30,
2022
  June 30,
2021
    (Dollars in thousands)        
Net income available for common stockholders adjusted for amortization of core deposit intangibles                            
Net income   $ 29,626     $ 33,470     $ 41,506     $ 36,835     $ 29,456     $ 63,096     $ 61,243  
Adjustments:                            
Plus: Amortization of core deposit intangibles     2,438       2,438       2,438       2,438       2,438       4,876       4,885  
Less: Tax benefit at the statutory rate     512       512       512       512       512       1,024       1,026  
Net income available for common stockholders adjusted for amortization of core deposit intangibles



  $ 31,552     $ 35,396     $ 43,432     $ 38,761     $ 31,382     $ 66,948     $ 65,102  
                             
Average Tangible Common Equity                            
Total average stockholders' equity   $ 1,447,377     $ 1,357,448     $ 1,301,676     $ 1,290,528     $ 1,254,371     $ 1,402,661     $ 1,239,415  
Adjustments:                            
Average goodwill     (404,452 )     (404,014 )     (393,220 )     (370,840 )     (370,840 )     (404,234 )     (370,840 )
Average core deposit intangibles     (44,720 )     (47,158 )     (49,596 )     (52,043 )     (54,471 )     (45,932 )     (55,685 )
Average tangible common equity   $ 998,205     $ 906,276     $ 858,860     $ 867,645     $ 829,060     $ 952,495     $ 812,890  
Return on Average Tangible Common Equity (Annualized)     12.68 %     15.84 %     20.06 %     17.72 %     15.18 %     14.17 %     16.15 %


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

Operating Earnings, Pre-tax, Pre-provision Operating Earnings and performance metrics calculated using Operating Earnings and Pre-tax, Pre-provision Operating Earnings, 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, pre-tax, pre-provision operating earnings and the performance metrics calculated using these metrics, listed below, are non-GAAP measures used by management to evaluate the Company’s financial performance. We calculate (a) operating earnings as net income plus severance payments, plus loss on sale of debt securities AFS, net, less Thrive PPP loan forgiveness income, plus M&A expenses, less tax impact of adjustments, plus nonrecurring tax adjustments. We calculate (b) diluted operating earnings per share as operating earnings as described in clause (a) divided by weighted average diluted shares outstanding. We calculate (c) pre-tax, pre-provision operating earnings as operating earnings as described in clause (a) plus provision for income taxes, plus provision (benefit) for credit losses and unfunded commitments. We calculate (d) pre-tax, pre-provision operating return on average assets as pre-tax, pre-provision operating earnings as described in clause (a) divided by total average assets. We calculate (e) operating return on average assets as operating earnings as described in clause (a) divided by total average assets. We calculate (f) operating return on average tangible common equity as operating earnings as described in clause (a), adjusted for the amortization of intangibles and tax benefit at the statutory rate, divided by total average tangible common equity (average stockholders’ equity less average goodwill and average core deposit intangibles, net of accumulated amortization). We calculate (g) operating efficiency ratio as non interest expense plus adjustments to operating non interest expense divided by non interest income plus adjustments to operating non interest income, plus 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 Quarter Ended   For the Six Months Ended
    June 30,
2022
  Mar 31,
2022
  Dec 31,
2021
  Sep 30,
2021
  Jun 30,
2021
  June 30,
2022
  June 30,
2021
    (Dollars in thousands)
Operating Earnings                            
Net income   $ 29,626   $ 33,470   $ 41,506     $ 36,835   $ 29,456   $ 63,096   $ 61,243
                             
Plus: Severance payments1                       627         627
Plus: Loss on sale of debt securities AFS, net                   188            
Less: Thrive PPP loan forgiveness income2                   1,912            
Plus: M&A expenses     295     700     826               995    
Operating pre-tax income     29,921     34,170     42,332       35,111     30,083     64,091     61,870
Less: Tax impact of adjustments     66     156     (78 )     39     131     222     131
Plus: Nonrecurring tax adjustments3                               426
Operating earnings   $ 29,855   $ 34,014   $ 42,410     $ 35,072   $ 29,952   $ 63,869   $ 62,165
                             
Weighted average diluted shares outstanding     54,646     51,571     50,441       50,306     50,331     53,121     50,187
Diluted EPS   $ 0.54   $ 0.65   $ 0.82     $ 0.73   $ 0.59   $ 1.19   $ 1.22
Diluted operating EPS   $ 0.55   $ 0.66   $ 0.84     $ 0.70   $ 0.60     1.20     1.24

1 Severance payments relate to branch restructurings made during the three months ended June 30, 2021.
2 During the third quarter of 2021, Thrive’s PPP loan with another bank was 100% forgiven by the Small Business Administration. As a result of our 49% investment in Thrive, the $1.9 million represents our portion of the PPP loan forgiveness. PPP fee income is not taxable and as such has no tax impact.
3 A nonrecurring tax adjustment of $426 thousand recorded in the first quarter of 2021 was due to a true-up of a deferred tax liability.

    For the Quarter Ended   For the Six Months Ended
    June 30,
2022
  Mar 31,
2022
  Dec 31,
2021
  Sep 30,
2021
  Jun 30,
2021
  June 30,
2022
  June 30,
2021
    (Dollars in thousands)
Pre-Tax, Pre-Provision Operating Earnings                            
Net income   $ 29,626     $ 33,470     $ 41,506     $ 36,835     $ 29,456     $ 63,096     $ 61,243  
Plus: Provision for income taxes     8,079       8,102       10,697       9,195       7,837       16,181       16,830  
Plus: Provision (benefit) for credit losses and unfunded commitments     9,000       (7 )     (4,389 )     (448 )     577       8,993       7  
Plus: Severance payments                             627             627  
Plus: Loss on sale of AFS securities, net                       188                    
Less: Thrive PPP loan forgiveness income                       1,912                  
Plus: M&A expenses     295       700       826                   995        
Pre-tax, pre-provision operating earnings   $ 47,000     $ 42,265     $ 48,640     $ 43,858     $ 38,497     $ 89,265     $ 78,707  
                             
Average total assets   $ 10,711,663     $ 9,998,922     $ 9,788,671     $ 9,385,470     $ 9,321,279     $ 10,357,261     $ 9,132,347  
Pre-tax, pre-provision operating return on average assets1     1.76 %     1.71 %     1.97 %     1.85 %     1.66 %     1.74 %     1.74 %
                             
Average total assets   $ 10,711,663     $ 9,998,922     $ 9,788,671     $ 9,385,470     $ 9,321,279     $ 10,357,261     $ 9,132,347  
Return on average assets1     1.11 %     1.36 %     1.68 %     1.56 %     1.27 %     1.23 %     1.35 %
Operating return on average assets1     1.12       1.38       1.72       1.48       1.29       1.24       1.37  
                             
Operating earnings adjusted for amortization of core deposit intangibles                            
Operating earnings   $ 29,855     $ 34,014     $ 42,410     $ 35,072     $ 29,952     $ 63,869     $ 62,165  
Adjustments:                            
Plus: Amortization of core deposit intangibles     2,438       2,438       2,438       2,438       2,438       4,876       4,885  
Less: Tax benefit at the statutory rate     512       512       512       512       512       1,024       1,026  
Operating earnings adjusted for amortization of core deposit intangibles   $ 31,781     $ 35,940     $ 44,336     $ 36,998     $ 31,878     $ 67,721     $ 66,024  
                             
Average Tangible Common Equity                            
Total average stockholders' equity   $ 1,447,377     $ 1,357,448     $ 1,301,676     $ 1,290,528     $ 1,254,371     $ 1,402,661     $ 1,239,415  
Adjustments:                            
Less: Average goodwill     (404,452 )     (404,014 )     (393,220 )     (370,840 )     (370,840 )     (404,234 )     (370,840 )
Less: Average core deposit intangibles     (44,720 )     (47,158 )     (49,596 )     (52,043 )     (54,471 )     (45,932 )     (55,685 )
Average tangible common equity   $ 998,205     $ 906,276     $ 858,860     $ 867,645     $ 829,060     $ 952,495     $ 812,890  
Operating return on average tangible common equity1     12.77 %     16.08 %     20.48 %     16.92 %     15.42 %     14.34 %     16.38 %
                             
Efficiency ratio     50.76 %     52.84 %     48.53 %     47.55 %     52.42 %     51.76 %     51.01 %
Net interest income   $ 84,480     $ 73,040     $ 76,741     $ 71,276     $ 67,131     $ 157,520     $ 132,766  
Noninterest income     10,378       15,097       16,150       15,627       12,456       25,475       26,628  
Plus: Loss on sale of AFS securities, net                       188                    
Less: Thrive PPP loan forgiveness income                       1,912                    
Operating noninterest income     10,378       15,097       16,150       13,903       12,456       25,475       26,628  
Noninterest expense     48,153       46,572       45,077       41,321       41,717       94,725       81,314  
Less: Severance payments                             627             627  
Less: M&A expenses     295       700       826                   995        
Operating noninterest expense   $ 47,858     $ 45,872     $ 44,251     $ 41,321     $ 41,090     $ 93,730     $ 80,687  
Operating efficiency ratio     50.45 %     52.05 %     47.64 %     48.51 %     51.63 %     51.22 %     50.62 %

1 Annualized ratio for quarterly metrics.


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