Veritex Holdings, Inc. Reports Second Quarter Operating Results

July 25, 2023

DALLAS, July 25, 2023 (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, 2023.

“I am incredibly pleased with our second quarter and year to date results,” said C. Malcolm Holland, III. “We increased our deposits by $200 million with only 1% in brokered, grew capital by $32 million, expanded our CET1 ratio by 44 basis points and decreased our commercial real estate exposure. We continue to see positive results in all these areas as we progress through the start of the third quarter.”

	Quarter to Date						Year to Date
*Financial Highlights*	Q2 2023			Q1 2023			Q2 2023			Q2 2022

	(Dollars in thousands, except per share data) (unaudited)
GAAP
Net income	$	33,730		$	38,411		$	72,141		$	63,096
Diluted EPS		0.62			0.70			1.32			1.19
Book value per common share		27.48			27.54			27.48			26.50
Return on average assets²		1.10	%		1.28	%		1.18	%		1.23	%
Efficiency ratio		49.94			48.42			49.17			51.76
Return on average equity²		8.96			10.55			9.74			9.07
Non-GAAP¹
Operating earnings	$	34,673		$	43,274		$	77,947		$	63,869
Diluted operating EPS		0.64			0.79			1.43			1.20
Tangible book value per common share		19.41			19.43			19.41			18.20
Pre-tax, pre-provision operating earnings		58,520			66,461			124,981			89,265
Pre-tax, pre-provision operating return on average assets²		1.90	%		2.21	%		2.05	%		1.74	%
Pre-tax, pre-provision operating return on average loans²		2.43			2.84			2.63			2.34
Operating return on average assets²		1.13			1.44			1.28			1.24
Operating efficiency ratio		48.90			45.63			47.21			51.22
Return on average tangible common equity²		13.35			15.81			14.55			14.17
Operating return on average tangible common equity²		13.70			17.72			15.66			14.34

¹Refer 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.
²Annualized ratio.

Other Second Quarter Results

Total deposits increased by $199.2 million, or 8.8% annualized;
Loan to deposit ratio has decreased 3% from March 31, 2023;
Uninsured and uncollateralized deposits decreased to 33.3% as of June 30, 2023 compared to 36.5% as of March 31, 2023;
Common Equity Tier 1 increased 44 basis points to 9.76% driven by a decrease in risk-weighted assets;
Acquisition, development, and construction (“ADC”) loans decreased 9.3% from March 31, 2023 and as a percentage of risk-based capital (“RBC”) decreased from 129.2% to 115.1%;
Total ADC/CRE loans decreased 0.2% from March 31, 2023 and as a percentage of RBC decreased from 333.7% to 327.2%;
ACL to total loans increased to 1.05%;
Non-performing assets (“NPAs”) to total assets increased to 0.55%, or 20 bps, from March 31, 2023;
Annualized net charge-offs to average loans outstanding were 48 bps for the second quarter of 2023 compared to 4 bps for the three months ended March 31, 2023; and
Declared quarterly cash dividend of $0.20 per share of outstanding common stock payable on August 25, 2023.

Results of Operations for the Three Months Ended June 30, 2023

Net Interest Income

For the three months ended June 30, 2023, net interest income before provision for credit losses was $100.8 million and net interest margin was 3.51% compared to $103.4 million and 3.69%, respectively, for the three months ended March 31, 2023. The $2.6 million decrease in net interest income before provision for credit losses was primarily due to a $7.1 million increase in interest expense on certificates and other time deposits, a $5.2 million increase in advances from the Federal Home Loan Bank (“FHLB”), a $3.1 million increase in transaction and savings deposits driven by an increase in funding costs on deposits, and an $822 thousand decrease in interest income on debt securities. The decrease was partially offset by a $12.0 million increase in interest income on loans driven by an increase in loan yields and average balances and a $2.0 million increase in interest income on deposits in financial institutions and fed funds sold during the three months ended June 30, 2023. Net interest margin decreased 18 basis points compared to the three months ended March 31, 2023, primarily due to the increase in funding costs on deposits and FHLB borrowing costs during three months ended June 30, 2023, partially offset by an increase in loan yields and average balances.

Compared to the three months ended June 30, 2022, net interest income before provision for credit losses for the three months ended June 30, 2023 increased by $16.4 million, or 19.4%. The increase was primarily due to a $81.5 million increase in interest income on loans driven by an increase in average balances and loan yields and a $6.8 million increase in deposits in financial institutions and fed funds sold, partially offset by a $28.9 million increase in transaction and savings deposits, a $26.6 million increase in certificates and other time deposits and a $16.4 million increase in advances from FHLB driven by an increase in funding costs. Net interest margin increased 9 basis points to 3.51% for the three months ended June 30, 2023 from 3.42% for the three months ended June 30, 2022. The increase was primarily due to the increase in average balances and loan yields during the three months ended June 30, 2023, partially offset by an increase in funding costs.

Noninterest Income

Noninterest income for the three months ended June 30, 2023 was $13.7 million, an increase of $161 thousand, or 1.2%, compared to the three months ended March 31, 2023. The increase was primarily due to a $2.0 million increase in equity method investment income and a loss on sales of investment securities in the first quarter of 2023 of $5.3 million. The increase was partially offset by a $5.5 million decrease in government guaranteed loan income primarily driven by a decrease in USDA loans sold.

Compared to the three months ended June 30, 2022, noninterest income for the three months ended June 30, 2023 increased by $3.3 million, or 31.9%. The increase was primarily due to a $3.4 million increase in government guaranteed loan income, primarily driven by an increase in USDA loans sold through NAC and a $1.6 million increase in other noninterest income. The increase was partially offset by a $865 thousand decrease in loan fees driven by a $562 thousand decrease in syndication fees, a $481 thousand decrease in equity method investment income, and a decrease of $360 thousand in customer swap income.

Noninterest Expense

Noninterest expense was $57.2 million for the three months ended June 30, 2023, compared to $56.6 million for the three months ended March 31, 2023, an increase of $582 thousand, or 1.0%. The increase was primarily due to a $2.5 million increase in professional and regulatory fees driven by FDIC assessment fees that increased when the Company crossed $10 billion in total assets, an increase of $848 thousand in marketing expense, and a $777 thousand increase in other noninterest expense. The increase is partially offset by a $3.2 million decrease in salaries and employee benefits.

Compared to the three months ended June 30, 2022, noninterest expense for the three months ended June 30, 2023 increased by $9.0 million, or 18.8%. The increase was primarily driven by a $4.0 million increase in professional and regulatory fees driven by FDIC assessment fees that increased when the Company crossed $10 billion in total assets, a $1.7 million increase in salaries and employee benefits, a $1.7 million increase in other noninterest expenses, a $1.3 million increase in data processing and software expenses and a $331 thousand increase in occupancy and equipment expenses.

Financial Condition

Total LHI was $9.71 billion at June 30, 2023, an increase of $16.0 million, or 0.7% annualized, compared to March 31, 2023. The increase was the result of the continued execution, and success of our loan growth strategy, including our continued investment in talent.

Total deposits were $9.23 billion at June 30, 2023, an increase of $199.2 million, or 8.8% annualized, compared to March 31, 2023. The increase was primarily the result of an increase of $98.2 million in interest-bearing deposits, an increase of $32.1 million in certificates and other time deposits, an increase of $21.7 million in non-interest bearing deposits, and an increase of $47.1 million in correspondent money market account balances. As of June 30, 2023, uninsured deposits were 33.26% of total deposits compared to 38.92% as of March 31, 2023.

Credit Quality

Nonperforming assets totaled $68.3 million, or 0.55% of total assets, at June 30, 2023, compared to $44.5 million, or 0.35% of total assets, at March 31, 2023. The Company had net charge-offs of $11.5 million for the quarter.

The Company recorded a provision for credit losses of $15.0 million for the three months ended June 30, 2023, a $9.4 million provision for credit losses for the three months ended March 31, 2023 and a $9.0 million provision for credit losses for the three months ended June 30, 2022. The recorded provision for credit losses for the three months ended June 30, 2023, compared to the three months ended March 31, 2023, was primarily attributable to an increase in general reserves as a result of changes in economic factors and loan growth. The Company recorded a benefit for unfunded commitments of $1.1 million for the three months ended June 30, 2023, a $1.5 million provision for unfunded commitments for the three months ended March 31, 2023, and no provision for unfunded commitments for the three months ended June 30, 2022. The recorded benefit for unfunded commitments for the three months ended June 30, 2023, compared to the three months ended March 31, 2023, was attributable to a decrease in unfunded commitment balances partially offset by changes in economic factors. Allowance for credit loss (“ACL”) as a percentage of LHI was 1.05%, 1.02% and 0.94% at June 30, 2023, March 31, 2023 and June 30, 2022, respectively.

Dividend Information

After the close of the market on Tuesday, July 25, 2023, 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 25, 2023 to stockholders of record as of the close of business on August 10, 2023.

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, pre-tax, pre-provision operating return on average loans, pre-tax, pre-provision operating return on average loans, 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 26, 2023, at 8:30 a.m. Central Time. Participants may pre-register for the call by visiting https://edge.media-server.com/mmc/p/xu9w726g 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/BI4c4f56cfcc834a4f9ccbaba9c815983a. 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 thereafter. 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 the expected payment of Veritex Holdings, Inc.’s (“Veritex”) quarterly cash dividend; the impact of certain changes in Veritex’s accounting policies, standards and interpretations; a continuation of recent turmoil in the banking industry, responsive measures to mitigate and manage it and related supervisory and regulatory actions and costs 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, 2022 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, 2023			Mar 31, 2023			Dec 31, 2022			Sep 30, 2022			Jun 30, 2022			Jun 30, 2023			Jun 30, 2022

	(Dollars and shares in thousands, except per share data)
Per Share Data (Common Stock):
Basic EPS	$	0.62		$	0.71		$	0.74		$	0.80		$	0.55		$	1.33		$	1.21
Diluted EPS		0.62			0.70			0.73			0.79			0.54			1.32			1.19
Book value per common share		27.48			27.54			26.83			26.15			26.50			27.48			26.50
Tangible book value per common share¹		19.41			19.43			18.64			17.91			18.20			19.41			18.20
Dividends paid per common share outstanding²		0.20			0.20			0.20			0.20			0.20			0.40			0.40

Common Stock Data:
Shares outstanding at period end		54,261			54,229			54,030			53,988			53,951			54,261			53,951
Weighted average basic shares outstanding for the period		54,247			54,149			54,011			53,979			53,949			54,199			52,331
Weighted average diluted shares outstanding for the period		54,486			54,606			54,780			54,633			54,646			54,546			53,121

Summary of Credit Ratios:
ACL to total LHI		1.05	%		1.02	%		0.96	%		0.94	%		0.94	%		1.05	%		0.94	%
NPAs to total assets		0.55			0.35			0.36			0.26			0.40			0.55			0.40
NPAs, excluding nonaccrual purchase credit deteriorated (“PCD”) loans, to total assets³		0.44			0.25			0.25			0.26			0.40			0.44			0.40
Net charge-offs to average loans outstanding⁴		0.48			0.04			0.24			0.12			0.04			0.26			0.14

Summary Performance Ratios:
Return on average assets⁴		1.10	%		1.28	%		1.35	%		1.50	%		1.11	%		1.18	%		1.23	%
Return on average equity⁴		8.96			10.55			11.03			11.82			8.21			9.74			9.07
Return on average tangible common equity^{1, 4}		13.35			15.81			16.75			17.82			12.68			14.55			14.17
Efficiency ratio		49.94			48.42			47.63			44.71			50.76			49.17			51.76
Net interest margin		3.51			3.69			3.87			3.77			3.42			3.60			3.32

Selected Performance Metrics - Operating:
Diluted operating EPS¹	$	0.64		$	0.79		$	0.74		$	0.80		$	0.55		$	1.43		$	1.20
Pre-tax, pre-provision operating return on average assets^{1, 4}		1.90	%		2.21	%		2.15	%		2.20	%		1.76	%		2.05	%		1.74	%
Pre-tax, pre-provision operating return on average loans^{1, 4}		2.43			2.84			2.78			2.88			2.35			2.63			2.34
Operating return on average assets^1,4		1.13			1.44			1.36			1.51			1.12			1.28			1.24
Operating return on average tangible common equity^1,4		13.70			17.72			16.95			17.94			12.77			15.66			14.34
Operating efficiency ratio¹		48.90			45.63			47.11			44.37			50.45			47.21			51.22

Veritex Holdings, Inc. Capital Ratios:
Average stockholders' equity to average total assets		12.23	%		12.09	%		12.20	%		12.69	%		13.51	%		12.16	%		13.54	%
Tangible common equity to tangible assets¹		8.76			8.66			8.60			8.58			9.04			8.76			9.04
Tier 1 capital to average assets (leverage)		9.80			9.67			9.82			9.79			10.14			9.80			10.14
Common equity tier 1 capital		9.76			9.32			9.09			9.09			9.25			9.76			9.25
Tier 1 capital to risk-weighted assets		10.01			9.56			9.34			9.35			9.52			10.01			9.52
Total capital to risk-weighted assets		12.51			11.99			11.63			11.68			11.95			12.51			11.95

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.
³Nonaccrual PCD loans consist of PCD loans that transitioned upon adoption of ASC 326 Financial Instruments - Credit Losses and were accounted for on a pooled basis that have subsequently been placed on nonaccrual status.
⁴Annualized ratio for quarterly metrics.

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

	Jun 30, 2023			Mar 31, 2023			Dec 31, 2022			Sep 30, 2022			Jun 30, 2022
	(unaudited)			(unaudited)						(unaudited)			(unaudited)
ASSETS
Cash and cash equivalents	$	663,921		$	808,395		$	436,077		$	433,897		$	410,716
Debt securities, net		1,144,020			1,150,959			1,282,460			1,303,004			1,354,403
Other investments		138,894			137,621			122,450			115,551			202,685

Loans held for sale		29,876			42,816			20,641			17,644			14,210
LHI, MW		436,255			437,501			446,227			523,805			629,291
LHI, excluding MW		9,257,183			9,237,159			9,036,424			8,513,254			7,923,131
Total loans		9,723,314			9,717,476			9,503,292			9,054,703			8,566,632
ACL, loans		(102,150	)		(98,694	)		(91,052	)		(85,037	)		(80,576	)
Bank-owned life insurance		84,375			84,962			84,496			84,030			84,097
Bank premises, furniture and equipment, net		105,986			107,540			108,824			108,720			108,769
Other real estate owned (“OREO”)		—			—			—			—			1,032
Intangible assets, net of accumulated amortization		48,293			51,086			53,213			56,238			59,011
Goodwill		404,452			404,452			404,452			404,452			404,452
Other assets		259,263			245,690			250,149			238,896			193,590
Total assets	$	12,470,368		$	12,609,487		$	12,154,361		$	11,714,454		$	11,304,811
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Noninterest-bearing deposits	$	2,234,109		$	2,212,389		$	2,640,617		$	2,811,412		$	2,947,830
Interest-bearing transaction and savings deposits		3,590,253			3,492,011			3,514,729			3,437,898			3,233,803
Certificates and other time deposits		2,928,949			2,896,870			2,086,642			1,667,364			1,562,626
Correspondent money market deposits		480,598			433,468			881,246			831,770			773,447
Total deposits		9,233,909			9,034,738			9,123,234			8,748,444			8,517,706
Accounts payable and other liabilities		190,900			171,985			177,579			173,198			126,116
Advances from FHLB		1,325,000			1,680,000			1,175,000			1,150,000			1,000,000
Subordinated debentures and subordinated notes		229,279			229,027			228,775			228,524			228,272
Securities sold under agreements to repurchase		—			—			—			2,389			3,275
Total liabilities		10,979,088			11,115,750			10,704,588			10,302,555			9,875,369
Commitments and contingencies
Stockholders’ equity:
Common stock		609			609			607			606			606
Additional paid-in capital		1,311,687			1,308,345			1,306,852			1,303,171			1,300,170
Retained earnings		429,753			406,873			379,299			350,195			317,664
Accumulated other comprehensive loss		(83,187	)		(54,508	)		(69,403	)		(74,491	)		(21,416	)
Treasury stock		(167,582	)		(167,582	)		(167,582	)		(167,582	)		(167,582	)
Total stockholders’ equity		1,491,280			1,493,737			1,449,773			1,411,899			1,429,442
Total liabilities and stockholders’ equity	$	12,470,368		$	12,609,487		$	12,154,361		$	11,714,454		$	11,304,811

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

	For the Quarter Ended															For the Six Months Ended
	Jun 30, 2023			Mar 31, 2023			Dec 31, 2022			Sep 30, 2022			Jun 30, 2022			Jun 30, 2023			Jun 30, 2022
	(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)
Interest income:
Loans, including fees	$	163,727		$	151,707		$	136,846		$	109,199		$	82,191		$	315,434		$	153,634
Debt securities		10,166			10,988			10,880			10,462			9,632			21,154			17,394
Deposits in financial institutions and Fed Funds sold		7,507			5,534			3,401			1,898			714			13,041			976
Equity securities and other investments		1,118			1,408			1,087			1,666			1,057			2,526			1,967
Total interest income		182,518			169,637			152,214			123,225			93,594			352,155			173,971
Interest expense:
Transaction and savings deposits		32,957			29,857			24,043			12,897			4,094			62,814			5,845
Certificates and other time deposits		28,100			20,967			8,543			3,919			1,465			49,067			2,845
Advances from FHLB		17,562			12,358			10,577			2,543			834			29,920			2,381
Subordinated debentures and subordinated notes		3,068			3,066			2,954			2,826			2,721			6,134			5,380
Total interest expense		81,687			66,248			46,117			22,185			9,114			147,935			16,451
Net interest income		100,831			103,389			106,097			101,040			84,480			204,220			157,520
Provision for credit losses¹		15,000			9,385			11,800			6,650			9,000			24,385			8,500
(Benefit) provision for unfunded commitments		(1,129	)		1,497			(523	)		850			—			368			493
Net interest income after provisions		86,960			92,507			94,820			93,540			75,480			179,467			148,527
Noninterest income:
Service charges and fees on deposit accounts		5,272			5,017			5,173			5,217			5,039			10,289			9,749
Loan fees		1,520			2,064			2,477			2,786			2,385			3,584			5,179
Loss on sales of investment securities		—			(5,321	)		—			—			—			(5,321	)		—
Gain on sales of mortgage loans held for sale		40			6			4			16			223			46			530
Government guaranteed loan income, net		4,144			9,688			7,808			572			789			13,832			5,680
Equity method investment income (loss)		485			(1,521	)		(5,416	)		(1,058	)		966			(1,036	)		1,333
Customer swap income		961			217			2,273			3,358			1,321			1,178			2,267
Other income (loss)		1,270			3,381			2,007			2,130			(345	)		4,651			737
Total noninterest income		13,692			13,531			14,326			13,021			10,378			27,223			25,475
Noninterest expense:
Salaries and employee benefits		28,650			31,865			33,690			29,714			26,924			60,515			54,437
Occupancy and equipment		4,827			4,973			5,116			4,615			4,496			9,800			9,013
Professional and regulatory fees		6,868			4,389			4,401			3,718			2,865			11,257			6,023
Data processing and software expense		4,709			4,720			4,197			3,509			3,386			9,429			6,307
Marketing		2,627			1,779			1,841			1,845			2,306			4,406			3,493
Amortization of intangibles		2,468			2,495			2,495			2,494			2,495			4,963			4,990
Telephone and communications		355			478			358			389			352			833			737
Merger and acquisition (“M&A”) expense		—			—			—			384			295			—			995
Other		6,693			5,916			5,261			4,323			5,034			12,609			8,730
Total noninterest expense		57,197			56,615			57,359			50,991			48,153			113,812			94,725
Income before income tax expense		43,455			49,423			51,787			55,570			37,705			92,878			79,277
Income tax expense		9,725			11,012			11,890			12,248			8,079			20,737			16,181
Net income	$	33,730		$	38,411		$	39,897		$	43,322		$	29,626		$	72,141		$	63,096
Net income available to common stockholders	$	33,730		$	38,411		$	39,897		$	43,322		$	29,626		$	72,141		$	63,096

Basic EPS	$	0.62		$	0.71		$	0.74		$	0.80		$	0.55		$	1.33		$	1.21
Diluted EPS	$	0.62		$	0.70		$	0.73		$	0.79		$	0.54		$	1.32		$	1.19
Weighted average basic shares outstanding		54,247			54,149			54,011			53,979			53,949			54,199			52,331
Weighted average diluted shares outstanding		54,486			54,606			54,780			54,633			54,646			54,546			53,121

¹ Includes provision for credit losses on loans of $23.5 million and available for sale (“AFS”) securities of $885 thousand for the six months ended June 30, 2023.

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

	For the Quarter Ended
	June 30, 2023							March 31, 2023							June 30, 2022
	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, except percentages)
Assets
Interest-earning assets:
Loans¹	$	9,285,550		$	158,685	6.85	%	$	9,141,137		$	146,801	6.51	%	$	7,558,966		$	78,262	4.15	%
LHI, MW		371,763			5,042	5.44			360,172			4,906	5.52			479,187			3,929	3.29
Debt securities		1,133,845			10,166	3.60			1,252,457			10,988	3.56			1,318,502			9,632	2.93
Interest-bearing deposits in other banks		583,818			7,507	5.16			478,345			5,534	4.69			369,847			714	0.77
Equity securities and other investments		137,868			1,118	3.25			124,985			1,408	4.57			167,327			1,057	2.53
Total interest-earning assets		11,512,844			182,518	6.36			11,357,096			169,637	6.06			9,893,829			93,594	3.79
ACL, loans		(102,559	)						(92,664	)						(74,268	)
Noninterest-earning assets		939,938							949,881							892,102
Total assets	$	12,350,223						$	12,214,313						$	10,711,663

Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Interest-bearing demand and savings deposits	$	3,919,745		$	32,957	3.37	%	$	4,150,995		$	29,857	2.92	%	$	3,770,098		$	4,094	0.44	%
Certificates and other time deposits		2,873,548			28,100	3.92			2,588,728			20,967	3.28			1,459,690			1,465	0.40
Advances from FHLB and Other		1,472,912			17,562	4.78			1,122,683			12,358	4.46			828,769			834	0.40
Subordinated debentures and subordinated notes		229,151			3,068	5.37			231,251			3,066	5.38			232,043			2,721	4.70
Total interest-bearing liabilities		8,495,356			81,687	3.86			8,093,657			66,248	3.32			6,290,600			9,114	0.58

Noninterest-bearing liabilities:
Noninterest-bearing deposits		2,175,002							2,470,700							2,870,692
Other liabilities		169,240							173,380							102,994
Total liabilities		10,839,598							10,737,737							9,264,286
Stockholders’ equity		1,510,625							1,476,576							1,447,377
Total liabilities and stockholders’ equity	$	12,350,223						$	12,214,313						$	10,711,663

Net interest rate spread²						2.50	%						2.74	%						3.21	%
Net interest income and margin³				$	100,831	3.51	%				$	103,389	3.69	%				$	84,480	3.42	%

¹ Includes average outstanding balances of loans held for sale of $23,374, $19,679 and $12,112 for the quarters ended June 30, 2023, March 31, 2023, and June 30, 2022, respectively, and average balances of LHI, excluding MW.
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, 2023							June 30, 2022
	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	$	9,213,742		$	305,486	6.69	%	$	7,233,431		$	146,636	4.09	%
LHI, WH		366,000			9,948	5.48			450,592			6,998	3.13
Debt securities		1,192,823			21,154	3.58			1,230,159			17,394	2.85
Interest-bearing deposits in other banks		531,373			13,041	4.95			461,844			976	0.43
Equity securities and other investments		131,462			2,526	3.87			178,602			1,967	2.22
Total interest-earning assets		11,435,400			352,155	6.21			9,554,628			173,971	3.67
ACL		(97,639	)						(76,046	)
Noninterest-earning assets		944,883							878,679
Total assets	$	12,282,644						$	10,357,261

Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Interest-bearing demand and savings deposits	$	4,033,975		$	62,814	3.14	%	$	3,621,697		$	5,845	0.33	%
Certificates and other time deposits		2,731,925			49,067	3.62			1,480,654			2,845	0.39
Advances from FHLB and Other		1,298,765			29,920	4.65			803,295			2,381	0.60
Subordinated debentures and subordinated notes		230,195			6,134	5.37			231,959			5,380	4.68
Total interest-bearing liabilities		8,294,860			147,935	3.60			6,137,605			16,451	0.54

Noninterest-bearing liabilities:
Noninterest-bearing deposits		2,322,790							2,731,869
Other liabilities		171,299							85,126
Total liabilities		10,788,949							8,954,600
Stockholders’ equity		1,493,695							1,402,661
Total liabilities and stockholders’ equity	$	12,282,644						$	10,357,261

Net interest rate spread²						2.61	%						3.13	%
Net interest income and margin³				$	204,220	3.60	%				$	157,520	3.32	%

¹ Includes average outstanding balances of loans held for sale of $21,537 and $12,440 for the six months ended June 30, 2023 and 2022, respectively, and average balances of LHI, excluding MW.
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 (Unaudited)
Yield Trend
	For the Quarter Ended
	Jun 30, 2023		Mar 31, 2023		Dec 31, 2022		Sep 30, 2022		Jun 30, 2022
Average yield on interest-earning assets:
Loans¹	6.85	%	6.51	%	5.98	%	5.01	%	4.15	%
LHI, MW	5.44		5.52		5.20		4.11		3.29
Debt securities	3.60		3.56		3.36		3.05		2.93
Interest-bearing deposits in other banks	5.16		4.69		3.81		2.17		0.77
Equity securities and other investments	3.25		4.57		3.62		3.25		2.53
Total interest-earning assets	6.36	%	6.06	%	5.55	%	4.59	%	3.79	%

Average rate on interest-bearing liabilities:
Interest-bearing demand and savings deposits	3.37	%	2.92	%	2.21	%	1.23	%	0.44	%
Certificates and other time deposits	3.92		3.28		1.90		0.94		0.40
Advances from FHLB	4.78		4.46		3.91		1.12		0.40
Subordinated debentures and subordinated notes	5.37		5.38		5.12		4.85		4.70
Total interest-bearing liabilities	3.86	%	3.32	%	2.47	%	1.27	%	0.58	%

Net interest rate spread²	2.50	%	2.74	%	3.08	%	3.32	%	3.21	%
Net interest margin³	3.51	%	3.69	%	3.87	%	3.77	%	3.42	%

¹Includes average outstanding balances of loans held for sale of $23,374, $19,679, $15,296, $14,023 and $12,112 for the three months ended June 30, 2023, March 31, 2023, December 31, 2022, September 30, 2022 and June 30, 2022, respectively, and average balances of LHI, excluding MW.
²Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
³Net interest margin is equal to net interest income divided by average interest-earning assets.

Supplemental Yield Trend

	For the Quarter Ended
	Jun 30, 2023		Mar 31, 2023		Dec 31, 2022		Sep 30, 2022		Jun 30, 2022
Average cost of interest-bearing deposits	3.61	%	3.06	%	2.12	%	1.15	%	0.43	%
Average costs of total deposits, including noninterest-bearing	2.73		2.24		1.46		0.76		0.28

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

LHI and Deposit Portfolio Composition

	Jun 30, 2023					Mar 31, 2023					Dec 31, 2022					Sep 30, 2022					Jun 30, 2022

	(In thousands, except percentages)
LHI¹
Commercial and Industrial (“C&I”)	$	2,850,084		30.7	%	$	2,895,957		31.3	%	$	2,942,348		32.4	%	$	2,743,769		32.2	%	$	2,457,742		31.0	%
Real Estate:
Owner occupied commercial (“OOCRE”)		671,602		7.2			631,563		6.8			715,829		7.9			677,705		7.9			646,723		8.1
Non-owner occupied commercial (“NOOCRE”)		2,509,731		27.1			2,505,344		27.1			2,341,379		25.9			2,273,305		26.6			2,203,970		27.8
Construction and land		1,659,700		17.9			1,831,349		19.8			1,787,400		19.7			1,673,997		19.6			1,532,997		19.3
Farmland		51,663		0.6			51,680		0.6			43,500		0.5			43,569		0.5			47,319		0.6
1-4 family residential		923,442		10.0			896,252		9.7			894,456		9.9			858,693		10.1			765,260		9.6
Multi-family residential		592,473		6.4			432,209		4.6			322,679		3.6			252,244		3.0			276,632		3.5
Consumer		11,189		0.1			8,316		0.1			7,806		0.1			7,465		0.1			7,520		0.1
Total LHI	$	9,269,884		100	%	$	9,252,670		100	%	$	9,055,397		100	%	$	8,530,747		100	%	$	7,938,163		100	%

MW		436,255					437,501					446,227					523,805					629,291

Total LHI¹	$	9,706,139				$	9,690,171				$	9,501,624				$	9,054,552				$	8,567,454

Deposits
Noninterest-bearing	$	2,234,109		24.2	%	$	2,212,389		24.5	%	$	2,640,617		28.9	%	$	2,811,412		32.1	%	$	2,947,830		34.6	%
Interest-bearing transaction		676,653		7.3			866,609		9.6			622,814		6.8			603,729		6.9			660,557		7.8
Money market		2,816,769		30.5			2,518,922		27.9			2,773,622		30.4			2,701,762		30.9			2,443,748		28.7
Savings		96,831		1.0			106,480		1.2			118,293		1.3			132,407		1.5			129,498		1.5
Certificates and other time deposits		2,928,949		31.7			2,896,870		32.0			2,086,642		22.9			1,667,364		19.1			1,562,626		18.3
Correspondent money market accounts		480,598		5.2			433,468		4.8			881,246		9.7			831,770		9.5			773,447		9.1
Total deposits	$	9,233,909		100	%	$	9,034,738		100	%	$	9,123,234		100	%	$	8,748,444		100	%	$	8,517,706		100	%

Loan to Deposit Ratio		105.1	%				107.3	%				104.1	%				103.5	%				100.6	%

Loan to Deposit Ratio, excluding MW		100.4	%				102.4	%				99.3	%				97.5	%				93.2	%

¹ Total LHI does not include deferred fees of $12.7 million, $15.5 million, $19.0 million, $17.5 million and $15.0 million at June 30, 2023, March 31, 2023, December 31, 2022, September 30, 2022 and June 30, 2022, respectively.

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

	For the Quarter Ended															Six Months Ended
	Jun 30, 2023			Mar 31, 2023			Dec 31, 2022			Sep 30, 2022			Jun 30, 2022			June 30, 2023			Jun 30, 2022

	(In thousands, except percentages)
NPAs:
Nonaccrual loans	$	54,055		$	31,452		$	30,364		$	30,592		$	42,242		$	54,055		$	42,242
Nonaccrual PCD loans¹		13,721			12,784			13,178			—			—			13,721			—
Accruing loans 90 or more days past due²		528			296			125			—			1,753			528			1,753
Total nonperforming loans held for investment (“NPLs”)		68,304			44,532			43,667			30,592			43,995			68,304			43,995
OREO		—			—			—			—			1,032			—			1,032
Total NPAs	$	68,304		$	44,532		$	43,667		$	30,592		$	45,027		$	68,304		$	45,027

Charge-offs:
OOCRE	$	—		$	(116	)	$	—		$	(1,061	)	$	(244	)	$	(116	)	$	(1,585	)
NOOCRE		(8,215	)		—			(1,019	)		(838	)		—			(8,215	)		(553	)
C&I		(3,540	)		(1,051	)		(5,449	)		(460	)		(528	)		(4,591	)		(3,822	)
Consumer		(92	)		(62	)		(41	)		(19	)		(1,091	)		(154	)		(1,225	)
Total charge-offs		(11,847	)		(1,229	)		(6,509	)		(2,378	)		(1,863	)		(13,076	)		(7,185	)

Recoveries:
1-4 family residential		1			1			24			4			3			2			3
OOCRE		—			—			26			—			245			—			245
NOOCRE		150			—			229			3			93			150			493
C&I		106			364			415			177			572			470			716
Consumer		46			6			30			5			41			52			50
Total recoveries		303			371			724			189			954			674			1,507

Net charge-offs	$	(11,544	)	$	(858	)	$	(5,785	)	$	(2,189	)	$	(909	)	$	(12,402	)	$	(5,678	)


ACL	$	102,150		$	98,694		$	91,052		$	85,037		$	80,576		$	102,150		$	80,576

Asset Quality Ratios:
NPAs to total assets		0.55	%		0.35	%		0.36	%		0.26	%		0.40	%		0.55	%		0.40	%
NPAs, excluding nonaccrual PCD loans, to total assets		0.44			0.25			0.25			0.26			0.40			0.44			0.40
NPLs to total LHI		0.71			0.47			0.48			0.35			0.55			0.71			0.55
NPLs, excluding nonaccrual PCD loans, to total LHI		0.56			0.33			0.32			0.34			0.51			0.56			0.51
ACL to total LHI		1.05			1.02			0.96			0.94			0.94			1.05			0.94
Net charge-offs to average loans outstanding³		0.48			0.04			0.24			0.12			0.04			0.26			0.14

¹Nonaccrual PCD loans consist of PCD loans that transitioned upon adoption of ASC 326 Financial Instruments - Credit Losses and were accounted for on a pooled basis that have subsequently been placed on nonaccrual status.
²Accruing 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.
³Annualized ratio for quarterly metrics.

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, 2023			Mar 31, 2023			Dec 31, 2022			Sep 30, 2022			Jun 30, 2022

	(Dollars in thousands, except per share data)
Tangible Common Equity
Total stockholders' equity	$	1,491,280		$	1,493,737		$	1,449,773		$	1,411,899		$	1,429,442
Adjustments:
Goodwill		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,452	)
Core deposit intangibles		(33,371	)		(35,808	)		(38,247	)		(40,684	)		(43,122	)
Tangible common equity	$	1,053,457		$	1,053,477		$	1,007,074		$	966,763		$	981,868
Common shares outstanding		54,261			54,229			54,030			53,988			53,951

Book value per common share	$	27.48		$	27.54		$	26.83		$	26.15		$	26.50
Tangible book value per common share	$	19.41		$	19.43		$	18.64		$	17.91		$	18.20

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, 2023			Mar 31, 2023			Dec 31, 2022			Sep 30, 2022			Jun 30, 2022

	(Dollars in thousands)
Tangible Common Equity
Total stockholders' equity	$	1,491,280		$	1,493,737		$	1,449,773		$	1,411,899		$	1,429,442
Adjustments:
Goodwill		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,452	)
Core deposit intangibles		(33,371	)		(35,808	)		(38,247	)		(40,684	)		(43,122	)
Tangible common equity	$	1,053,457		$	1,053,477		$	1,007,074		$	966,763		$	981,868
Tangible Assets
Total assets	$	12,470,368		$	12,609,487		$	12,154,361		$	11,714,454		$	11,304,811
Adjustments:
Goodwill		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,452	)
Core deposit intangibles		(33,371	)		(35,808	)		(38,247	)		(40,684	)		(43,122	)
Tangible Assets	$	12,032,545		$	12,169,227		$	11,711,662		$	11,269,318		$	10,857,237
Tangible Common Equity to Tangible Assets		8.76	%		8.66	%		8.60	%		8.58	%		9.04	%

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															Six Months Ended
	Jun 30, 2023			Mar 31, 2023			Dec 31, 2022			Sep 30, 2022			Jun 30, 2022			June 30, 2023			Jun 30, 2022

	(Dollars in thousands)
Net income available for common stockholders adjusted for amortization of core deposit intangibles
Net income	$	33,730		$	38,411		$	39,897		$	43,322		$	29,626		$	72,141		$	63,096
Adjustments:
Plus: Amortization of core deposit intangibles		2,438			2,438			2,438			2,438			2,438			4,876			4,876
Less: Tax benefit at the statutory rate		512			512			512			512			512			1,024			1,024
Net income available for common stockholders adjusted for amortization of core deposit intangibles	$	35,656		$	40,337		$	41,823		$	45,248		$	31,552		$	75,993		$	66,948

Average Tangible Common Equity
Total average stockholders' equity	$	1,510,625		$	1,476,576		$	1,434,818		$	1,453,816		$	1,447,377		$	1,493,695		$	1,402,661
Adjustments:
Average goodwill		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,234	)
Average core deposit intangibles		(34,969	)		(37,361	)		(39,792	)		(42,230	)		(44,720	)		(36,159	)		(45,932	)
Average tangible common equity	$	1,071,204		$	1,034,763		$	990,574		$	1,007,134		$	998,205		$	1,053,084		$	952,495
Return on Average Tangible Common Equity (Annualized)		13.35	%		15.81	%		16.75	%		17.82	%		12.68	%		14.55	%		14.17	%

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, Pre-tax, Pre-Provision Operating Return on Average Loans, 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 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 noninterest expense plus adjustments to operating noninterest expense divided by noninterest income plus adjustments to operating noninterest 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										Six Months Ended
	Jun 30, 2023		Mar 31, 2023		Dec 31, 2022		Sep 30, 2022		Jun 30, 2022		June 30, 2023		Jun 30, 2022

	(Dollars in thousands, except per share data)
Operating Earnings
Net income	$	33,730	$	38,411	$	39,897	$	43,322	$	29,626	$	72,141	$	63,096

Plus: Severance payments¹		1,194		835		630		—		—		2,029		—
Plus: Loss on sale of debt securities AFS, net		—		5,321		—		—		—		5,321		—
Plus: M&A expenses		—		—		—		384		295		—		995
Operating pre-tax income		34,924		44,567		40,527		43,706		29,921		79,491		64,091
Less: Tax impact of adjustments		251		1,293		132		81		66		1,544		222
Operating earnings	$	34,673	$	43,274	$	40,395	$	43,625	$	29,855	$	77,947	$	63,869

Weighted average diluted shares outstanding		54,486		54,606		54,780		54,633		54,646		54,546		53,121
Diluted EPS	$	0.62	$	0.70	$	0.73	$	0.79	$	0.54	$	1.32	$	1.19
Diluted operating EPS	$	0.64	$	0.79	$	0.74	$	0.80	$	0.55	$	1.43	$	1.20

¹ Severance payments relate to certain restructurings made during the periods disclosed.

	For the Quarter Ended															Six Months Ended
	Jun 30, 2023			Mar 31, 2023			Dec 31, 2022			Sep 30, 2022			Jun 30, 2022			June 30, 2023			Jun 30, 2022

	(Dollars in thousands)
Pre-Tax, Pre-Provision Operating Earnings
Net income	$	33,730		$	38,411		$	39,897		$	43,322		$	29,626		$	72,141		$	63,096
Plus: Provision for income taxes		9,725			11,012			11,890			12,248			8,079			20,737			16,181
Plus: Provision for credit losses and unfunded commitments		13,871			10,882			11,277			7,500			9,000			24,753			8,993
Plus: Severance payments		1,194			835			630			—			—			2,029			—
Plus: Loss on sale of debt securities AFS, net		—			5,321			—			—			—			5,321			—
Plus: M&A expenses		—			—			—			384			295			—			995
Pre-tax, pre-provision operating earnings	$	58,520		$	66,461		$	63,694		$	63,454		$	47,000		$	124,981		$	89,265

Average total assets	$	12,350,223		$	12,214,313		$	11,761,044		$	11,460,857		$	10,711,663		$	12,282,644		$	10,357,261
Pre-tax, pre-provision operating return on average assets¹		1.90	%		2.21	%		2.15	%		2.20	%		1.76	%		2.05	%		1.74	%

Average loans	$	9,657,313		$	9,501,309		$	9,103,552		$	8,729,093		$	8,038,153		$	9,579,742		$	7,684,023
Pre-tax, pre-provision operating return on average loans¹		2.43	%		2.84	%		2.78	%		2.88	%		2.35	%		2.63	%		2.34	%

Average total assets	$	12,350,223		$	12,214,313		$	11,761,044		$	11,460,857		$	10,711,663		$	12,282,644		$	10,357,261
Return on average assets¹		1.10	%		1.28	%		1.35	%		1.50	%		1.11	%		1.18	%		1.23	%
Operating return on average assets¹		1.13			1.44			1.36			1.51			1.12			1.28			1.24

Operating earnings adjusted for amortization of core deposit intangibles
Operating earnings	$	34,673		$	43,274		$	40,395		$	43,625		$	29,855		$	77,947		$	63,869
Adjustments:
Plus: Amortization of core deposit intangibles		2,438			2,438			2,438			2,438			2,438			4,876			4,876
Less: Tax benefit at the statutory rate		512			512			512			512			512			1,024			1,024
Operating earnings adjusted for amortization of core deposit intangibles	$	36,599		$	45,200		$	42,321		$	45,551		$	31,781		$	81,799		$	67,721

Average Tangible Common Equity
Total average stockholders' equity	$	1,510,625		$	1,476,576		$	1,434,818		$	1,453,816		$	1,447,377		$	1,493,695		$	1,402,661
Adjustments:
Less: Average goodwill		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,234	)
Less: Average core deposit intangibles		(34,969	)		(37,361	)		(39,792	)		(42,230	)		(44,720	)		(36,159	)		(45,932	)
Average tangible common equity	$	1,071,204		$	1,034,763		$	990,574		$	1,007,134		$	998,205		$	1,053,084		$	952,495
Operating return on average tangible common equity¹		13.70	%		17.72	%		16.95	%		17.94	%		12.77	%		15.66	%		14.34	%

Efficiency ratio		49.94	%		48.42	%		47.63	%		44.71	%		50.76	%		49.17	%		51.76	%
Net interest income	$	100,831		$	103,389		$	106,097		$	101,040		$	84,480		$	204,220		$	157,520
Noninterest income		13,692			13,531			14,326			13,021			10,378			27,223			25,475
Plus: Loss on sale of AFS securities, net		—			5,321			—			—			—			5,321			—
Operating noninterest income		13,692			18,852			14,326			13,021			10,378			32,544			25,475
Noninterest expense		57,197			56,615			57,359			50,991			48,153			113,812			94,725
Less: Severance payments		1,194			835			630			—			—			2,029			—
Less: M&A expenses		—			—			—			384			295			—			995
Operating noninterest expense	$	56,003		$	55,780		$	56,729		$	50,607		$	47,858		$	111,783		$	93,730
Operating efficiency ratio		48.90	%		45.63	%		47.11	%		44.37	%		50.45	%		47.21	%		51.22	%

¹Annualized ratio for quarterly metrics.

Media and Investor Relations:
investorrelations@veritexbank.com

Source: Veritex Holdings, Inc.

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Veritex Holdings, Inc. Reports Second Quarter Operating Results