Veritex Holdings, Inc. Reports Third Quarter Operating Results
Third Quarter 2019 Highlights:
• Diluted EPS was
• Book value per common share was
• Return on average assets was 1.36%, operating return on average assets1 was 1.42% and pre-tax, pre-provision operating return on average assets1 was 2.26% for the third quarter of 2019;
• Efficiency ratio was 43.67% and operating efficiency ratio1 was 42.36% for the third quarter of 2019, reflecting three consecutive quarters of operating efficiency ratio1 below 44%;
• Increased and extended previously announced stock buyback program. In the third quarter of 2019,
• Declared quarterly cash dividend of
• Received American Banker’s “Best Banks to Work For” for the sixth consecutive year.
Summary of Financial Data
QTD | YTD | |||||||||||||||
Q3 2019 | Q2 2019 | Q3 2019 | Q3 2018 | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
GAAP | ||||||||||||||||
Net income | $ | 27,405 | $ | 26,876 | $ | 61,688 | $ | 29,516 | ||||||||
Diluted EPS | 0.51 | 0.49 | 1.13 | 1.20 | ||||||||||||
Return on average assets2 | 1.36 | % | 1.36 | % | 1.04 | % | 1.28 | % | ||||||||
Efficiency ratio | 43.67 | 51.49 | 59.42 | 55.15 | ||||||||||||
Book value per common share | $ | 23.02 | $ | 22.55 | $ | 23.02 | $ | 21.38 | ||||||||
Non-GAAP1 | ||||||||||||||||
Operating net income | $ | 28,629 | $ | 32,234 | $ | 93,542 | $ | 33,794 | ||||||||
Diluted operating EPS | 0.53 | 0.59 | 1.71 | 1.37 | ||||||||||||
Pre-tax, pre-provision operating return on average assets | 2.26 | % | 2.22 | % | 2.30 | % | 2.05 | % | ||||||||
Operating return on average assets2 | 1.42 | 1.63 | 1.58 | 1.46 | ||||||||||||
Operating efficiency ratio | 42.36 | 43.66 | 43.19 | 49.45 | ||||||||||||
Return on average tangible common equity2 | 15.15 | 15.26 | 11.93 | 12.36 | ||||||||||||
Operating return on average tangible common equity2 | 15.78 | 18.09 | 17.57 | 14.09 | ||||||||||||
Tangible book value per common share | $ | 14.61 | $ | 14.27 | $ | 14.61 | $ | 14.27 |
1 Refer to the section titled “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures.
2 Annualized ratio.
Results of Operations for the Three Months Ended
Net Interest Income
For the three months ended
Net interest income before provision for loan losses increased by
Noninterest Income
Noninterest income for the three months ended
Compared to the three months ended
Noninterest Expense
Noninterest expense was
Compared to the three months ended
Financial Condition
Total loans were
Total deposits were
Asset Quality
Allowance for loan losses as a percentage of loans held for investment, including mortgage warehouse, was 0.45%, 0.42% and 0.73% of total loans at September 30, 2019, June 30, 2019 and September 30, 2018, respectively. The allowance for loan losses as a percentage of total loans for each of the three quarters was determined by evaluating the qualitative factors around the nature, volume and mix of the loan portfolio. The increase in the allowance for loan losses as a percentage of loans held for investment from June 30, 2019 was primarily attributable to the general provision required from an increase of loans acquired from Green that were re-underwritten in the third quarter of 2019. Once an acquired loan undergoes new underwriting and meets the criteria for a new loan, any remaining fair value adjustments become interest income and the loan becomes fully subject to our allowance for loan loss methodology. The decrease in the allowance for loan losses as a percentage of loans held for investment from September 30, 2018 was attributable to our acquisition of Green, as acquired loans are recorded at fair value. Our allowance for loan losses and remaining purchase discount on acquired loans as a percentage of loans held for investment, including mortgage warehouse, was 1.44%, 1.77% and 1.28% of total loans at September 30, 2019, June 30, 2019 and September 30, 2018, respectively.
We recorded a provision for loan losses for the three months ended September 30, 2019 of
Nonperforming assets totaled
Dividend Information
On October 21, 2019, Veritex’s Board of Directors declared a quarterly cash dividend of
Non-GAAP Financial Measures
Veritex’s management uses certain non-GAAP (generally accepted accounting principles) financial measures to evaluate its operating performance and provide information that is important to investors. However, non-GAAP financial measures are supplemental and should be viewed in addition to, and not as an alternative for, Veritex’s reported results prepared in accordance with GAAP. Specifically,
Business Combinations Measurement Period
The measurement period for the Company to determine the fair values of acquired identifiable assets and assumed liabilities for Green will end at the earlier of (i) twelve months from the date of the acquisition or (ii) as soon as the Company receives the information it was seeking about facts and circumstances that existed as of the acquisition date or learns that more information is not obtainable. Provisional estimates have been recorded for the Green acquisition as independent valuations have not been finalized. The Company does not expect any significant differences from estimated values upon completion of the valuations.
Conference Call
The Company will host an investor conference call to review the results on
The call and corresponding presentation slides will be webcast live on the home page of the Company's website, https://veritexholdingsinc.gcs-web.com. An audio replay will be available one hour after the conclusion of the call at (855) 859-2056, Conference #3966936. This replay, as well as the webcast, will be available until
About
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Media Contact:
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Investor Relations:
972-349-6132
Forward-Looking Statements
This earnings release contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on various facts and derived utilizing assumptions, current expectations, estimates and projections and are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements include, without limitation, statements relating to the impact
VERITEX HOLDINGS, INC. AND SUBSIDIARY
Financial Highlights
(Unaudited)
For the Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||
Sep 30, 2019 |
Jun 30, 2019 |
Mar 31, 2019 |
Dec 31, 2018 |
Sep 30, 2018 |
Sep 30, 2019 |
Sep 30, 2018 |
||||||||||||||||||||||
(Dollars and shares in thousands) | ||||||||||||||||||||||||||||
Per Share Data (Common Stock): | ||||||||||||||||||||||||||||
Basic EPS | $ | 0.52 | $ | 0.50 | $ | 0.14 | $ | 0.41 | $ | 0.37 | $ | 1.15 | $ | 1.22 | ||||||||||||||
Diluted EPS | 0.51 | 0.49 | 0.13 | 0.40 | 0.36 | 1.13 | 1.20 | |||||||||||||||||||||
Book value per common share | 23.02 | 22.55 | 21.88 | 21.88 | 21.38 | 23.02 | 21.38 | |||||||||||||||||||||
Tangible book value per common share1 | 14.61 | 14.27 | 13.76 | 14.74 | 14.21 | 14.61 | 14.21 | |||||||||||||||||||||
Common Stock Data: | ||||||||||||||||||||||||||||
Shares outstanding at period end | 52,373 | 53,457 | 54,236 | 24,254 | 24,192 | 52,373 | 24,192 | |||||||||||||||||||||
Weighted average basic shares outstanding for the period | 52,915 | 53,969 | 54,293 | 24,224 | 24,176 | 53,721 | 24,151 | |||||||||||||||||||||
Weighted average diluted shares outstanding for the period | 53,873 | 54,929 | 55,439 | 24,532 | 24,613 | 54,633 | 24,587 | |||||||||||||||||||||
Summary Performance Ratios: | ||||||||||||||||||||||||||||
Return on average assets2 | 1.36 | % | 1.36 | % | 0.38 | % | 1.20 | % | 1.10 | % | 1.04 | % | 1.28 | % | ||||||||||||||
Return on average equity2 | 8.98 | 8.98 | 2.52 | 7.44 | 6.88 | 6.88 | 7.83 | |||||||||||||||||||||
Return on average tangible common equity1, 2 | 15.15 | 15.26 | 5.09 | 11.52 | 10.79 | 11.93 | 12.36 | |||||||||||||||||||||
Efficiency ratio | 43.67 | 51.49 | 82.30 | 54.27 | 57.58 | 59.42 | 55.15 | |||||||||||||||||||||
Selected Performance Metrics - Operating: | ||||||||||||||||||||||||||||
Diluted operating EPS1 | 0.53 | 0.59 | 0.59 | 0.47 | 0.42 | 1.71 | 1.37 | |||||||||||||||||||||
Pre-tax, pre-provision operating return on average assets1, 2 | 2.26 | 2.22 | 2.40 | 1.95 | 1.98 | 2.30 | 2.05 | |||||||||||||||||||||
Operating return on average assets1, 2 | 1.42 | % | 1.63 | % | 1.69 | % | 1.40 | % | 1.28 | % | 1.58 | % | 1.46 | % | ||||||||||||||
Operating return on average tangible common equity1, 2 | 15.78 | 18.09 | 18.81 | 13.37 | 12.49 | 17.57 | 14.09 | |||||||||||||||||||||
Operating efficiency ratio1 | 42.36 | 43.66 | 43.54 | 50.65 | 49.09 | 43.19 | 49.45 | |||||||||||||||||||||
Veritex Holdings, Inc. Capital Ratios: | ||||||||||||||||||||||||||||
Average stockholders' equity to average total assets | 15.11 | % | 15.13 | % | 15.18 | % | 16.14 | % | 15.92 | % | 15.13 | % | 16.29 | % | ||||||||||||||
Tier 1 capital to average assets (leverage) | 10.33 | 10.47 | 10.57 | 12.04 | 11.74 | 10.35 | 11.74 | |||||||||||||||||||||
Common equity tier 1 capital | 10.82 | 11.32 | 11.07 | 11.80 | 12.02 | 10.83 | 12.02 | |||||||||||||||||||||
Tier 1 capital to risk-weighted assets | 11.26 | 11.77 | 11.50 | 12.18 | 12.43 | 11.28 | 12.43 | |||||||||||||||||||||
Total capital to risk-weighted assets | 12.26 | 12.80 | 12.45 | 12.98 | 13.22 | 12.28 | 13.22 | |||||||||||||||||||||
Tangible common equity to tangible assets1 | 10.17 | 10.08 | 10.02 | 11.78 | 11.08 | 10.17 | 11.08 | |||||||||||||||||||||
Veritex Bank Capital Ratios: | ||||||||||||||||||||||||||||
Tier 1 capital to average assets (leverage) | 10.64 | % | 10.80 | % | 10.65 | % | 10.87 | % | 10.53 | % | 10.65 | % | 10.53 | % | ||||||||||||||
Common equity tier 1 capital | 11.61 | % | 12.16 | % | 11.61 | % | 11.01 | % | 11.13 | % | 11.63 | % | 11.13 | % | ||||||||||||||
Tier 1 capital to risk-weighted assets | 11.61 | % | 12.16 | % | 11.61 | % | 11.01 | % | 11.13 | % | 11.63 | % | 11.13 | % | ||||||||||||||
Total capital to risk-weighted assets | 12.00 | % | 12.54 | % | 11.93 | % | 11.64 | % | 11.75 | % | 12.02 | % | 11.75 | % |
1Refer to the section titled “Reconciliation of Non-GAAP Financial Measures” after the financial highlights for a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures.
2Annualized ratio.
VERITEX HOLDINGS, INC. AND SUBSIDIARY
Financial Highlights
(In thousands)
Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | ||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||||||
ASSETS | ||||||||||||||||||||
Cash and cash equivalents | $ | 252,592 | $ | 265,822 | $ | 339,473 | $ | 84,449 | $ | 261,790 | ||||||||||
Securities | 1,023,393 | 1,020,279 | 950,671 | 262,695 | 256,237 | |||||||||||||||
Other investments | 89,795 | 81,088 | 75,920 | 23,174 | 27,769 | |||||||||||||||
Loans held for sale | 10,715 | 7,524 | 8,002 | 1,258 | 1,425 | |||||||||||||||
Loans held for investment, mortgage warehouse | 233,577 | 200,017 | 114,158 | — | — | |||||||||||||||
Loans held for investment | 5,654,027 | 5,731,833 | 5,663,721 | 2,555,494 | 2,444,499 | |||||||||||||||
Total loans | 5,898,319 | 5,939,374 | 5,785,881 | 2,556,752 | 2,445,924 | |||||||||||||||
Allowance for loan losses | (26,243 | ) | (24,712 | ) | (21,603 | ) | (19,255 | ) | (17,909 | ) | ||||||||||
Bank-owned life insurance | 80,411 | 79,899 | 79,397 | 22,064 | 21,915 | |||||||||||||||
Bank premises, furniture and equipment, net | 118,449 | 115,373 | 119,354 | 78,409 | 77,346 | |||||||||||||||
Other real estate owned | 4,625 | 1,748 | 151 | — | — | |||||||||||||||
Intangible assets, net | 75,363 | 78,347 | 81,245 | 15,896 | 16,603 | |||||||||||||||
Goodwill | 370,463 | 370,221 | 368,268 | 161,447 | 161,447 | |||||||||||||||
Other assets | 75,716 | 82,667 | 69,474 | 22,919 | 24,724 | |||||||||||||||
Branch assets held for sale | — | — | 83,516 | — | — | |||||||||||||||
Total assets | $ | 7,962,883 | $ | 8,010,106 | $ | 7,931,747 | $ | 3,208,550 | $ | 3,275,846 | ||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||
Deposits: | ||||||||||||||||||||
Noninterest-bearing | $ | 1,473,126 | $ | 1,476,668 | $ | 1,439,630 | $ | 626,283 | $ | 661,754 | ||||||||||
Interest-bearing | 2,528,293 | 2,646,154 | 2,617,117 | 1,313,161 | 1,346,264 | |||||||||||||||
Certificates and other time deposits | 1,876,427 | 2,042,266 | 2,240,968 | 682,984 | 648,236 | |||||||||||||||
Total deposits | 5,877,846 | 6,165,088 | 6,297,715 | 2,622,428 | 2,656,254 | |||||||||||||||
Accounts payable and accrued expenses | 45,475 | 44,414 | 42,621 | 5,413 | 6,875 | |||||||||||||||
Accrued interest payable and other liabilities | 6,054 | 7,069 | 6,846 | 5,361 | 5,759 | |||||||||||||||
Advances from FHLB | 752,907 | 512,945 | 252,982 | 28,019 | 73,055 | |||||||||||||||
Subordinated debentures and subordinated notes | 72,284 | 72,486 | 72,719 | 16,691 | 16,691 | |||||||||||||||
Securities sold under agreements to repurchase | 2,787 | 2,811 | 2,778 | — | — | |||||||||||||||
Branch liabilities held for sale | — | — | 62,381 | — | — | |||||||||||||||
Total liabilities | 6,757,353 | 6,804,813 | 6,738,042 | 2,677,912 | 2,758,634 | |||||||||||||||
Commitments and contingencies | ||||||||||||||||||||
Stockholders’ equity: | ||||||||||||||||||||
Common stock | 524 | 535 | 546 | 243 | 242 | |||||||||||||||
Additional paid-in capital | 1,114,659 | 1,112,238 | 1,109,386 | 449,427 | 448,117 | |||||||||||||||
Retained earnings | 125,344 | 104,652 | 84,559 | 83,968 | 74,143 | |||||||||||||||
Unallocated Employee Stock Ownership Plan shares | — | — | — | — | (106 | ) | ||||||||||||||
Accumulated other comprehensive income (loss) | 23,837 | 17,741 | 7,016 | (2,930 | ) | (5,114 | ) | |||||||||||||
Treasury stock | (58,834 | ) | (29,873 | ) | (7,802 | ) | (70 | ) | (70 | ) | ||||||||||
Total stockholders’ equity | 1,205,530 | 1,205,293 | 1,193,705 | 530,638 | 517,212 | |||||||||||||||
Total liabilities and stockholders’ equity | $ | 7,962,883 | $ | 8,010,106 | $ | 7,931,747 | $ | 3,208,550 | $ | 3,275,846 |
VERITEX HOLDINGS, INC. AND SUBSIDIARY
Financial Highlights
(In thousands, except per share data)
For the Three Months Ended | For the Nine Months Ended |
|||||||||||||||||||||||||||
Sep 30, 2019 |
Jun 30, 2019 |
Mar 31, 2019 |
Dec 31, 2018 |
Sep 30, 2018 |
Sep 30, 2019 |
Sep 30, 2018 |
||||||||||||||||||||||
Interest income: | ||||||||||||||||||||||||||||
Loans, including fees | $ | 85,811 | $ | 86,786 | $ | 85,747 | $ | 35,028 | $ | 35,074 | $ | 258,344 | $ | 99,432 | ||||||||||||||
Securities | 7,687 | 7,397 | 7,232 | 1,908 | 1,722 | 22,316 | 4,697 | |||||||||||||||||||||
Deposits in financial institutions and Fed Funds sold | 1,329 | 1,372 | 1,554 | 833 | 1,016 | 4,255 | 2,316 | |||||||||||||||||||||
Other investments | 816 | 622 | 691 | 413 | 108 | 2,129 | 442 | |||||||||||||||||||||
Total interest income | 95,643 | 96,177 | 95,224 | 38,182 | 37,920 | 287,044 | 106,887 | |||||||||||||||||||||
Interest expense: | ||||||||||||||||||||||||||||
Transaction and savings deposits | 10,381 | 11,405 | 10,366 | 5,412 | 4,694 | 32,152 | 12,187 | |||||||||||||||||||||
Certificates and other time deposits | 10,283 | 10,145 | 8,792 | 3,394 | 3,068 | 29,220 | 6,320 | |||||||||||||||||||||
Advances from FHLB | 3,081 | 2,187 | 2,055 | 377 | 630 | 7,323 | 1,324 | |||||||||||||||||||||
Subordinated debentures and subordinated notes | 1,024 | 998 | 1,094 | 304 | 250 | 3,116 | 727 | |||||||||||||||||||||
Total interest expense | 24,769 | 24,735 | 22,307 | 9,487 | 8,642 | 71,811 | 20,558 | |||||||||||||||||||||
Net interest income | 70,874 | 71,442 | 72,917 | 28,695 | 29,278 | 215,233 | 86,329 | |||||||||||||||||||||
Provision for loan losses | 9,674 | 3,335 | 5,012 | 1,364 | 3,057 | 18,021 | 5,239 | |||||||||||||||||||||
Net interest income after provision for loan losses | 61,200 | 68,107 | 67,905 | 27,331 | 26,221 | 197,212 | 81,090 | |||||||||||||||||||||
Noninterest income: | ||||||||||||||||||||||||||||
Service charges and fees on deposit accounts | 3,667 | 3,422 | 3,517 | 832 | 809 | 10,606 | 2,588 | |||||||||||||||||||||
Loan fees | 2,252 | 1,932 | 1,677 | 387 | 410 | 5,861 | 945 | |||||||||||||||||||||
Loss on sales of investment securities | — | (642 | ) | (772 | ) | (42 | ) | (34 | ) | (1,414 | ) | (22 | ) | |||||||||||||||
Gain on sales of loans | 853 | 1,104 | 2,370 | 1,789 | 270 | 4,327 | 1,267 | |||||||||||||||||||||
Rental income | 369 | 373 | 368 | 310 | 414 | 1,110 | 1,343 | |||||||||||||||||||||
Other | 1,289 | (155 | ) | 1,324 | 343 | 539 | 2,458 | 1,335 | ||||||||||||||||||||
Total noninterest income | 8,430 | 6,034 | 8,484 | 3,619 | 2,408 | 22,948 | 7,456 | |||||||||||||||||||||
Noninterest expense: | ||||||||||||||||||||||||||||
Salaries and employee benefits | 17,530 | 17,459 | 18,885 | 8,278 | 7,394 | 53,874 | 22,981 | |||||||||||||||||||||
Occupancy and equipment | 4,044 | 4,014 | 4,129 | 2,412 | 2,890 | 12,187 | 8,267 | |||||||||||||||||||||
Professional and regulatory fees | 2,750 | 2,814 | 3,418 | 1,889 | 1,893 | 8,982 | 5,525 | |||||||||||||||||||||
Data processing and software expense | 2,252 | 2,309 | 1,924 | 888 | 697 | 6,485 | 2,214 | |||||||||||||||||||||
Marketing | 708 | 961 | 619 | 570 | 306 | 2,288 | 1,213 | |||||||||||||||||||||
Amortization of intangibles | 2,712 | 2,719 | 2,760 | 835 | 798 | 8,191 | 2,632 | |||||||||||||||||||||
Telephone and communications | 361 | 625 | 395 | 223 | 236 | 1,381 | 1,076 | |||||||||||||||||||||
Merger and acquisition expense | 1,035 | 5,790 | 31,217 | 1,150 | 2,692 | 38,042 | 4,070 | |||||||||||||||||||||
Other | 3,238 | 3,205 | 3,646 | 1,293 | 1,340 | 10,089 | 3,743 | |||||||||||||||||||||
Total noninterest expense | 34,630 | 39,896 | 66,993 | 17,538 | 18,246 | 141,519 | 51,721 | |||||||||||||||||||||
Net income from operations | 35,000 | 34,245 | 9,396 | 13,412 | 10,383 | 78,641 | 36,825 | |||||||||||||||||||||
Income tax expense | 7,595 | 7,369 | 1,989 | 3,587 | 1,448 | 16,953 | 7,309 | |||||||||||||||||||||
Net income | $ | 27,405 | $ | 26,876 | $ | 7,407 | $ | 9,825 | $ | 8,935 | $ | 61,688 | $ | 29,516 | ||||||||||||||
Basic EPS | $ | 0.52 | $ | 0.50 | $ | 0.14 | $ | 0.41 | $ | 0.37 | $ | 1.15 | $ | 1.22 | ||||||||||||||
Diluted EPS | $ | 0.51 | $ | 0.49 | $ | 0.13 | $ | 0.40 | $ | 0.36 | $ | 1.13 | $ | 1.20 | ||||||||||||||
Weighted average basic shares outstanding | 52,915 | 53,969 | 54,293 | 24,224 | 24,176 | 53,721 | 24,151 | |||||||||||||||||||||
Weighted average diluted shares outstanding | 53,873 | 54,929 | 55,439 | 24,532 | 24,613 | 54,633 | 24,587 |
VERITEX HOLDINGS, INC. AND SUBSIDIARY
Financial Highlights
(In thousands except percentages)
For the Three Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
September 30, 2019 | June 30, 2019 | September 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||
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 |
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Assets | ||||||||||||||||||||||||||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||||||||||||||||||||||||||
Loans1 | $ | 5,702,696 | $ | 84,022 | 5.85 | % | $ | 5,762,257 | $ | 85,030 | 5.92 | % | $ | 2,432,095 | $ | 35,074 | 5.72 | % | ||||||||||||||||||||||||||||||
Loans held for investment, mortgage warehouse | 182,793 | 1,789 | 3.88 | 154,586 | 1,756 | 4.56 | — | — | — | |||||||||||||||||||||||||||||||||||||||
Securities | 1,022,289 | 7,687 | 2.98 | 956,160 | 7,397 | 3.10 | 254,242 | 1,722 | 2.69 | |||||||||||||||||||||||||||||||||||||||
Interest-bearing deposits in other banks | 234,087 | 1,329 | 2.25 | 228,461 | 1,372 | 2.41 | 203,750 | 1,016 | 1.98 | |||||||||||||||||||||||||||||||||||||||
Other investments2 | 71,901 | 816 | 4.50 | 59,508 | 622 | 4.19 | 20,044 | 108 | 2.14 | |||||||||||||||||||||||||||||||||||||||
Total interest-earning assets | 7,213,766 | 95,643 | 5.26 | 7,160,972 | 96,177 | 5.39 | 2,910,131 | 37,920 | 5.17 | |||||||||||||||||||||||||||||||||||||||
Allowance for loan losses | (22,539 | ) | (23,891 | ) | (16,160 | ) | ||||||||||||||||||||||||||||||||||||||||||
Noninterest-earning assets | 818,150 | 800,238 | 331,826 | |||||||||||||||||||||||||||||||||||||||||||||
Total assets | $ | 8,009,377 | $ | 7,937,319 | $ | 3,225,797 | ||||||||||||||||||||||||||||||||||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||
Interest-bearing demand and savings deposits | $ | 2,621,701 | $ | 10,381 | 1.57 | % | $ | 2,713,735 | $ | 11,405 | 1.69 | % | $ | 1,278,797 | $ | 4,694 | 1.46 | % | ||||||||||||||||||||||||||||||
Certificates and other time deposits | 1,953,084 | 10,283 | 2.09 | 2,107,567 | 10,145 | 1.93 | 655,035 | 3,068 | 1.86 | |||||||||||||||||||||||||||||||||||||||
Advances from FHLB | 632,754 | 3,081 | 1.93 | 334,926 | 2,187 | 2.62 | 120,114 | 630 | 2.08 | |||||||||||||||||||||||||||||||||||||||
Subordinated debentures and subordinated notes | 74,869 | 1,024 | 5.43 | 75,252 | 998 | 5.32 | 16,690 | 250 | 5.94 | |||||||||||||||||||||||||||||||||||||||
Total interest-bearing liabilities | 5,282,408 | 24,769 | 1.86 | 5,231,480 | 24,735 | 1.90 | 2,070,636 | 8,642 | 1.66 | |||||||||||||||||||||||||||||||||||||||
Noninterest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||
Noninterest-bearing deposits | 1,467,127 | 1,456,538 | 635,952 | |||||||||||||||||||||||||||||||||||||||||||||
Other liabilities | 49,695 | 48,669 | 11,750 | |||||||||||||||||||||||||||||||||||||||||||||
Total liabilities | 6,799,230 | 6,736,687 | 2,718,338 | |||||||||||||||||||||||||||||||||||||||||||||
Stockholders’ equity | 1,210,147 | 1,200,632 | 514,876 | |||||||||||||||||||||||||||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 8,009,377 | $ | 7,937,319 | $ | 3,233,214 | ||||||||||||||||||||||||||||||||||||||||||
Net interest rate spread3 | 3.40 | % | 3.49 | % | 3.51 | % | ||||||||||||||||||||||||||||||||||||||||||
Net interest income | $ | 70,874 | $ | 71,442 | $ | 29,278 | ||||||||||||||||||||||||||||||||||||||||||
Net interest margin4 | 3.90 | % | 4.00 | % | 3.99 | % |
1 Includes average outstanding balances of loans held for sale of
2 The Company historically reported dividend income in other noninterest income and has re-classed
3 Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
4 Net interest margin is equal to net interest income divided by average interest-earning assets.
VERITEX HOLDINGS, INC. AND SUBSIDIARY
Financial Highlights
(In thousands except percentages)
For the Nine Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
September 30, 2019 | September 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average Outstanding Balance |
Interest Earned/ Interest Paid |
Average Yield/ Rate |
Average Outstanding Balance |
Interest Earned/ Interest Paid |
Average Yield/ Rate |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest-earning assets: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans1 | $ | 5,731,902 | $ | 253,247 | 5.91 | % | $ | 2,342,797 | $ | 99,432 | 5.67 | % | |||||||||||||||||||||||||||||||||||||||||||||
Loans held for investment, mortgage warehouse | 152,617 | 5,097 | 4.47 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Securities | 968,616 | 22,316 | 3.08 | 241,764 | 4,697 | 2.60 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Interest-bearing deposits in other banks | 242,119 | 4,255 | 2.40 | 168,329 | 2,316 | 1.84 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Other investments2 | 56,438 | 2,129 | 5.04 | 16,390 | 442 | 3.61 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Total interest-earning assets | 7,151,692 | 287,044 | 5.37 | 2,769,280 | 106,887 | 5.16 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses | (22,173 | ) | (14,309 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Noninterest-earning assets | 799,509 | 340,136 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total assets | $ | 7,929,028 | $ | 3,095,107 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities and Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest-bearing demand and savings deposits | $ | 2,657,195 | $ | 32,152 | 1.62 | % | $ | 1,256,726 | $ | 12,187 | 1.30 | % | |||||||||||||||||||||||||||||||||||||||||||||
Certificates and other time deposits | 2,067,032 | 29,220 | 1.89 | 591,953 | 6,320 | 1.43 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Advances from FHLB | 427,306 | 7,323 | 2.29 | 99,138 | 1,324 | 1.79 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Subordinated debentures and subordinated notes | 75,298 | 3,116 | 5.53 | 16,768 | 727 | 5.80 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Total interest-bearing liabilities | 5,226,831 | 71,811 | 1.84 | 1,964,585 | 20,558 | 1.40 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Noninterest-bearing liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noninterest-bearing deposits | 1,459,904 | 614,107 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other liabilities | 42,853 | 12,310 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total liabilities | 6,729,588 | 2,591,002 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders’ equity | 1,199,440 | 504,105 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 7,929,028 | $ | 3,095,107 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest rate spread3 | 3.53 | % | 3.76 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest income | $ | 215,233 | $ | 86,329 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest margin4 | 4.02 | % | 4.17 | % |
1 Includes average outstanding balances of loans held for sale of
2 The Company historically reported dividend income in other noninterest income and has re-classed
3 Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
4 Net interest margin is equal to net interest income divided by average interest-earning assets.
VERITEX HOLDINGS, INC. AND SUBSIDIARY
Financial Highlights
Yield Trend
For the Three Months Ended | ||||||||||||||||||||||||||||||||
September 30, 2019 |
June 30, 2019 |
March 31, 2019 |
December 31, 2018 |
September 30, 2018 |
||||||||||||||||||||||||||||
Average yield on interest-earning assets: | ||||||||||||||||||||||||||||||||
Loans1 | 5.85 | % | 5.92 | % | 5.96 | % | 5.55 | % | 5.72 | % | ||||||||||||||||||||||
Loans held for investment, mortgage warehouse | 3.88 | 4.56 | 5.26 | — | — | |||||||||||||||||||||||||||
Securities | 2.98 | 3.10 | 3.17 | 2.88 | 2.69 | |||||||||||||||||||||||||||
Interest-bearing deposits in other banks | 2.25 | 2.41 | 2.39 | 2.41 | 1.98 | |||||||||||||||||||||||||||
Other investments | 4.50 | 4.19 | 4.92 | 6.36 | 2.14 | |||||||||||||||||||||||||||
Total interest-earning assets | 5.26 | % | 5.39 | % | 5.44 | % | 5.17 | % | 5.17 | % | ||||||||||||||||||||||
Average rate on interest-bearing liabilities: | ||||||||||||||||||||||||||||||||
Interest-bearing demand and savings deposits | 1.57 | % | 1.69 | % | 1.64 | % | 1.60 | % | 1.46 | % | ||||||||||||||||||||||
Certificates and other time deposits | 2.09 | 1.93 | 1.59 | 2.05 | 1.86 | |||||||||||||||||||||||||||
Advances from FHLB | 1.93 | 2.62 | 2.68 | 2.85 | 2.08 | |||||||||||||||||||||||||||
Subordinated debentures and subordinated notes | 5.43 | 5.32 | 5.85 | 7.23 | 5.94 | |||||||||||||||||||||||||||
Total interest-bearing liabilities | 1.86 | % | 1.90 | % | 1.74 | % | 1.82 | % | 1.66 | % | ||||||||||||||||||||||
Net interest rate spread2 | 3.40 | % | 3.49 | % | 3.70 | % | 3.35 | % | 3.51 | % | ||||||||||||||||||||||
Net interest margin3 | 3.90 | % | 4.00 | % | 4.17 | % | 3.89 | % | 3.99 | % |
1Includes average outstanding balances of loans held for sale of
2 Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
3 Net interest margin is equal to net interest income divided by average interest-earning assets.
Supplemental Yield Trend
For the Three Months Ended | ||||||||||||||||||||||||||||||||
September 30, 2019 |
June 30, 2019 |
March 31, 2019 |
December 31, 2018 |
September 30, 2018 |
||||||||||||||||||||||||||||
Average cost of interest-bearing deposits | 1.79 | % | 1.79 | % | 1.62 | % | 1.75 | % | 1.59 | % | ||||||||||||||||||||||
Average costs of total deposits, including noninterest-bearing | 1.36 | 1.38 | 1.25 | 1.32 | 1.20 |
VERITEX HOLDINGS, INC. AND SUBSIDIARY
Financial Highlights
(In thousands except percentages)
Loans Held for Investment (“LHI”) and Deposit Portfolio Composition
September 30, 2019 |
June 30, 2019 |
March 31, 2019 |
December 31, 2018 |
September 30, 2018 |
||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Loans Held for Investment2 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Originated Loans | ||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial | $ | 1,027,433 | 33.4 | % | $ | 878,970 | 32.2 | % | $ | 836,792 | 33.3 | % | $ | 697,906 | 33.0 | % | $ | 646,978 | 33.3 | % | ||||||||||||||||||||||||||||||
Real Estate: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Owner occupied commercial | 253,043 | 8.2 | 229,243 | 8.4 | 215,088 | 8.6 | 188,847 | 8.9 | 179,422 | 9.2 | ||||||||||||||||||||||||||||||||||||||||
Commercial | 877,669 | 28.5 | 800,506 | 29.3 | 752,628 | 30.0 | 636,200 | 30.0 | 592,959 | 30.5 | ||||||||||||||||||||||||||||||||||||||||
Construction and land | 490,389 | 15.9 | 405,323 | 14.8 | 364,812 | 14.5 | 303,315 | 14.3 | 254,258 | 13.1 | ||||||||||||||||||||||||||||||||||||||||
Farmland | 7,986 | 0.3 | 15,944 | 0.6 | 8,247 | 0.3 | 7,898 | 0.4 | 8,181 | 0.5 | ||||||||||||||||||||||||||||||||||||||||
1-4 family residential | 315,839 | 10.3 | 290,808 | 10.7 | 274,880 | 10.9 | 235,092 | 11.0 | 210,702 | 10.9 | ||||||||||||||||||||||||||||||||||||||||
Multi-family residential | 95,258 | 3.1 | 101,973 | 3.7 | 48,777 | 1.9 | 47,371 | 2.2 | 46,240 | 2.3 | ||||||||||||||||||||||||||||||||||||||||
Consumer | 8,471 | 0.2 | 7,714 | 0.3 | 8,587 | 0.3 | 4,304 | 0.2 | 3,123 | 0.2 | ||||||||||||||||||||||||||||||||||||||||
Total originated LHI | $ | 3,076,088 | 100 | % | $ | 2,730,481 | 100 | % | $ | 2,509,811 | 100 | % | $ | 2,120,933 | 100 | % | $ | 1,941,863 | 100 | % | ||||||||||||||||||||||||||||||
Acquired Loans | ||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial | $ | 683,823 | 26.5 | % | $ | 909,074 | 30.3 | % | $ | 975,878 | 30.9 | % | $ | 62,866 | 14.4 | % | $ | 76,162 | 15.3 | % | ||||||||||||||||||||||||||||||
Real Estate: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Owner occupied commercial | 463,087 | 18.0 | 517,525 | 17.2 | 530,026 | 16.8 | 132,432 | 30.5 | 133,865 | 26.6 | ||||||||||||||||||||||||||||||||||||||||
Commercial | 832,841 | 32.3 | 927,019 | 30.9 | 948,815 | 30.1 | 145,553 | 33.5 | 162,842 | 32.4 | ||||||||||||||||||||||||||||||||||||||||
Construction and land | 133,233 | 5.2 | 138,527 | 4.6 | 149,897 | 4.8 | 21,548 | 5.0 | 39,885 | 7.9 | ||||||||||||||||||||||||||||||||||||||||
Farmland | — | — | 1,528 | 0.1 | 1,781 | 0.1 | 2,630 | 0.6 | 2,672 | 0.5 | ||||||||||||||||||||||||||||||||||||||||
1-4 family residential | 243,471 | 9.4 | 266,248 | 8.9 | 295,719 | 9.4 | 62,825 | 14.5 | 79,106 | 15.7 | ||||||||||||||||||||||||||||||||||||||||
Multi-family residential | 211,708 | 8.2 | 228,904 | 7.6 | 238,936 | 7.6 | 3,914 | 0.9 | 4,077 | 0.8 | ||||||||||||||||||||||||||||||||||||||||
Consumer | 9,642 | 0.4 | 12,848 | 0.4 | 13,180 | 0.4 | 2,808 | 0.6 | 4,043 | 0.8 | ||||||||||||||||||||||||||||||||||||||||
Total acquired LHI | $ | 2,577,805 | 100 | % | $ | 3,001,673 | 100 | % | $ | 3,154,232 | 100 | % | $ | 434,576 | 100 | % | $ | 502,652 | 100 | % | ||||||||||||||||||||||||||||||
Mortgage warehouse | 233,577 | 200,017 | 114,157 | — | — | |||||||||||||||||||||||||||||||||||||||||||||
Total LHI1 | $ | 5,887,470 | $ | 5,932,171 | $ | 5,778,200 | $ | 2,555,509 | $ | 2,444,515 | ||||||||||||||||||||||||||||||||||||||||
Deposits2 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Noninterest-bearing | $ | 1,473,126 | 25.1 | % | $ | 1,476,668 | 24.0 | % | $ | 1,439,630 | 22.9 | % | $ | 626,283 | 23.8 | % | $ | 661,754 | 24.9 | % | ||||||||||||||||||||||||||||||
Interest-bearing transaction | 373,997 | 6.4 | 373,982 | 6.1 | 334,868 | 5.3 | 146,969 | 5.6 | 144,328 | 5.4 | ||||||||||||||||||||||||||||||||||||||||
Money market | 2,066,315 | 35.2 | 2,178,274 | 35.3 | 2,169,049 | 34.4 | 1,133,045 | 43.2 | 1,168,262 | 44.0 | ||||||||||||||||||||||||||||||||||||||||
Savings | 87,981 | 1.5 | 93,898 | 1.5 | 113,200 | 1.8 | 33,147 | 1.3 | 33,674 | 1.3 | ||||||||||||||||||||||||||||||||||||||||
Certificates and other time deposits | 1,876,427 | 31.8 | 2,042,266 | 33.1 | 2,240,968 | 35.6 | 682,984 | 26.1 | 648,236 | 24.4 | ||||||||||||||||||||||||||||||||||||||||
Total deposits | $ | 5,877,846 | 100 | % | $ | 6,165,088 | 100 | % | $ | 6,297,715 | 100 | % | $ | 2,622,428 | 100 | % | $ | 2,656,254 | 100 | % | ||||||||||||||||||||||||||||||
Loan to Deposit Ratio | 100.2 | % | 96.2 | % | 91.8 | % | 97.4 | % | 92.0 | % |
1 Total LHI does not include deferred (costs) fees of (
2 LHI and deposit portfolio composition exclude assets and liabilities held for sale as of March 31, 2019.
VERITEX HOLDINGS, INC. AND SUBSIDIARY
Financial Highlights
(In thousands except percentages)
Asset Quality
For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Sep 30, 2019 | Sep 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nonperforming Assets (“NPAs”): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Originated nonaccrual loans1 | $ | 5,081 | $ | 4,751 | $ | 5,739 | $ | 5,358 | $ | 2,307 | $ | 5,081 | $ | 2,307 | |||||||||||||||||||||||||||||||||||||||||||||||
Acquired nonaccrual loans1 | 5,091 | 10,982 | 12,944 | 19,387 | 19,515 | 5,091 | 19,515 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Originated accruing loans 90 or more days past due2 | 815 | 12,738 | 2,329 | — | 4,302 | 815 | 4,302 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquired accruing loans 90 or more days past due2 | 1,379 | 13,036 | 1,974 | — | — | 1,379 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total nonperforming loans held for investment (“NPLs”) | 12,366 | 41,507 | 22,986 | 24,745 | 26,124 | 12,366 | 26,124 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other real estate owned | 4,625 | 1,748 | 151 | — | — | 4,625 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total NPAs | $ | 16,991 | $ | 43,255 | $ | 23,137 | $ | 24,745 | $ | 26,124 | $ | 16,991 | $ | 26,124 | |||||||||||||||||||||||||||||||||||||||||||||||
Charge-offs: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Residential | $ | — | $ | (157 | ) | $ | — | $ | — | $ | — | $ | (157 | ) | $ | — | |||||||||||||||||||||||||||||||||||||||||||||
Commercial | (8,101 | ) | (143 | ) | (2,654 | ) | (26 | ) | — | (10,898 | ) | (149 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Consumer | (113 | ) | (30 | ) | (74 | ) | — | — | (217 | ) | (22 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||
Total charge-offs | (8,214 | ) | (330 | ) | (2,728 | ) | (26 | ) | — | (11,272 | ) | (171 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Recoveries: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Residential | — | 54 | 8 | — | — | 62 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial | 71 | 10 | 10 | 7 | 10 | 91 | 34 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consumer | — | 40 | 46 | — | — | 86 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total recoveries | 71 | 104 | 64 | 7 | 10 | 239 | 34 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net charge-offs | $ | (8,143 | ) | $ | (226 | ) | $ | (2,664 | ) | $ | (19 | ) | $ | 10 | $ | (11,033 | ) | $ | (137 | ) | |||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses (“ALLL”) at end of period | $ | 26,243 | $ | 24,712 | $ | 21,603 | $ | 19,255 | $ | 17,909 | $ | 26,243 | $ | 17,909 | |||||||||||||||||||||||||||||||||||||||||||||||
Remaining purchase discount (“PD”) on acquired loans3 | $ | 58,503 | $ | 80,365 | $ | 83,365 | $ | 12,098 | $ | 13,389 | 58,503 | 13,389 | |||||||||||||||||||||||||||||||||||||||||||||||||
Asset Quality Ratios: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NPAs to total assets | 0.21 | % | 0.54 | % | 0.29 | % | 0.77 | % | 0.80 | % | 0.21 | % | 0.80 | % | |||||||||||||||||||||||||||||||||||||||||||||||
NPLs to total LHI | 0.21 | 0.70 | 0.40 | 0.97 | 1.07 | 0.21 | 1.07 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
ALLL to total LHI | 0.45 | 0.42 | 0.37 | 0.75 | 0.73 | 0.45 | 0.73 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
ALLL and remaining PD on acquired loans to total LHI3 | 1.44 | 1.77 | 1.82 | 1.23 | 1.28 | 1.44 | 1.28 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net charge-offs to average loans outstanding | 0.14 | — | 0.05 | — | — | 0.19 | 0.01 |
1 The Company historically reported in the acquired nonaccrual loans line item in the table above only acquired purchased credit impaired (“PCI”) loans that were deemed to be on nonaccrual status subsequent to the respective acquisition date. The Company has reclassed
2 Accruing loans greater than 90 days past due exclude PCI loans greater than 90 days past due.
3 Remaining PD on acquired loans includes non-accretable and accretable purchase discount on purchased performing and purchased credit impaired loans for each quarter presented in the table.
VERITEX HOLDINGS, INC. AND SUBSIDIARY
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
We identify certain financial measures discussed in this earnings release as being “non-GAAP financial measures.” In accordance with
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 | ||||||||||||||||||||||||||||||||||||||||||||||
Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||||||||||||||||||||||||||||||||||||
Tangible Common Equity | ||||||||||||||||||||||||||||||||||||||||||||||
Total stockholders' equity | $ | 1,205,530 | $ | 1,205,293 | $ | 1,193,705 | $ | 530,638 | $ | 517,212 | ||||||||||||||||||||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||||||||||||||||
Goodwill | (370,463 | ) | (370,221 | ) | (368,268 | ) | (161,447 | ) | (161,447 | ) | ||||||||||||||||||||||||||||||||||||
Core deposit intangibles | (70,014 | ) | (72,465 | ) | (74,916 | ) | (11,675 | ) | (12,107 | ) | ||||||||||||||||||||||||||||||||||||
Tangible common equity | $ | 765,053 | $ | 762,607 | $ | 750,521 | $ | 357,516 | $ | 343,658 | ||||||||||||||||||||||||||||||||||||
Common shares outstanding | 52,373 | 53,457 | 54,236 | 24,254 | 24,192 | |||||||||||||||||||||||||||||||||||||||||
Book value per common share | $ | 23.02 | $ | 22.55 | $ | 21.88 | $ | 21.88 | $ | 21.38 | ||||||||||||||||||||||||||||||||||||
Tangible book value per common share | $ | 14.61 | $ | 14.27 | $ | 13.76 | $ | 14.74 | $ | 14.21 |
VERITEX HOLDINGS, INC. AND SUBSIDIARY
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
Tangible Common Equity to Tangible Assets. Tangible common equity to tangible assets is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) tangible common equity as total stockholders’ equity, less goodwill and core deposit intangibles, net of accumulated amortization; (b) tangible assets as total assets less goodwill and core deposit intangibles, net of accumulated amortization; and (c) tangible common equity to tangible assets as tangible common equity (as described in clause (a)) divided by tangible assets (as described in clause (b)). For tangible common equity to tangible assets, the most directly comparable financial measure calculated in accordance with GAAP is total stockholders’ equity to total assets.
We believe that this measure is important to many investors in the marketplace who are interested in the relative changes from period to period in common equity and total assets, in each case, exclusive of changes in core deposit intangibles. Goodwill and other intangible assets have the effect of increasing both total stockholders’ equity and assets while not increasing our tangible common equity or tangible assets.
The following table reconciles, as of the dates set forth below, total stockholders’ equity to tangible common equity and total assets to tangible assets and presents our tangible common equity to tangible assets:
As of | ||||||||||||||||||||||||||||||||||||||||||||||
Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||
Tangible Common Equity | ||||||||||||||||||||||||||||||||||||||||||||||
Total stockholders' equity | $ | 1,205,530 | $ | 1,205,293 | $ | 1,193,705 | $ | 530,638 | $ | 517,212 | ||||||||||||||||||||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||||||||||||||||
Goodwill | (370,463 | ) | (370,221 | ) | (368,268 | ) | (161,447 | ) | (161,447 | ) | ||||||||||||||||||||||||||||||||||||
Core deposit intangibles | (70,014 | ) | (72,465 | ) | (74,916 | ) | (11,675 | ) | (12,107 | ) | ||||||||||||||||||||||||||||||||||||
Tangible common equity | $ | 765,053 | $ | 762,607 | $ | 750,521 | $ | 357,516 | $ | 343,658 | ||||||||||||||||||||||||||||||||||||
Tangible Assets | ||||||||||||||||||||||||||||||||||||||||||||||
Total assets | $ | 7,962,883 | $ | 8,010,106 | $ | 7,931,747 | $ | 3,208,550 | $ | 3,275,846 | ||||||||||||||||||||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||||||||||||||||
Goodwill | (370,463 | ) | (370,221 | ) | (368,268 | ) | (161,447 | ) | (161,447 | ) | ||||||||||||||||||||||||||||||||||||
Core deposit intangibles | (70,014 | ) | (72,465 | ) | (74,916 | ) | (11,675 | ) | (12,107 | ) | ||||||||||||||||||||||||||||||||||||
Tangible Assets | $ | 7,522,406 | $ | 7,567,420 | $ | 7,488,563 | $ | 3,035,428 | $ | 3,102,292 | ||||||||||||||||||||||||||||||||||||
Tangible Common Equity to Tangible Assets | 10.17 | % | 10.08 | % | 10.02 | % | 11.78 | % | 11.08 | % |
VERITEX HOLDINGS, INC. AND SUBSIDIARY
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
Return on Average Tangible Common Equity. Return on average tangible common equity is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) return as net income available for common stockholders adjusted for amortization of core deposit intangibles as net income, plus amortization of core deposit intangibles, less tax benefit at the statutory rate; (b) average tangible common equity as total average stockholders’ equity less average goodwill and average core deposit intangibles, net of accumulated amortization; and (c) return (as described in clause (a)) divided by average tangible common equity (as described in clause (b)). For return on average tangible common equity, the most directly comparable financial measure calculated in accordance with GAAP is return on average equity.
We believe that this measure is important to many investors in the marketplace who are interested in the return on common equity, exclusive of the impact of core deposit intangibles. Goodwill and core deposit intangibles have the effect of increasing total stockholders’ equity while not increasing our tangible common equity. This measure is particularly relevant to acquisitive institutions that may have higher balances in goodwill and core deposit intangibles than non-acquisitive institutions.
The following table reconciles, as of the dates set forth below, average tangible common equity to average common equity and net income available for common stockholders adjusted for amortization of core deposit intangibles, net of taxes to net income and presents our return on average tangible common equity:
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Sep 30, 2019 | Sep 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income available for common stockholders adjusted for amortization of core deposit intangibles | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | $ | 27,405 | $ | 26,876 | $ | 7,407 | $ | 9,825 | $ | 8,935 | $ | 61,688 | $ | 29,516 | ||||||||||||||||||||||||||||||||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Plus: Amortization of core deposit intangibles | 2,451 | 2,451 | 2,477 | 432 | 431 | 7,379 | 1,250 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less: Tax benefit at the statutory rate | 515 | 515 | 520 | 91 | 91 | 1,550 | 263 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income available for common stockholders adjusted for amortization of intangibles | $ | 29,341 | $ | 28,812 | $ | 9,364 | $ | 10,166 | $ | 9,275 | $ | 67,517 | $ | 30,503 | ||||||||||||||||||||||||||||||||||||||||||||||||
Average Tangible Common Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total average stockholders' equity | $ | 1,210,147 | $ | 1,200,632 | $ | 1,190,266 | $ | 523,590 | $ | 514,876 | $ | 1,199,440 | $ | 504,105 | ||||||||||||||||||||||||||||||||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average goodwill | (370,224 | ) | (369,255 | ) | (366,795 | ) | (161,447 | ) | (161,447 | ) | (369,097 | ) | (160,725 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Average core deposit intangibles | (71,355 | ) | (73,875 | ) | (76,727 | ) | (11,932 | ) | (12,354 | ) | (73,965 | ) | (13,370 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Average tangible common equity | $ | 768,568 | $ | 757,502 | $ | 746,744 | $ | 350,211 | $ | 341,075 | $ | 756,378 | $ | 330,010 | ||||||||||||||||||||||||||||||||||||||||||||||||
Return on Average Tangible Common Equity (Annualized) | 15.15 | % | 15.26 | % | 5.09 | % | 11.52 | % | 10.79 | % | 11.93 | % | 12.36 | % |
VERITEX HOLDINGS, INC. AND SUBSIDIARY
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
Operating Net Income, Pre-tax, Pre-provision Operating Earnings and performance metrics calculated using Operating Earnings and Pre-tax, Pre-provision Operating Net Income, including Diluted Operating Earnings per Share, Operating Return on Average Assets, Pre-tax, Pre-Provision Operating Return on Average Assets, Operating Return on Average Tangible Common Equity and Operating Efficiency Ratio. Operating earnings and pre-tax, pre-provision operating earnings are non-GAAP measures used by management to evaluate the Company’s financial performance. We calculate (a) operating net income as net income plus loss on sale of securities available for sale, net, plus loss (gain) on sale of disposed branch assets, plus lease exit costs, net, plus branch closure expenses, plus one-time issuance of shares to all employees, plus merger and acquisition expenses, less tax impact of adjustments, plus re-measurement of deferred tax assets as a result of the reduction in the corporate income tax rate under the Tax Cuts and Jobs Act, plus other merger and acquisition discrete tax items. We calculate (b) pre-tax, pre-provision operating earnings as operating earnings as described in clause (a) plus provision for income taxes, plus provision for loan losses. We calculate (c) diluted operating earnings per share as operating earnings as described in clause (a) divided by weighted average diluted shares outstanding. We calculate (d) operating return on average tangible common equity as operating earnings as described in clause (a) divided by total average tangible common equity (average stockholders' equity less average goodwill and average core deposit intangibles, net of accumulated amortization.) We calculate (e) operating efficiency ratio as non interest expense plus adjustments to operating non interest expense divided by (i) non interest income plus adjustments to operating non interest income plus (ii) net interest income.
We believe that these measures and the operating metrics calculated utilizing these measures are important to management and many investors in the marketplace who are interested in understanding the ongoing operating performance of the Company and provide meaningful comparisons to its peers.
The following tables reconcile, as of the dates set forth below, operating net income and pre-tax, pre-provision operating earnings and related metrics:
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||||||||||||||||||||||||||||
Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Sep 30, 2019 | Sep 30, 2018 | ||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||
Operating Net Income | ||||||||||||||||||||||||||||||||||||||||||
Net income | $ | 27,405 | $ | 26,876 | $ | 7,407 | $ | 9,825 | $ | 8,935 | $ | 61,688 | $ | 29,516 | ||||||||||||||||||||||||||||
Plus: Loss on sale of securities available for sale, net | — | 642 | 772 | 42 | — | 1,414 | — | |||||||||||||||||||||||||||||||||||
Plus: Loss (gain) on sale of disposed branch assets1 | — | 359 | — | — | — | 359 | (388 | ) | ||||||||||||||||||||||||||||||||||
Plus: Lease exit costs, net2 | — | — | — | — | — | — | 1,071 | |||||||||||||||||||||||||||||||||||
Plus: Branch closure expenses | — | — | — | — | — | — | 172 | |||||||||||||||||||||||||||||||||||
Plus: One-time issuance of shares to all employees | — | — | — | — | — | — | 421 | |||||||||||||||||||||||||||||||||||
Plus: Merger and acquisition expenses | 1,035 | 5,431 | 31,217 | 1,150 | 2,692 | 37,683 | 4,070 | |||||||||||||||||||||||||||||||||||
Operating pre-tax income | 28,440 | 33,308 | 39,396 | 11,017 | 11,627 | 101,144 | 34,862 | |||||||||||||||||||||||||||||||||||
Less: Tax impact of adjustments3 | 217 | 1,351 | 6,717 | (440 | ) | 538 | 8,285 | 1,073 | ||||||||||||||||||||||||||||||||||
Plus: Tax Act re-measurement | — | — | — | — | (688 | ) | — | 5 | ||||||||||||||||||||||||||||||||||
Plus: Other M&A tax items | 406 | 277 | — | — | — | 683 | — | |||||||||||||||||||||||||||||||||||
Operating net income | $ | 28,629 | $ | 32,234 | $ | 32,679 | $ | 11,457 | $ | 10,401 | $ | 93,542 | $ | 33,794 | ||||||||||||||||||||||||||||
Weighted average diluted shares outstanding | 53,873 | 54,929 | 55,439 | 24,532 | 24,613 | 54,633 | 24,587 | |||||||||||||||||||||||||||||||||||
Diluted EPS | $ | 0.51 | $ | 0.49 | $ | 0.13 | $ | 0.40 | $ | 0.36 | $ | 1.13 | $ | 1.20 | ||||||||||||||||||||||||||||
Diluted operating EPS | 0.53 | 0.59 | 0.59 | 0.47 | 0.42 | 1.71 | 1.37 |
1 Loss on sale of disposed branch assets for the nine months ended September 30, 2019 and for the three months ended June 30, 2019 is included in merger and acquisition expense in the condensed consolidated statements of income.
2 Lease exit costs, net for the nine months ended September 30, 2018 includes a $1.5 million consent fee and $240 thousand in professional services paid in January 2018 to separately assign and sublease two of our branch leases that we ceased using in 2017 offset by the reversal of the corresponding assigned lease cease-use liability totaling $669 thousand.
3 During the fourth quarter of 2018, we initiated a transaction cost study, which through December 31, 2018 resulted in $727 thousand of expenses paid that are non-deductible merger and acquisition expenses. As such, the $727 thousand of non-deductible expenses are reflected in the nine months ended September 30, 2018 tax impact of adjustments amounts reported. All other non-merger related adjustments to operating net income are taxed at the statutory rate.
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||||||||||||||||||||||||||||
Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Sep 30, 2019 | Sep 30, 2018 | ||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||
Pre-Tax, Pre-Provision Operating Earnings | ||||||||||||||||||||||||||||||||||||||||||
Net income | $ | 27,405 | $ | 26,876 | $ | 7,407 | $ | 9,825 | $ | 8,935 | $ | 61,688 | $ | 29,516 | ||||||||||||||||||||||||||||
Plus: Provision for income taxes | 7,595 | 7,369 | 1,989 | 3,587 | 1,448 | 16,953 | 7,309 | |||||||||||||||||||||||||||||||||||
Pus: Provision for loan losses | 9,674 | 3,335 | 5,012 | 1,364 | 3,057 | 18,021 | 5,239 | |||||||||||||||||||||||||||||||||||
Plus: Loss on sale of securities available for sale, net | — | 642 | 772 | 42 | — | 1,414 | — | |||||||||||||||||||||||||||||||||||
Plus: Loss (gain) on sale of disposed branch assets1 | — | 359 | — | — | — | 359 | (388 | ) | ||||||||||||||||||||||||||||||||||
Plus: Lease exit costs, net2 | — | — | — | — | — | — | 1,071 | |||||||||||||||||||||||||||||||||||
Plus: Branch closure expenses | — | — | — | — | — | — | 172 | |||||||||||||||||||||||||||||||||||
Plus: One-time issuance of shares to all employees | — | — | — | — | — | — | 421 | |||||||||||||||||||||||||||||||||||
Plus: Merger and acquisition expenses | 1,035 | 5,431 | 31,217 | 1,150 | 2,692 | 37,683 | 4,070 | |||||||||||||||||||||||||||||||||||
Pre-tax, pre-provision operating earnings | $ | 45,709 | $ | 44,012 | $ | 46,397 | $ | 15,968 | $ | 16,132 | $ | 136,118 | $ | 47,410 | ||||||||||||||||||||||||||||
Average total assets | $ | 8,009,377 | $ | 7,937,319 | $ | 7,841,267 | $ | 3,243,168 | $ | 3,225,797 | $ | 7,929,028 | $ | 3,095,107 | ||||||||||||||||||||||||||||
Pre-tax, pre-provision operating return on average assets3 | 2.26 | % | 2.22 | % | 2.40 | % | 1.95 | % | 1.98 | % | 2.30 | % | 2.05 | % | ||||||||||||||||||||||||||||
Average total assets | $ | 8,009,377 | $ | 7,937,319 | $ | 7,841,267 | $ | 3,243,168 | $ | 3,225,797 | $ | 7,929,028 | $ | 3,095,107 | ||||||||||||||||||||||||||||
Return on average assets3 | 1.36 | % | 1.36 | % | 0.38 | % | 1.20 | % | 1.10 | % | 1.04 | % | 1.28 | % | ||||||||||||||||||||||||||||
Operating return on average assets3 | 1.42 | 1.63 | 1.69 | 1.40 | 1.28 | 1.58 | 1.46 | |||||||||||||||||||||||||||||||||||
Operating earnings adjusted for amortization of intangibles | ||||||||||||||||||||||||||||||||||||||||||
Operating net income | $ | 28,629 | $ | 32,234 | $ | 32,679 | $ | 11,457 | $ | 10,401 | $ | 93,542 | $ | 33,794 | ||||||||||||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||||||||||||
Plus: Amortization of core deposit intangibles | 2,451 | 2,451 | 2,477 | 432 | 431 | 7,379 | 1,250 | |||||||||||||||||||||||||||||||||||
Less: Tax benefit at the statutory rate | 515 | 515 | 520 | 91 | 91 | 1,550 | 263 | |||||||||||||||||||||||||||||||||||
Operating earnings adjusted for amortization of intangibles | $ | 30,565 | $ | 34,170 | $ | 34,636 | $ | 11,798 | $ | 10,741 | $ | 99,371 | $ | 34,781 | ||||||||||||||||||||||||||||
Average Tangible Common Equity | ||||||||||||||||||||||||||||||||||||||||||
Total average stockholders' equity | $ | 1,210,147 | $ | 1,200,632 | $ | 1,190,266 | $ | 523,590 | $ | 514,876 | $ | 1,199,440 | $ | 504,105 | ||||||||||||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||||||||||||
Less: Average goodwill | (370,224 | ) | (369,255 | ) | (366,795 | ) | (161,447 | ) | (161,447 | ) | (369,097 | ) | (160,725 | ) | ||||||||||||||||||||||||||||
Less: Average core deposit intangibles | (71,355 | ) | (73,875 | ) | (76,727 | ) | (11,932 | ) | (12,354 | ) | (73,965 | ) | (13,370 | ) | ||||||||||||||||||||||||||||
Average tangible common equity | $ | 768,568 | $ | 757,502 | $ | 746,744 | $ | 350,211 | $ | 341,075 | $ | 756,378 | $ | 330,010 | ||||||||||||||||||||||||||||
Operating return on average tangible common equity3 | 15.78 | % | 18.09 | % | 18.81 | % | 13.37 | % | 12.49 | % | 17.57 | % | 14.09 | % | ||||||||||||||||||||||||||||
Efficiency ratio | 43.67 | % | 51.49 | % | 82.30 | % | 54.27 | % | 57.58 | % | 59.42 | % | 55.15 | % | ||||||||||||||||||||||||||||
Operating efficiency ratio | 42.36 | % | 43.66 | % | 43.54 | % | 50.65 | % | 49.09 | % | 43.19 | % | 49.45 | % |
1 Loss on sale of disposed branch assets for the nine months ended September 30, 2019 and for the three months ended June 30, 2019 is included in merger and acquisition expense in the condensed consolidated statements of income.
2 Lease exit costs, net for the nine months ended September 30, 2018 includes a $1.5 million consent fee and $240 thousand in professional services paid in January 2018 to separately assign and sublease two of our branch leases that we ceased using in 2017 offset by the reversal of the corresponding assigned lease cease-use liability totaling $669 thousand.
3 Annualized ratio.
lrenfro@veritexbank.com scaudle@veritexbank.com
Source: Veritex Holdings, Inc.