0001501570-20-000220 | 10-Q | XBRL Viewer

Fair Value

The following table summarizes assets measured at fair value on a recurring basis as of June 30, 2020 and December 31, 2019, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:


	June 30, 2020
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
Financial Assets:
Available for sale securities	$	—	$	1,080,070	$	—	$	1,080,070
Equity securities with a readily determinable fair value	15,835		—		—		15,835
PPP loans	—		398,949		—		398,949
Loans held for sale⁽¹⁾	—		14,962		—		14,962
Interest rate swap designated as hedging instruments	—		2,525		—		2,525
Customer interest rate swaps not designated as hedging instruments	—		16,206		—		16,206
Correspondent interest rate caps and collars not designated as hedging instruments	—		6		—		6

Financial Liabilities:
Interest rate swap designated as hedging instruments	—		3,936		—		3,936
Correspondent interest rate swaps not designated as hedging instruments	—		17,370		—		17,370
Customer interest rate caps and collars not designated as hedging instruments	—		6		—		6

⁽¹⁾ Represents loans held for sale elected to be carried at fair value upon origination or acquisition.


	December 31, 2019
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
Financial Assets:
Available for sale securities	$	—	$	964,365	$	—	$	964,365
Equity securities with a readily determinable fair value	11,122		—		—		11,122
Loans held for sale⁽¹⁾	—		10,068		—		10,068
Correspondent interest rate swaps	—		105		—		105
Customer interest rate swaps	—		4,393		—		4,393
Correspondent interest rate caps and collars	—		11		—		11
Commercial loan interest rate floor	—		3,353		—		3,353
Financial Liabilities:
Correspondent interest rate swaps	—		4,736		—		4,736
Customer interest rate swaps	—		84		—		84
Customer interest rate caps and collars	—		11		—		11

⁽¹⁾ Represents loans held for sale elected to be carried at fair value upon origination or acquisition.

There were no transfers between Level 2 and Level 3 during the six months ended June 30, 2020 and 2019.

The following table summarizes assets measured at fair value on a non-recurring basis as of June 30, 2020 and December 31, 2019, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:


	Fair Value Measurements Using
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
As of June 30, 2020
Assets:
Collateral dependent loans with an allowance	$	—	$	—	$	18,804	$	18,804

As of December 31, 2019
Assets:
Impaired loans	—		—		4,504		4,504
Other real estate owned	—		—		5,995		5,995

At June 30, 2020, collateral dependent loans with an allowance had a recorded investment of $18,804, with $5,713 specific allowance for credit loss allocated. At December 31, 2019, impaired loans had a carrying value of $4,504, with $1,602 specific allowance for credit loss allocated.

Other real estate owned consisted of four properties recorded with a fair value of approximately $5,995 at December 31, 2019.

There were no liabilities measured at fair value on a non-recurring basis as of June 30, 2020 or December 31, 2019.

Fair Value of Financial Instruments

The Company’s methods of determining fair value of financial instruments in this Note are consistent with its methodologies disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Please refer to Note 17 in the Company’s Annual Report on Form 10-K for information on these methods.

The estimated fair values and carrying values of all financial instruments not measured at fair value on a recurring basis under current authoritative guidance as of June 30, 2020 and December 31, 2019 were as follows:


			Fair Value
	Carrying Amount		Level 1		Level 2		Level 3
June 30, 2020
Financial assets:
Cash and cash equivalents	$	160,306	$	—	$	160,306	$	—
Held to maturity investments	31,991		—		35,211		—
Loans held for sale¹	13,079		—		13,079		—

Loans held for investment, mortgage warehouse²	441,992		—		—		443,185
Loans held for investment²	5,726,873		—		—		5,632,965
Accrued interest receivable	30,449		—		30,449		—
Bank-owned life insurance	81,876		—		81,876		—
Servicing asset	2,940		—		3,032		—
Equity securities without a readily determinable fair value	3,575		N/A		N/A		N/A
Federal Home Loan Bank and Federal Reserve Bank stock	83,785		N/A		N/A		N/A
Financial liabilities:
Deposits	$	6,125,547	$	—	$	6,110,795	$	—
Advances from FHLB	1,087,794		—		1,101,977		—
Accrued interest payable	4,088		—		4,088		—
Subordinated debentures and subordinated notes	140,283		—		140,283		—
Securities sold under agreement to repurchase	1,772		—		1,772		—

December 31, 2019
Financial assets:
Cash and cash equivalents	$	251,550	$	—	$	251,550	$	—
Held to maturity investments	32,965		—		34,810		—
Loans held for sale¹	4,012		—		4,012		—
Loans held for investment, mortgage warehouse²	183,628		—		—		185,060
Loans held for investment²	5,737,577		—		—		5,714,885
Accrued interest receivable	19,508		—		19,508		—
Bank-owned life insurance	80,915		—		80,915		—
Servicing asset	3,113		—		3,113		—
Equity securities without a readily determinable fair value	3,575		N/A		N/A		N/A
Federal Home Loan Bank and Federal Reserve Bank stock	68,348		N/A		N/A		N/A
Financial liabilities:
Deposits	$	5,894,350	$	—	$	5,692,217	$	—
Advances from FHLB	677,870		—		708,692		—
Accrued interest payable	5,893		—		5,893		—
Subordinated debentures and subordinated notes	145,571		—		145,571		—
Other borrowings	2,353		—		2,353		—

¹ Loans held for sale represent mortgage loans held for sale that are carried at lower of cost or market.

² Carried at amortized cost.

Derivative Instruments and Hedging Activities Disclosure [Abstract]

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Derivative Financial Instruments

6 Months Ended

Jun. 30, 2020

Derivative Financial Instruments

The Company primarily uses derivatives to manage exposure to market risk, including interest rate risk and credit risk and to assist customers with their risk management objectives. Management will designate certain derivatives as hedging instruments in a qualifying hedge accounting relationship. The Company’s remaining derivatives consist of derivatives held for customer accommodation or other purposes.

The fair value of derivative positions outstanding is included in other assets and accounts payable and other liabilities on the accompanying condensed consolidated balance sheets and in the net change in each of these financial statement line items in the accompanying condensed consolidated statements of cash flows. For derivatives not designated as hedging instruments, gains and losses due to changes in fair value are included in other noninterest income and the operating section of the condensed consolidated statement of cash flows. For derivatives designated as hedging instruments, the entire change in the fair value related to the derivative instrument is recognized as a component of other comprehensive income and subsequently reclassified into interest income or interest expense when the forecasted transaction affects income. The notional amounts and estimated fair values as of June 30, 2020 and December 31, 2019 are as shown in the table below.


	June 30, 2020										December 31, 2019
			Estimated Fair Value								Estimated Fair Value
	Notional Amount		Asset Derivative		Liability Derivative		Notional Amount		Asset Derivative		Liability Derivative
Derivatives designated as hedging instruments (cash flow hedges):
Interest rate swap on borrowing advances	$	500,000	$	2,525	$	—	$	—	$	—	$	—
Interest rate swap on money market deposit account payments	250,000		—		3,936		—		—		—
Commercial loan interest rate floor	—		—		—		275,000		3,353		—
Total derivatives designated as hedging instruments	750,000		2,525		3,936		275,000		3,353		$	—

Derivatives not designated as hedging instruments:
Financial institution counterparty:
Interest rate swaps	$	300,588	$	—	$	17,370	$	222,394	$	105	$	4,736
Interest rate caps and collars	73,094		6		—		90,093		11		—
Commercial customer counterparty:
Interest rate swaps	300,588		16,206		—		222,394		4,393		84
Interest rate caps and collars	73,094		—		6		90,093		—		11
Total derivatives not designated as hedging instruments	747,364		16,212		17,376		$	624,974	4,509		4,831
Offsetting derivative assets/liabilities			6		6				(2,895)		(2,895)
Total Derivatives	$	1,497,364	18,743		21,318		$	899,974	4,967		1,936

Pre-tax gain (loss) included in the condensed consolidated statements of income and related to derivative instruments for the three and six months ended June 30, 2020 were as follows. We had no cash flow hedges for the three and six months ended June 30, 2019.


	For the Three Months Ended June 30, 2020										For the Three Months Ended June 30, 2019
	Net gain recognized in other comprehensive income on derivative		Gain (loss) reclassified from accumulated other comprehensive income into income		Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income		Net Gain recognized in other comprehensive income on derivative		Loss reclassified from accumulated other comprehensive income into income		Location of Loss Reclassified from Accumulated Other Comprehensive Income into Income
Derivatives designated as hedging instruments (cash flow hedges):
Interest rate swap on borrowing advances	$	(2,089)	$	—	Interest Expense		$	—	$	—
Interest rate swap on money market deposit account payments	(2,033)		(215)		Interest Expense		—		—
Commercial loan interest rate floor	(546)		546		Interest Income		1,620		(139)		Interest Income
Total	$	(4,668)	$	331			$	1,620	$	(139)

					Gain recognized in other noninterest income						Loss recognized in other noninterest income
Derivatives not designated as hedging instruments:
Interest rate swaps, caps and collars					$	75					$	(120)


	For the Six Months Ended June 30, 2020										For the Six Months Ended June 30, 2019
	Net gain recognized in other comprehensive income on derivative		Gain (loss) reclassified from accumulated other comprehensive income into income		Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income		Net Gain recognized in other comprehensive income on derivative		Loss reclassified from accumulated other comprehensive income into income		Location of Loss Reclassified from Accumulated Other Comprehensive Income into Income
Derivatives designated as hedging instruments (cash flow hedges):
Interest rate swap on borrowing advances	$	2,525	$	—	Interest Expense		$	—	$	—
Interest rate swap on money market deposit account payments	(3,936)		(215)		Interest Expense		—		—
Commercial loan interest rate floor	475		831		Interest Income		1,620		(139)		Interest Income
Total	$	(936)	$	616			$	1,620	$	(139)


Derivatives not designated as hedging instruments:					Gain recognized in other noninterest income						Gain recognized in other noninterest income
Interest rate swaps, caps and collars					$	576					$	130

Cash Flow Hedges

In March 2020, the Company entered into an interest rate swap for a notional amount of $500,000 to hedge the variability of cash flow payments attributable to changes in interest rates in regards to forecasted issuances of three-month term debt arrangements every three months from March 2022 through March 2032. These forecasted borrowings can be sourced from an FHLB advance, repurchase agreement, brokered certificate of deposit or some combination.

In March 2020, the Company entered into an interest rate swap for a notional amount of $250,000 to hedge the variability of cash flow payments attributable to changes in interest rates in regards to forecasted money market account borrowings from March 2020 through March 2025.

In May 2019, the Company entered into a $275,000 notional interest rate floor for commercial loans with a two-year term. The interest rate floor had a purchased floor strike of 2.43%. In February 2020, the Company terminated this interest rate floor. The gain resulting from the termination of the interest rate floor will remain in other comprehensive income (loss) and will be accreted into earnings over the remaining period of the former hedging relationship unless the forecasted transaction becomes probable of not occurring.

Interest Rate Swap, Floor, Cap and Collar Agreements Not Designated as Hedging Derivatives

In order to accommodate the borrowing needs of certain commercial customers, the Company has entered into interest rate swap or cap agreements with those customers. These interest rate derivative contracts effectively allow the Company’s customers to convert a variable rate loan into a fixed rate loan. In order to offset the exposure and manage interest rate risk, at the time an agreement was entered into with a customer, the Company entered into an interest rate swap or cap with a correspondent bank counterparty with offsetting terms. These derivative instruments are not designated as accounting hedges and changes in the net fair value are recognized in noninterest income or expense. Because the Company acts as an intermediary for its customers, changes in the fair value of the underlying derivative contracts substantially offset each other and do not have a material impact on the Company’s results of operations. The fair value amounts are included in other assets and other liabilities.

The following is a summary of the interest rate swaps, caps and collars outstanding as of June 30, 2020 and December 31, 2019.


	June 30, 2020
	Notional Amount		Fixed Rate	Floating Rate	Maturity	Fair Value
Non-hedging derivative instruments:
Customer interest rate derivatives:
Interest rate swaps - receive fixed/pay floating	$	300,588	3.140 - 8.470%	LIBOR 1 month + —% - 5.00% PRIME H15 - 0.250%	Wtd. Avg. 4.2 years	$	(17,370)
Interest rate caps and collars	$	73,094	2.500% / 3.100%	LIBOR 1 month + —%	Wtd. Avg. 1.4 years	$	6

Correspondent interest rate derivatives:
Interest rate swaps - pay fixed/receive floating	$	300,588	3.140 - 8.470%	LIBOR 1 month + —% - 5.00% PRIME H15 - 0.250%	Wtd. Avg. 4.2 years	$	16,206
Interest rate caps and collars	$	73,094	3.000% / 5.000%	LIBOR 1 month + —% - 2.50%	Wtd. Avg. 1.4 years	$	(6)

	December 31, 2019
	Notional Amount		Fixed Rate	Floating Rate	Maturity	Fair Value
Non-hedging derivative instruments:
Customer interest rate derivatives:
Interest rate swaps - receive fixed/pay floating	$	222,394	2.944 - 8.470%	LIBOR 1 month + —% - 5.00% PRIME H15 - 0.250%	Wtd. Avg. 3.3 years	$	(4,632)
Interest rate caps and collars	$	90,093	2.430% / 5.800%	LIBOR 1 month + —% - 3.75%	Wtd. Avg. 1.5 years	$	11

Correspondent interest rate derivatives:
Interest rate swaps - pay fixed/receive floating	$	222,394	2.944 - 8.470%	LIBOR 1 month + —% - 5.00% PRIME H15 - 0.250%	Wtd. Avg. 3.3 years	$	4,309
Interest rate caps and collars	$	90,093	3.000% / 5.800%	LIBOR 1 month + —% - 3.75%	Wtd. Avg. 1.5 years	$	(11)

Financial Instruments with Off-Balance Sheet Risk

6 Months Ended

Jun. 30, 2020

Financial Instruments with Off-Balance Sheet Risk

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the condensed consolidated balance sheets.

The Company’s exposure to credit loss in the event of nonperformance by the other party to a financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

The following table sets forth the approximate amounts of these financial instruments as of June 30, 2020 and December 31, 2019:


	June 30,		December 31,
	2020		2019
Commitments to extend credit	$	2,243,122	$	1,950,350
Standby and commercial letters of credit	39,454		27,196
Total	$	2,282,576	$	1,977,546

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Management evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary upon extension of credit, is based on management’s credit evaluation of the borrower.

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Standby letters of credit generally have fixed expiration dates or other termination clauses and may require payment of a fee. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Company’s policy for obtaining collateral and the nature of such collateral is substantially the same as that involved in making commitments to extend credit.

The table below presents our financial instruments with off-balance sheet risk, as well as the activity in the allowance for unfunded commitment credit losses related to those financial instruments. This allowance is recorded in accounts payable and other liabilities on the condensed consolidated balance sheets:


	June 30,		December 31,
	2020		2019
Beginning balance for allowance for unfunded commitments	$	878	$	878
Impact of CECL adoption	840		—
Provision for unfunded commitments	6,680		—
Ending balance of allowance for unfunded commitments	$	8,398	$	878

Stock-Based Awards

6 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

Stock-Based Awards

Veritex 2010 Stock Option and Equity Incentive Plan (“2010 Incentive Plan”)

The Company recognized no stock compensation expense related to the 2010 Incentive Plan for the three and six months ended June 30, 2020. The Company recognized stock compensation expense related to the 2010 Incentive Plan of $2 for the three and six months ended June 30, 2019.

A summary of option activity under the 2010 Incentive Plan for the six months ended June 30, 2020 and 2019, and changes during the periods then ended, is presented below:


	2010 Incentive Plan
	Non-Performance Based Stock Options
	Shares Underlying Options	Weighted Exercise Price		Weighted Average Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2019	275,000	$	10.12	2.39 years



Exercised	(15,000)	10.28
Outstanding and exercisable at June 30, 2019	260,000	$	10.12	1.86 years


Outstanding at January 1, 2020	257,500	$	10.28	1.37 years	$	4,971



Exercised	(207,500)	10.14
Outstanding and exercisable at June 30, 2020	50,000	$	10.84	1.98 years	$	414

As of June 30, 2020, December 31, 2019 and June 30, 2019 there was no unrecognized stock compensation expense related to non-performance based stock options.

A summary of the fair value of the Company’s stock options exercised under the 2010 Incentive Plan for the six months ended June 30, 2020 and 2019 is presented below:


	Fair Value of Options Exercised as of June 30,
	2020	2019
Non-performance based stock options exercised	5,851	390

2019 Amended Plan and Green Acquired Omnibus Plans

2020 Grants of Restricted Stock Units

During the six months ending June 30, 2020, the Company granted non-performance-based and performance-based restricted stock units (“RSUs”) under the 2019 Amended and Restated Omnibus Incentive Plan, which amended and restated the 2014 Omnibus Incentive Plan (“2019 Amended Plan”), and the Veritex (Green) 2014 Omnibus Equity Incentive Plan (“Veritex (Green) 2014 Plan”). The majority of the non-performance-based RSUs granted to employees during the six months ending June 30, 2020 cliff vest after three to five years from the grant date. There were also non-performance-based RSUs granted to the Company’s directors that vest in four equal quarterly installments from the grant date.

The performance-based RSUs granted in January 2020 are subject to “cliff” vesting, with a vesting date of January 1, 2023, based on a performance period starting on December 31, 2019 and ending on December 31, 2022. The vesting percentage is determined based on the Company’s total shareholder return (“TSR”) relative to the TSR of 15 peer companies (“Peer Group”) over the performance period. Below is a table showing the range of vesting percentages for the performance-based RSUs based on the Company’s TSR percentile rank.


			Vesting %
Below the 24.9^th percentile of Peer Group TSR			—%
Within the 25^th to 49.9^th percentile of Peer Group TSR			50%
Within the 50^th the 74.9^th percentile of Peer Group TSR			100%
At or above the 75^th percentile of Peer Group TSR			150%

A Monte Carlo simulation was used to estimate the fair value of performance-based RSUs on the grant date that include a market condition based on the Company’s TSR relative to its Peer Group, which determines the eligible number of RSUs to vest.

2020 Grant of Stock Options

In January 2020, the Company granted non-performance-based options under the 2019 Amended Plan and the Veritex (Green) 2014 Plan, which vest over three years in equal installments on each anniversary of the grant date.

The fair value of each option award is estimated on the grant date using the Black-Scholes option-pricing model with the following assumptions used for the grants for the six months ended June 30, 2020:

Six Months Ended June 30, 2020

Expected life

5 to 6.51 years

Expected volatility

27.49% to 38.88%

Dividend yield

2.33% to 5.14%

Risk-free interest rate

0.36% to 1.76%

The expected life is based on the amount of time that options being valued are expected to remain outstanding. The dividend yield assumption is based on the Company’s dividend history. The expected volatility is based on historical volatility of the Company. The risk-free interest rates are based upon yields of U.S. Treasury issues with a term equal to the expected life of the option being valued.

Stock Compensation Expense and Liability Award Compensation Expense

Stock compensation expense for equity awards under the 2019 Amended Plan was approximately $1,392 and $2,880 for the three and six months ended June 30, 2020. For the three and six months ended June 30, 2019, the Company recognized $548 and $638 in stock compensation expense.

Stock compensation expense for options and RSUs granted under the Veritex (Green) 2014 Plan was approximately $453 and $923 for the three and six months ended June 30, 2020, respectively. Stock compensation expense for options and RSUs granted under the Veritex (Green) 2014 Plan was approximately $386 and $771 for the three and six months ended June 30, 2019, respectively.

There was no compensation expense for liability-classified awards under the 2019 Amended Plan during the three and six months ended June 30, 2020. Compensation expense for liability-classified awards was $695 and $1,403 for the three and six months ended June 30, 2019.

2019 Amended Plan

A summary of the status of the Company’s stock options under the 2019 Amended Plan as of June 30, 2020 and 2019, and changes during the six months then ended, is as follows:


	2019 Amended Plan
	Non-performance Based Stock Options
	Equity Awards										Liability Awards
	Shares Underlying Options	Weighted Exercise Price		Weighted Average Contractual Term	Aggregate Intrinsic Value		Shares Underlying Options	Weighted Exercise Price		Weighted Average Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2019	449,520	$	24.47	8.24 years			—	$	—
Granted	151,730	23.72					253,633	21.38
Conversion to equity awards	253,633	21.38					(253,633)	21.38
Forfeited	(26,789)	25.82					—	—

Exercised	(11,848)	15.37					—	—
Outstanding at June 30, 2019	816,246	$	23.45	8.65 years			—	$	—		—
Options exercisable at June 30, 2019	418,896	$	24.58	7.78 years			—	$	—

Outstanding at January 1, 2020	849,768	$	23.61	8.24 years	$	4,687	—	$	—
Granted	170,025	27.31					—	—

Forfeited	(22,456)	28.00					—	—

Exercised	(33,439)	19.19					—	—
Outstanding at June 30, 2020	963,898	$	24.32	8.08 years	$	(6,390)	—	$	—		$	—
Options exercisable at June 30, 2020	487,983	$	24.21	7.31 years	$	(4,440)	—	$	—
Weighted average fair value of options granted during the period		$	27.31					$	—

As of June 30, 2020, December 31, 2019 and June 30, 2019, there was $3,206, $2,948 and $1,373 of total unrecognized compensation expense related to equity options awarded under the 2019 Amended Plan, respectively. As of June 30, 2020, there was no unrecognized compensation expense related to liability options awarded under the 2019 Amended Plan. The unrecognized compensation expense at June 30, 2020 is expected to be recognized over the remaining weighted average requisite service period of 2.13 years.

A summary of the status of the Company’s non-performance-based RSUs under the 2019 Amended Plan as of June 30, 2020 and 2019, and changes during the six months then ended, is as follows:


	2019 Amended Plan
	Non-performance-Based
	RSUs
	Equity Awards				Liability Awards
	Units	Weighted Average Grant Date Fair Value		Units	Weighted Average Grant Date Fair Value
Outstanding at January 1, 2019	133,455	$	19.67	—	$	—
Granted	99,327	22.94		165,739	21.38
Conversion to equity awards	165,739	21.38		(165,739)	21.38
Vested into shares	(228,531)	23.58

Outstanding at June 30, 2019	169,990	$	22.31	—	$	—

Outstanding at January 1, 2020	175,688	$	21.65	—	$	—
Granted	328,900	26.55		—	—

Vested into shares	(66,874)	24.75		—	—
Forfeited	(470)	29.13		—	—
Outstanding at June 30, 2020	437,244	$	24.83	—	$	—

A summary of the status of the Company’s performance-based RSUs under the 2019 Amended Plan as of June 30, 2020 and 2019, and changes during the six months then ended, is as follows:


	2019 Amended Plan
	Performance-Based
	RSUs
	Equity Awards				Liability Awards
	Units	Weighted Average Grant Date Fair Value		Units	Weighted Average Grant Date Fair Value
Outstanding at January 1, 2019	63,988	$	21.28	—	$	—
Granted	36,532	22.30		32,249	21.38
Conversion to equity awards	32,249	21.38		(32,249)	21.38
Vested into shares	(51,284)	25.31		—	—
Forfeited	(17,122)	21.38		—	—
Outstanding at June 30, 2019	64,363	$	22.73	—	$	—

Outstanding at January 1, 2020	63,727	$	22.76	—	$	—
Granted	39,398	29.13		—	—

Vested into shares	(1,841)	26.65		—	—

Outstanding at June 30, 2020	101,284	$	25.22	—	$	—

As of June 30, 2020, December 31, 2019 and June 30, 2019 there was $10,038, $4,329 and $2,548 of total unrecognized compensation related to equity RSUs awarded under the 2019 Amended Plan, respectively. As of June 30, 2020, there was no of unrecognized compensation related to liability RSUs awarded under the 2019 Amended Plan. The unrecognized compensation expense at June 30, 2020 is expected to be recognized over the remaining weighted average requisite service period of 3.1 years.

A summary of the fair value of the Company’s stock options exercised and RSUs vested under the 2019 Amended Plan during the six months ended June 30, 2020 and 2019 is presented below:


	Fair Value of Options Exercised or RSUs Vested in the Six Months Ended June 30,
	2020	2019
Non-performance-based stock options exercised	943	315
Non-performance-based RSUs vested	100	5,523
Performance-based RSUs vested	18	1,089

Veritex (Green) 2014 Plan

A summary of the status of the Company’s stock options under the Veritex (Green) 2014 Plan as of June 30, 2020 and 2019, and changes during the six months then ended, is as follows:


	Veritex (Green) 2014 Plan
	Non-performance Based Stock Options
	Shares Underlying Options	Weighted Exercise Price		Weighted Average Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2019	—	$	—
Converted in acquisition of Green	304,778	15.41
Granted	211,793	21.38
Forfeited	(1,317)	21.38

Exercised	(56,193)	13.15
Outstanding at June 30, 2019	459,061	$	18.42	8.15 years
Options exercisable at June 30, 2019	248,585	$	15.92	7.05 years

Outstanding at January 1, 2020	386,969	$	19.30	7.86 years	$	3,800

Granted	31,075	29.13
Forfeited	(27,070)	21.38

Exercised	(34,476)	19.54
Outstanding at June 30, 2020	356,498	$	19.95	7.53 years	$	(878)
Options exercisable at June 30, 2020	214,342	$	17.87	6.65 years	$	(1,106)
Weighted average fair value of options granted during the period		$	29.13

As of June 30, 2020, December 31, 2019 and June 30, 2019, there was $910, $1,062, and $1,348 of total unrecognized compensation expense related to options awarded under the Veritex (Green) 2014 Plan, respectively. The unrecognized compensation expense at June 30, 2020 is expected to be recognized over the remaining weighted average requisite service period of 1.6 years.

A summary of the status of the Company’s non-performance-based RSUs under the Veritex (Green) 2014 Plan as of June 30, 2020 and 2019 and changes during the six months then ended, is as follows:


	Veritex (Green) 2014 Plan
	Non-performance-Based
	RSUs
	Units	Weighted Average Grant Date Fair Value
Outstanding at January 1, 2019	—	$	—
Granted	116,250	21.38


Outstanding at June 30, 2019	116,250	$	21.38

Outstanding at January 1, 2020	116,250	$	21.38
Granted	93,918	28.47
Vested into shares	(38,744)	29.13
Forfeited	(4,402)	29.13
Outstanding at June 30, 2020	167,022	$	25.33

A summary of the status of the Company’s performance-based RSUs under the Veritex (Green) 2014 Plan as of June 30, 2020 and 2019 and changes during the six months then ended, is as follows:


	Veritex (Green) 2014 Plan
	Performance-Based
	RSUs
	Units	Weighted Average Grant Date Fair Value
Outstanding at January 1, 2019	—	$	—
Granted	26,145	$	21.38

Forfeited	(508)	$	21.38
Outstanding at June 30, 2019	25,637	$	21.38

Outstanding at January 1, 2020	25,320	$	21.38
Granted	8,531	29.13


Outstanding at June 30, 2020	33,851	$	23.33

As of June 30, 2020, December 31, 2019 and June 30, 2019, there was $3,249, $1,991, and $2,509, respectively, of total unrecognized compensation related to outstanding performance-based RSUs awarded under the Veritex (Green) 2014 Plan to be recognized over a remaining weighted average requisite service period of 2.5 years.

A summary of the fair value of the Company’s stock options exercised and RSUs vested under the Veritex (Green) 2014 Plan during the six months ended June 30, 2020 and 2019 presented below:


	Fair Value of Options Exercised or RSUs Vested in the Six Months Ended June 30,
	2020		2019
Non-performance-based stock options exercised	$	1,001	$	1,431
Non-performance-based RSUs vested	142		—

Green Bancorp Inc. 2010 Stock Option Plan and Green Bancorp Inc. 2006 Stock Option Plan

In addition to the Veritex (Green) 2014 Plan discussed earlier in this Note, the Company assumed two stock and incentive plans in the Green acquisition, the Green Bancorp Inc. 2010 Stock Option Plan (“Green 2010 Plan”) and the Green Bancorp Inc. 2006 Stock Option Plan (“Green 2006 Plan”). For the Green 2010 Plan and the Green 2006 Plan, 768,628 and 11,850 of stock options, respectively, were converted in the acquisition of Green during the six months ended June 30, 2019. No stock options or restricted stock units were awarded from these plans during the six months ended June 30, 2020 or 2019. During the six months ended June 30, 2020, 437,946 stock options granted under the Green 2010 Plan were exercised and no stock options granted under the Green 2006 Plan were exercised. As of June 30, 2020, 128,990 exercisable stock options remain outstanding in the Green 2010 Plan and no exercisable stock options remain outstanding in the Green 2006 Plan.

Income Taxes

6 Months Ended

Jun. 30, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income tax expense for the three and six months ended June 30, 2020 and 2019 was as follows:


	Three Months Ended June 30,									Six Months Ended June 30,
	2020			2019			2020			2019
Income tax expense for the period	$	3,987		$	7,369		$	3,303		$	9,358
Effective tax rate	14.2		%	21.5		%	10.5		%	21.4		%

For the three and six months ended June 30, 2020, the Company had an effective tax rate of 14.2% and 10.5%. The decrease in the effective tax rate during the three months ended was primarily due to a net discrete tax benefit of $1,799 as a result of the Company amending a prior year Green Bancorp, Inc. (“Green”) tax return to carry back a net operating loss ("NOL") incurred by Green on January 1, 2019. The Company was allowed to carry back this NOL as result of a provision in the Coronavirus Aid, Relief, and Economic Security Act (the “CARES” Act) which permits NOLs generated in tax years 2018, 2019 or 2020 to be carried back five years. In addition to this, during the six months ended June 30, 2020, the Company recognized a net discrete tax benefit of $1,423 primarily associated with the recognition of excess tax benefit realized on share-based payment awards. Excluding these discrete tax items, the Company had an effective tax rate of 20.7% and 20.9% for the three and six months ended June 30, 2020.

Commitments and Contingencies	6 Months Ended
Commitments and Contingencies	Jun. 30, 2020
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies Litigation The Company may from time to time be involved in legal actions arising from normal business activities. In the opinion of management, there are no claims for which it is reasonably possible that an adverse outcome would have a material effect on the Company's financial position, liquidity or results of operations. The Company is not aware of any material unasserted claims.

Capital Requirements and Restrictions on Retained Earnings

6 Months Ended

Jun. 30, 2020

Banking and Thrift [Abstract]

Capital Requirements and Restrictions on Retained Earnings

The Company, on a consolidated basis, and the Bank are subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can lead to the initiation of certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the Company’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Company’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

In the first quarter of 2020, U.S. federal regulatory authorities issued an interim final rule that provides banking organizations that adopt CECL during the 2020 calendar year with the option to delay for two years the estimated impact of CECL on regulatory capital relative to regulatory capital determined under the prior incurred loss methodology, followed by a three-year transition period to phase out the aggregate amount of the capital benefit provided during the initial two-year delay (i.e., a five-year transition in total). In connection with our adoption of CECL on January 1, 2020, we have elected to utilize the five-year CECL transition.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the table below) of total, CET1 and Tier 1 capital (as defined in the regulations) to risk weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined). Management believes, as of June 30, 2020 and December 31, 2019, that the Company and the Bank met all capital adequacy requirements to which they were subject.

As of June 30, 2020 and December 31, 2019, the Company’s and the Bank’s capital ratios exceeded those levels necessary to be categorized as “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as “well capitalized,” the Company and the Bank must maintain minimum total risk-based, CET1, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table below. There are no conditions or events since June 30, 2020 that management believes have changed the Company’s categorization as “well capitalized.”

A comparison of the Company’s and Bank’s actual capital amounts and ratios to required capital amounts and ratios is presented in the following table:


	Actual						For Capital Adequacy Purposes							To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount			Ratio		Amount		Ratio
As of June 30, 2020
Total capital (to risk-weighted assets)
Company	$	955,220	12.71	%	$	601,240		8.0	%	n/a		n/a
Bank	938,457		12.49	%	601,093			8.0	%	$	751,367	10.0	%
Tier 1 capital (to risk-weighted assets)
Company	755,141		10.05	%	450,830			6.0	%	n/a		n/a
Bank	848,508		11.29	%	450,934			6.0	%	601,246		8.0	%
Common equity tier 1 to risk-weighted assets
Company	726,006		9.66	%	338,202			4.5	%	n/a		n/a
Bank	848,508		11.29	%	338,201			4.5	%	488,512		6.5	%
Tier 1 capital (to average assets)
Company	755,121		9.16	%	329,747			4.0	%	n/a		n/a
Bank	848,508		10.29	%	329,838			4.0	%	412,297		5.0	%
As of December 31, 2019
Total capital (to risk-weighted assets)
Company	$	917,939	13.10	%	$	560,573		8.0	%	n/a		n/a
Bank	870,838		12.44	%	560,024			8.0	%	$	700,031	10.0	%
Tier 1 capital (to risk-weighted assets)
Company	771,679		11.02	%	420,152			6.0	%	n/a		n/a
Bank	840,126		12.00	%	420,063			6.0	%	560,084		8.0	%
Common equity tier 1 to risk-weighted assets
Company	742,675		10.60	%	315,287			4.5	%	n/a		n/a
Bank	840,126		12.00	%	315,047			4.5	%	455,068		6.5	%
Tier 1 capital (to average assets)
Company	771,679		10.17	%	303,512			4.0	%	n/a		n/a
Bank	840,126		11.07	%	303,569			4.0	%	379,461		5.0	%

Dividend Restrictions — Dividends paid by the Bank are subject to certain restrictions imposed by regulatory agencies. The Basel III Capital Rules further limit the amount of dividends that may be paid by the Bank. There are no dividend payment limitations by the Bank if the Bank’s capital conservation buffer is greater than 2.5%. The Bank had a capital conservation buffer of 4.49% as of June 30, 2020. Dividends of $8,563, or $0.17, and $17,291, or $0.34, were paid by the Company during the three and six months ended June 30, 2020, respectively. Dividends of $6,783, or $0.125, and $13,599, or $0.25, were paid by the Bank to the Company during the three six months ended June 30, 2019, respectively.

The entire disclosure for regulatory capital requirement for depository and lending institutions. Institutions include, but not are not limited to, finance company, insured depository institution, bank holding company, savings and loan association holding company, bank and savings institution not federally insured, mortgage company, foreign financial institution and credit union.

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Adoption of New Accounting Standards

Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Veritex and the Bank, its wholly owned subsidiary.

Segment Reporting

Reclassifications

Earnings Per Share

Earnings Per ShareEarnings per share (“EPS”) are based upon the Company’s weighted average shares outstanding.

GAAP. The Company recorded a net decrease to retained earnings of $15,505 as of January 1, 2020 for the cumulative effect of adopting ASC 326.

The following table illustrates the impact of ASC 326.


	January 1, 2020
	As Reported Under ASC 326		Pre-ASC 326 Adoption		Impact of ASC 326 Adoption
Assets:
Allowance for credit losses on debt securities held-to-maturity	$	—	$	—	$	—
Allowance for credit losses on loans
Construction and land	3,760		3,822		(62)
Farmland	65		61		4
1 - 4 family residential	6,002		1,378		4,624
Multi-family residential	2,593		1,965		628
Owner Occupied Commercial Real Estate	13,066		1,978		11,088
Non-Owner Occupied Commercial Real Estate	15,314		8,139		7,175
Commercial	27,729		12,369		15,360
Consumer	442		122		320
Allowance for credit losses on loans	$	68,971	$	29,834	$	39,137

Liabilities:
Allowance for credit losses on OBS credit exposures	$	1,718	$	878	840

Debt Securities, Available-for-sale

Debt Securities

Debt Securities, Held-to-maturity

Debt Securities

Allowance for Credit Losses - Available for Sale Securities

Allowance for Credit Losses – Available for Sale Securities

Allowance for Credit Losses – Held to Maturity Securities

Loans Held for Investment

Acquired Loans

The subsequent measurement of expected credit losses for all acquired loans is the same as the subsequent measurement of expected credit losses for originated loans.

Allowance for Credit Losses - Loans

The ACL is a valuation account that is deducted from the loans' amortized cost basis to present the net amount expected to be collected on the loans.

financial assets that are reasonable and supportable, to the identified pools of financial assets with similar risk characteristics for which the historical loss experience was observed.

The Company has identified the following pools of financial assets with similar risk characteristics for measuring expected credit losses:

Real Estate — This category of loans consists of the following loan types:

Farmland — These loans are principally loans to purchase farmland.

Consumer — This category of loans is used for personal use typically for consumer purposes.

Collateral Dependent Financial Assets

Troubled-debt Restructurings (TDRs)

Contractual Term

Discounted Cash Flow Method

Loss-Rate Method

Probability of Default/Loss Given Default Method

Loan Commitments and Allowance for Credit Losses on Off-Balance Sheet Credit Exposures

Derivative Financial Instruments

Derivative Financial Instruments (Not Designated as Accounting Hedges)

Derivative Financial Instruments (Designated as Cash Flow Hedges)

Fair Value Option

Fair Value OptionOn a specific identification basis, the Company may elect the fair value option for certain financial instruments in the period the financial instrument was originated or acquired. As of June 30, 2020, the Company had held for sale government guaranteed loans and held for investment PPP loans that the Company had elected to carry at fair value. Changes in fair value for instruments using the fair value option are recorded in noninterest income.The Company had a change in fair value for loans the Company elected to carry at fair value of $10,567 and $8,227 for the three and six months ended June 30, 2020, respectively, as compared to $2,257 and $2,507 for the three and six months ended June 30, 2019, respectively, that was recorded in government guaranteed loan income, net on the Condensed Consolidated Statements of Income. In addition, the Company records upfront costs and fees as incurred that are related to items for which the fair value option is elected through noninterest income. For the three and six month ended June 30, 2020, respectively, the Company recognized upfront fees of $12,516 on PPP loans through government guaranteed loan income, net on the Condensed Consolidated Statements of Income. There were minimal fees recognized on loans electing the fair value option for the three and six months ended June 30, 2019.

Goodwill

Goodwill Goodwill resulting from a business combination represents the excess of the fair value of the consideration transferred over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill is not amortized but is reviewed for potential impairment annually on October 31 of each fiscal year or when a triggering event occurs. The Company may first assess qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount, including goodwill. The Company has an unconditional option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the quantitative goodwill impairment test, and the Company may resume performing the qualitative assessment in any subsequent period. If the Company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the Company proceeds to perform the quantitative goodwill impairment test. The quantitative goodwill impairment test, used to identify both the existence of potential impairment and the amount of impairment loss, compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. Any such adjustments to goodwill are reflected in the results of operations in the periods in which they become known.

Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Schedule of Reconciliation Between Weighted Average Shares Used for Calculating Basic and Diluted EPS

The table below sets forth the reconciliation between weighted average shares used for calculating basic and diluted EPS for the three and six months ended June 30, 2020 and 2019:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Earnings (numerator)
Net income	$	24,028	$	26,876	$	28,162	$	34,283


Shares (denominator)
Weighted average shares outstanding for basic EPS	49,597		53,969		50,161		54,130
Dilutive effect of employee stock-based awards	130		960		222		901
Adjusted weighted average shares outstanding	49,727		54,929		50,383		55,031
EPS:
Basic	$	0.48	$	0.50	$	0.56	$	0.63
Diluted	$	0.48	$	0.49	$	0.56	$	0.62

Schedule of Impact of ASC 326

The following table illustrates the impact of ASC 326.


	January 1, 2020
	As Reported Under ASC 326		Pre-ASC 326 Adoption		Impact of ASC 326 Adoption
Assets:
Allowance for credit losses on debt securities held-to-maturity	$	—	$	—	$	—
Allowance for credit losses on loans
Construction and land	3,760		3,822		(62)
Farmland	65		61		4
1 - 4 family residential	6,002		1,378		4,624
Multi-family residential	2,593		1,965		628
Owner Occupied Commercial Real Estate	13,066		1,978		11,088
Non-Owner Occupied Commercial Real Estate	15,314		8,139		7,175
Commercial	27,729		12,369		15,360
Consumer	442		122		320
Allowance for credit losses on loans	$	68,971	$	29,834	$	39,137

Liabilities:
Allowance for credit losses on OBS credit exposures	$	1,718	$	878	840

Supplemental Statement of Cash Flows (Tables)

6 Months Ended

Jun. 30, 2020

Supplemental Cash Flow Elements [Abstract]

Schedule of Other Supplemental Cash Flow Information

Other supplemental cash flow information is presented below:


	Six Months Ended June 30,
	2020		2019
	(in thousands)
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	$	35,116	$	40,282
Cash paid for income taxes	2,330		6,300
Supplemental Disclosures of Non-Cash Flow Information:
Setup of ROU asset and lease liability upon adoption of ASC 842	$	—	$	9,380
Reclassification of deferred offering costs paid in 2018 from other assets to additional paid in capital	—		788
Reclassification of lease intangibles, cease-use liability and deferred rent liability to ROU asset upon adoption of ASC 842	—		(48)
Net foreclosure of other real estate owned and repossessed assets	4,100		1,748
Transfer of other real estate owned to other assets for losses incurred upon sale and expected to be collected from the SBA	327		—
Reclassification of branch assets held for sale to loans held for investment	—		26,171
Reclassification of branch liabilities held for sale to interest-bearing transaction and savings deposits	—		1,173
Non-cash assets acquired in business combination
Investment securities	$	—	$	660,792
Non-marketable equity securities	—		40,287
Loans held for sale	—		9,360
Loans held for investment	—		3,245,248
Accrued interest receivable	—		11,395
Bank-owned life insurance	—		56,841
Bank premises, furniture and equipment	—		36,855
Investment in trusts	—		666

Intangible assets, net	—		65,718
Goodwill	—		208,774
Other assets	—		12,649
Right of use asset	—		9,373
Deferred taxes	—		11,954
Current taxes	—		2,030
Assets held for sale	—		85,307
Total assets	$	—	$	4,457,249
Non-cash liabilities assumed in business combination
Non-interest-bearing deposits	$	—	$	825,364
Interest-bearing deposits	—		1,300,825
Certificates and other time deposits	—		1,346,915
Accounts payable and accrued expenses	—		26,261
Lease liability	—		9,373
Accrued interest payable and other liabilities	—		5,181
Securities sold under agreements to repurchase	—		3,226
Advances from Federal Home Loan Bank	—		300,000
Subordinated debentures and subordinated notes	—		56,233
Liabilities held for sale	—		52,682
Total liabilities	$	—	$	3,926,060

Securities (Tables)

6 Months Ended

Jun. 30, 2020

Investments, Debt and Equity Securities [Abstract]

Schedule of Gross Unrealized Gain Recognized on Equity Securities

The gross unrealized gain recognized on equity securities with readily determinable fair values recorded in other noninterest income in the Company’s condensed consolidated statements of income were as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Unrealized gain recognized on equity securities with a readily determinable fair value	$	462	$	157	$	213	$	293

Schedule of Carrying Amount and Approximate Fair Values of Available-for-Sale Securities

The amortized cost, related gross unrealized gains and losses, allowance for credit losses and the fair value of available for sale and held to maturity securities are as follows:


	June 30, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
Available for sale

Corporate bonds	$	150,923	$	2,874	$	2,468	$	—	$	151,329
Municipal securities	114,789		7,798		263		—		122,324
Mortgage-backed securities	271,680		17,764		—		—		289,444
Collateralized mortgage obligations	433,532		23,529		35		—		457,026
Asset-backed securities	56,531		3,416		—		—		59,947
	$	1,027,455	$	55,381	$	2,766	$	—	$	1,080,070


	June 30, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Allowance for Credit Losses
Held to maturity
Mortgage-backed securities	$	7,876	$	872	$	—	$	8,748	$	—
Collateralized mortgage obligations	1,712		144		—		1,856		—
Municipal securities	22,403		2,204		—		24,607		—
	$	31,991	$	3,220	$	—	$	35,211	$	—

The Company did not transfer any securities from available for sale to held to maturity at fair value during the three and six months ended June 30, 2020.


	December 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale

Corporate bonds	$	76,997	$	1,974	$	—	$	78,971
Municipal securities	74,956		3,724		—		78,680
Mortgage-backed securities	288,938		9,512		260		298,190
Collateralized mortgage obligations	431,276		6,465		1,503		436,238
Asset-backed securities	69,964		2,322		—		72,286
	$	942,131	$	23,997	$	1,763	$	964,365

Held to maturity
Mortgage-backed securities	$	8,621	$	452	$	—	$	9,073
Collateralized mortgage obligations	1,809		43		—		1,852
Municipal securities	22,535		1,350		—		23,885
	$	32,965	$	1,845	$	—	$	34,810

Schedule of Investment Securities That Have Been in a Continuous Unrealized Loss Position


	June 30, 2020
	Less Than 12 Months						12 Months or More						Totals
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Available for sale

Corporate bonds	$	66,947	$	2,468	$	—	$	—	$	66,947	$	2,468
Municipal securities	13,159		263		—		—		13,159		263
Mortgage-backed securities	6,810		35		—		—		6,810		35


	$	86,916	$	2,766	$	—	$	—	$	86,916	$	2,766


	December 31, 2019
	Less Than 12 Months						12 Months or More						Totals
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loss
Available for sale

Municipal securities	$	468	$	1	$	—	$	—	$	468	$	1

Mortgage-backed securities	28,883		370		—		—		28,883		370
Collateralized mortgage obligations	109,749		1,392		—		—		109,749		1,392
	$	139,100	$	1,763	$	—	$	—	$	139,100	$	1,763

Schedule of Amortized Costs and Estimated Fair Values of Securities Available for Sale, By Contractual Maturity


	June 30, 2020
	Available for Sale						Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	—	$	—	$	—	$	—
Due from one year to five years	4,919		5,169		—		—
Due from five years to ten years	133,141		133,254		2,824		3,028
Due after ten years	127,652		135,230		19,579		21,579
	265,712		273,653		22,403		24,607
Mortgage-backed securities and collateralized mortgage obligations	705,212		746,470		9,588		10,604
Asset-backed securities	56,531		59,947		—		—

	$	1,027,455	$	1,080,070	$	31,991	$	35,211


	December 31, 2019
	Available for Sale						Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	—	$	—	$	—	$	—
Due from one year to five years	4,904		5,100		—		—
Due from five years to ten years	74,596		76,403		1,204		1,219
Due after ten years	72,453		76,148		21,331		22,666
	151,953		157,651		22,535		23,885
Mortgage-backed securities and collateralized mortgage obligations	720,214		734,428		10,430		10,925
Asset-backed securities	69,964		72,286		—		—
	$	942,131	$	964,365	$	32,965	$	34,810

Schedule of Proceeds From Sales of Investment Securities Available for Sale and Gross Gains and Losses

Proceeds from sales of debt securities available for sale and gross gains and losses for the six months ended June 30, 2020 and 2019 were as follows:


	Six Months Ended June 30,
	2020		2019
Proceeds from sales	$	90,897	$	254,397
Gross realized gains	2,879		522
Gross realized losses	—		1,936

Loans and Allowance for Credit Losses (Tables)

6 Months Ended

Jun. 30, 2020

Receivables [Abstract]

Summary of Loans in the Accompanying Consolidated Balance Sheets

Loans held for investment in the accompanying condensed consolidated balance sheets are summarized as follows:


	June 30, 2020		December 31, 2019
Loans held for investment, carried at amortized cost:
Real estate:
Construction and land	$	599,510	$	629,374
Farmland	14,723		16,939
1 - 4 family residential	528,688		549,811
Multi-family residential	394,829		320,041
OOCRE	769,952		706,782
NOOCRE	1,847,480		1,784,201
Commercial	1,555,300		1,712,838
Mortgage warehouse	441,992		183,628
Consumer	14,932		17,457
	6,167,406		5,921,071

Deferred loan costs, net	1,459		134
Allowance for credit losses	(115,365)		(29,834)
Loans held for investment carried at amortized cost, net	6,053,500		5,891,371

Loans held for investment, carried at fair value:
PPP loans	398,949		—



Total loans held for investment, net	$	6,452,449	$	5,891,371

The outstanding balance represents the total amount owed, including accrued but unpaid interest, and any amounts previously charged off.


	December 31, 2019
Carrying amount	$	126,125
Outstanding balance	157,417

Changes in the accretable yield for PCI loans for the three and six months ended June 30, 2019 are included in table below.


	Three Months Ended		Six Months Ended
	June 30, 2019		June 30, 2019
Balance at beginning of period	$	33,862	$	18,747

Additions	—		18,073
Reclassifications (to) from nonaccretable	2,299		1,886

Accretion	(2,452)		(4,997)
Balance at end of period	$	33,709	$	33,709

Schedule of Activity in Allowance for Credit Loss

The activity in the ACL related to loans held for investment is as follows:


	Six Months Ended June 30, 2020
	Construction and Land			Farmland		Residential		Multifamily		OOCRE		NOOCRE		Commercial		Consumer		Total
Balance at beginning of year	$	3,822		$	61	$	1,378	$	1,965	$	1,978	$	8,139	$	12,369	$	122	$	29,834
Impact of adopting ASC 326 non-PCD loans	(707)			4		3,716		628		3,406		5,138		7,025		217		19,427
Impact of adoption ASC 326 PCD loans	645			—		908		—		7,682		2,037		8,335		103		19,710
Credit loss expense non-PCD loans	5,783			(2)		5,097		3,835		2,515		17,379		11,428		(26)		46,009
Credit loss expense PCD loans	(522)			—		(323)		—		(1,695)		3,374		1,124		(19)		1,939
Charge-offs	—			—		—		—		—		—		(1,740)		(125)		(1,865)
Recoveries	—			—		1		—		—		—		36		274		311
Ending Balance	$	9,021	0	$	63	$	10,777	$	6,428	$	13,886	$	36,067	$	38,577	$	546	$	115,365


	Six Months Ended June 30, 2019
	Construction and Land		Farmland		Residential		Multifamily		OOCRE		NOOCRE		Commercial		Consumer		Total
Balance at beginning of year	$	2,186	$	58	$	1,614	$	361	$	1,393	$	5,070	$	8,554	$	19	$	19,255
Credit Loss Expense	910		(4)		167		321		261		1,306		5,332		54		8,347
Charge-offs	—		—		—		—		—		—		(2,954)		(104)		(3,058)
Recoveries	—		—		62		—		—		—		20		86		168
Ending Balance	$	3,096	$	54	$	1,843	$	682	$	1,654	$	6,376	$	10,952	$	55	$	24,712


	December 31, 2019
	Real Estate
	Construction, Land and Farmland		Residential		Commercial Real Estate		Commercial		Consumer		Total
Loans individually evaluated for impairment	$	567	$	156	$	21,644	$	5,188	$	61	$	27,616
Loans collectively evaluated for impairment	641,799		865,927		2,372,485		1,869,259		17,267		5,766,737
PCD loans	3,947		3,769		96,854		22,019		129		126,718
Total	$	646,313	$	869,852	$	2,490,983	$	1,896,466	$	17,457	$	5,921,071

ACL Allocations
Loans individually evaluated for impairment	$	128	$	37	$	395	$	1,042	$	—	$	1,602
Loans collectively evaluated for impairment	3,755		3,306		9,702		10,754		122		27,639
PCD loans	—		—		20		573		—		593
Total	$	3,883	$	3,343	$	10,117	$	12,369	$	122	$	29,834

Schedule of Amortized Cost Basis of Collateral Dependent Loans


	Business Assets¹		Real Property¹		ACL Allocation
Real estate:
Construction and land	$	785	$	—	$	5

1 - 4 family residential	—		961		11

OOCRE	2,533		1,371		24
NOOCRE	1,486		18,876		44
Commercial	7,516		9,916		5,629

Consumer	20		130		—
Total	$	12,340	$	31,254	$	5,713

¹Loans reported exclude PCD loans that transitioned upon adoption of ASC 326 and accounted for on a pooled basis. Refer to Note 1 for further discussion.

Summary of Impaired Loans

The following table presents information on impaired loans as of December 31, 2019, as determined in accordance with ASC 310 prior to the Company’s adoption of ASU 2016-13:


	December 31, 2019⁽¹⁾
	Unpaid Contractual Principal Balance		Recorded Investment with No Allowance		Recorded Investment with Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment YTD
Real estate:
Construction and land	$	567	$	—	$	567	$	567	$	128	$	1,793
Farmland	—		—		—		—		—		—
1 - 4 family residential	156		—		156		156		37		158
Multi-family residential	—		—		—		—		—		—
Commercial real estate	21,644		21,040		604		21,644		395		22,529
Commercial	5,188		2,011		3,177		5,188		1,042		8,546
Consumer	61		61		—		61		—		62
Total	$	27,616	$	23,112	$	4,504	$	27,616	$	1,602	$	33,088

⁽¹⁾Loans reported exclude PCI loans.

Schedule of Non-Accrual Loans

Non-accrual loans aggregated by class of loans, as of June 30, 2020 and December 31, 2019, were as follows:


	June 30, 2020								December 31, 2019
	Nonaccrual		Nonaccrual With No ACL		Nonaccrual		Nonaccrual With No ACL
Real estate:
Construction and land	$	785	$	—	$	567	$	—
Farmland	—		—		—		—
1 - 4 family residential	961		852		1,581		1,581
Multi-family residential	—		—		—		—
OOCRE	3,904		2,943		3,029		2,778
NOOCRE	20,362		18,876		18,876		18,876
Commercial	17,432		1,981		5,672		2,747
Mortgage warehouse	—		—		—		—
Consumer	150		138		54		54
Total	$	43,594	$	24,790	$	29,779	$	26,036

Schedule of Age Analysis of Past Due Loans, Aggregated by Class of Loans

An age analysis of past due loans, aggregated by class of loans and including past due non-accrual loans, as of June 30, 2020 and December 31, 2019, is as follows:


	June 30, 2020
	30 to 59 Days		60 to 89 Days		90 Days or Greater		Total Past Due		Total Current		PCD		Total Loans		Total 90 Days Past Due and Still Accruing⁽¹⁾
Real estate:
Construction and land	$	—	$	—	$	785	$	785	$	595,737	$	2,988	$	599,510	$	—
Farmland	—		—		—		—		14,723		—		14,723		—
1 - 4 family residential	334		2,288		2,381		5,003		519,717		3,968		528,688		1,579
Multi-family residential	—		—		—		—		394,829		—		394,829		—
OOCRE	590		—		880		1,470		715,092		53,390		769,952		—
NOOCRE	231		16,391		18,876		35,498		1,759,289		52,693		1,847,480		—
Commercial	2,788		1,784		5,956		10,528		1,511,742		33,030		1,555,300		392
Mortgage warehouse	—		—		—		—		441,992		—		441,992		—
Consumer	1,192		49		83		1,324		13,394		214		14,932		50
Total	$	5,135	$	20,512	$	28,961	$	54,608	$	5,966,515	$	146,283	$	6,167,406	$	2,021

⁽¹⁾ Loans 90 days past due and still accruing excludes $60,630 of PCD loans as of June 30, 2020 that transitioned upon adoption of ASC 326. Refer to Note 1 for further discussion.


	December 31, 2019
	30 to 59 Days		60 to 89 Days		90 Days or Greater		Total Past Due		Total Current		PCD		Total Loans		Total 90 Days Past Due and Still Accruing⁽¹⁾
Real estate:
Construction and land	$	—	$	—	$	—	$	—	$	629,374	$	3,947	$	629,374	$	800
Farmland	—		—		—		—		16,939		—		16,939		—
1 - 4 family residential	2,595		520		1,155		4,270		541,772		3,769		549,811		959
Multi-family residential	—		—		—		—		320,041		—		320,041		—
Commercial real estate	12		3,834		868		4,714		2,389,415		96,854		2,490,983		511
Commercial	3,572		1,707		1,497		6,776		1,684,043		22,019		1,712,838		1,317
Mortgage warehouse	—		—		—		—		183,628		—		183,628		—
Consumer	30		2,641		140		2,811		14,646		129		17,457		73
Total	$	6,209	$	8,702	$	3,660	$	18,571	$	5,779,858	$	126,718	$	5,921,071	$	3,660

⁽¹⁾ Loans 90 days past due and still accruing excludes $41,328 of PCD loans accounted for on a pooled basis as of December 31, 2019.

Schedule of Loans Modified as TDRs


	Extended Amortization Period		Payment Deferrals		Total Modifications		Number of Loans






Commercial	$	1,440	$	1,337	$	2,777	3


Total	$	1,440	$	1,337	$	2,777	$	3

Summary of Internal Ratings of Loans, Including Purchased Credit Impaired Loans


	Term Loans Amortized Cost Basis by Origination Year
	2020		2019		2018		2017		2016		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
As of June 30, 2020
Construction and land:
Pass	$	41,047	$	223,836	$	231,749	$	23,852	$	12,423	$	20,796	$	40,843	$	—	$	594,546
Special mention	—		—		336		—		—		—		—		—		336
Substandard	—		—		855		785		—		—		—		—		1,640
PCD	—		—		—		—		938		2,050		—		—		2,988
Total construction and land	$	41,047	$	223,836	$	232,940	$	24,637	$	13,361	$	22,846	$	40,843	$	—	$	599,510

Farmland:
Pass	$	288	$	1,003	$	3,367	$	4,377	$	—	$	4,336	$	1,352	$	—	$	14,723


Total farmland	$	288	$	1,003	$	3,367	$	4,377	$	—	$	4,336	$	1,352	$	—	$	14,723

1 - 4 family residential:
Pass	$	61,702	$	91,523	$	103,660	$	60,959	$	38,526	$	133,313	$	24,845	$	3,026	$	517,554
Special mention	—		1,086		290		769		—		757		399		—		3,301
Substandard	10		—		347		194		629		2,066		619		—		3,865
PCD	—		—		—		—		—		3,968		—		—		3,968
Total 1 - 4 family residential	$	61,712	$	92,609	$	104,297	$	61,922	$	39,155	$	140,104	$	25,863	$	3,026	$	528,688

Multi-family residential:
Pass	$	27,939	$	114,024	$	141,151	$	29,934	$	43,413	$	8,574	$	265	$	—	$	365,300
Special mention	—		—		12,457		—		—		—		—		—		12,457
Substandard	—		17,072		—		—		—		—		—		—		17,072

Total multi-family residential	$	27,939	$	131,096	$	153,608	$	29,934	$	43,413	$	8,574	$	265	$	—	$	394,829

OOCRE:
Pass	$	82,846	$	64,781	$	84,818	$	86,618	$	97,021	$	219,020	$	7,556	$	—	$	642,660
Special mention	—		1,741		32,235		92		7,051		6,642		—		—		47,761
Substandard	—		—		1,665		2,701		9,771		5,334		263		6,407		26,141
PCD	—		—		10,263		—		7,970		35,157		—		—		53,390
Total OOCRE	$	82,846	$	66,522	$	128,981	$	89,411	$	121,813	$	266,153	$	7,819	$	6,407	$	769,952

NOOCRE:
Pass	$	169,033	$	279,348	$	486,896	$	101,984	$	203,526	$	342,748	$	14,722	$	—	$	1,598,257
Special mention	—		39,395		38,117		25,087		24,821		32,987		12,028		—		172,435
Substandard	—		390		1,352		—		—		22,352		—		—		24,094
PCD	—		—		18,655		—		6,714		27,324		1		—		52,694
Total NOOCRE	$	169,033	$	319,133	$	545,020	$	127,071	$	235,061	$	425,411	$	26,751	$	—	$	1,847,480

Commercial:
Pass	$	112,339	$	185,089	$	172,419	$	92,412	$	29,133	$	46,753	$	730,573	$	14,257	$	1,382,975
Special mention	3,901		5,291		11,313		9,340		325		—		32,414		4,072		66,656
Substandard	—		4,160		17,326		4,102		7,852		2,583		31,145		5,471		72,639
PCD	—		—		—		4,416		4,384		24,230		—		—		33,030
Total commercial	$	116,240	$	194,540	$	201,058	$	110,270	$	41,694	$	73,566	$	794,132	$	23,800	$	1,555,300

Mortgage warehouse:
Pass	$	—	$	—	$	—	$	—	$	—	$	—	$	441,992	$	—	$	441,992



Total mortgage warehouse	$	—	$	—	$	—	$	—	$	—	$	—	$	441,992	$	—	$	441,992

Consumer:
Pass	$	2,067	$	1,912	$	1,305	$	4,617	$	1,003	$	570	$	2,887	$	—	$	14,361

Substandard	—		—		—		63		121		—		—		—		184
PCD	—		—		—		40		—		185		—		—		225
Total consumer	$	2,067	$	1,912	$	1,305	$	4,720	$	1,143	$	898	$	2,887	$	—	$	14,932



Total Pass	$	497,261	$	961,516	$	1,225,365	$	404,753	$	425,045	$	776,110	$	1,265,035	$	17,283	$	5,572,368
Total Special Mention	3,901		47,513		94,748		35,288		32,216		40,529		44,841		4,072		302,946
Total Substandard	10		21,622		21,545		7,845		18,373		32,335		32,027		11,878		145,635
Total PCD	—		—		28,918		4,456		20,006		92,914		1		—		146,295
Total	$	501,172	$	1,030,651	$	1,370,576	$	452,342	$	495,640	$	941,888	$	1,341,904	$	33,233	$	6,167,406

The following table summarizes the Company’s internal ratings of its loans, including PCD loans, as of December 31, 2019:


	December 31, 2019
	Pass		Special Mention		Substandard		Doubtful		PCD		Total
Real estate:
Construction and land	$	618,773	$	3,965	$	2,689	$	—	$	3,947	$	629,374
Farmland	16,939		—		—		—		—		16,939
1 - 4 family residential	541,787		795		3,460		—		3,769		549,811
Multi-family residential	320,041		—		—		—		—		320,041
Commercial real estate	2,332,357		23,494		38,278		—		96,854		2,490,983
Commercial	1,610,150		51,999		28,670		—		22,019		1,712,838
Mortgage warehouse	183,628		—		—		—		—		183,628
Consumer	17,106		40		182		—		129		17,457
Total	$	5,640,781	$	80,293	$	73,279	$	—	$	126,718	$	5,921,071

Schedule of Summary of Changes in Servicing Assets

A summary of the changes in the related servicing assets are as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Balance at beginning of period	$	2,990	$	3,972	$	3,113	$	1,304
Servicing asset acquired through acquisition	—		—		—		2,382
Increase from loan sales	22		—		131		461

Amortization charged to income	(72)		(179)		(304)		(354)
Balance at end of period	$	2,940	$	3,793	$	2,940	$	3,793

Fair Value (Tables)

6 Months Ended

Jun. 30, 2020

Schedule of Assets Measured at Fair Value on a Recurring Basis


	June 30, 2020
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
Financial Assets:
Available for sale securities	$	—	$	1,080,070	$	—	$	1,080,070
Equity securities with a readily determinable fair value	15,835		—		—		15,835
PPP loans	—		398,949		—		398,949
Loans held for sale⁽¹⁾	—		14,962		—		14,962
Interest rate swap designated as hedging instruments	—		2,525		—		2,525
Customer interest rate swaps not designated as hedging instruments	—		16,206		—		16,206
Correspondent interest rate caps and collars not designated as hedging instruments	—		6		—		6

Financial Liabilities:
Interest rate swap designated as hedging instruments	—		3,936		—		3,936
Correspondent interest rate swaps not designated as hedging instruments	—		17,370		—		17,370
Customer interest rate caps and collars not designated as hedging instruments	—		6		—		6

⁽¹⁾ Represents loans held for sale elected to be carried at fair value upon origination or acquisition.


	December 31, 2019
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
Financial Assets:
Available for sale securities	$	—	$	964,365	$	—	$	964,365
Equity securities with a readily determinable fair value	11,122		—		—		11,122
Loans held for sale⁽¹⁾	—		10,068		—		10,068
Correspondent interest rate swaps	—		105		—		105
Customer interest rate swaps	—		4,393		—		4,393
Correspondent interest rate caps and collars	—		11		—		11
Commercial loan interest rate floor	—		3,353		—		3,353
Financial Liabilities:
Correspondent interest rate swaps	—		4,736		—		4,736
Customer interest rate swaps	—		84		—		84
Customer interest rate caps and collars	—		11		—		11

⁽¹⁾ Represents loans held for sale elected to be carried at fair value upon origination or acquisition.

Schedule of Assets Measured at Fair Value on a Non-Recurring Basis


	Fair Value Measurements Using
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
As of June 30, 2020
Assets:
Collateral dependent loans with an allowance	$	—	$	—	$	18,804	$	18,804

As of December 31, 2019
Assets:
Impaired loans	—		—		4,504		4,504
Other real estate owned	—		—		5,995		5,995

Schedule of Estimated Fair Values and Carrying Values of All Financial Instruments


			Fair Value
	Carrying Amount		Level 1		Level 2		Level 3
June 30, 2020
Financial assets:
Cash and cash equivalents	$	160,306	$	—	$	160,306	$	—
Held to maturity investments	31,991		—		35,211		—
Loans held for sale¹	13,079		—		13,079		—

Loans held for investment, mortgage warehouse²	441,992		—		—		443,185
Loans held for investment²	5,726,873		—		—		5,632,965
Accrued interest receivable	30,449		—		30,449		—
Bank-owned life insurance	81,876		—		81,876		—
Servicing asset	2,940		—		3,032		—
Equity securities without a readily determinable fair value	3,575		N/A		N/A		N/A
Federal Home Loan Bank and Federal Reserve Bank stock	83,785		N/A		N/A		N/A
Financial liabilities:
Deposits	$	6,125,547	$	—	$	6,110,795	$	—
Advances from FHLB	1,087,794		—		1,101,977		—
Accrued interest payable	4,088		—		4,088		—
Subordinated debentures and subordinated notes	140,283		—		140,283		—
Securities sold under agreement to repurchase	1,772		—		1,772		—

December 31, 2019
Financial assets:
Cash and cash equivalents	$	251,550	$	—	$	251,550	$	—
Held to maturity investments	32,965		—		34,810		—
Loans held for sale¹	4,012		—		4,012		—
Loans held for investment, mortgage warehouse²	183,628		—		—		185,060
Loans held for investment²	5,737,577		—		—		5,714,885
Accrued interest receivable	19,508		—		19,508		—
Bank-owned life insurance	80,915		—		80,915		—
Servicing asset	3,113		—		3,113		—
Equity securities without a readily determinable fair value	3,575		N/A		N/A		N/A
Federal Home Loan Bank and Federal Reserve Bank stock	68,348		N/A		N/A		N/A
Financial liabilities:
Deposits	$	5,894,350	$	—	$	5,692,217	$	—
Advances from FHLB	677,870		—		708,692		—
Accrued interest payable	5,893		—		5,893		—
Subordinated debentures and subordinated notes	145,571		—		145,571		—
Other borrowings	2,353		—		2,353		—

¹ Loans held for sale represent mortgage loans held for sale that are carried at lower of cost or market.

² Carried at amortized cost.

Derivative Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments in Balance Sheet

The notional amounts and estimated fair values as of June 30, 2020 and December 31, 2019 are as shown in the table below.


	June 30, 2020										December 31, 2019
			Estimated Fair Value								Estimated Fair Value
	Notional Amount		Asset Derivative		Liability Derivative		Notional Amount		Asset Derivative		Liability Derivative
Derivatives designated as hedging instruments (cash flow hedges):
Interest rate swap on borrowing advances	$	500,000	$	2,525	$	—	$	—	$	—	$	—
Interest rate swap on money market deposit account payments	250,000		—		3,936		—		—		—
Commercial loan interest rate floor	—		—		—		275,000		3,353		—
Total derivatives designated as hedging instruments	750,000		2,525		3,936		275,000		3,353		$	—

Derivatives not designated as hedging instruments:
Financial institution counterparty:
Interest rate swaps	$	300,588	$	—	$	17,370	$	222,394	$	105	$	4,736
Interest rate caps and collars	73,094		6		—		90,093		11		—
Commercial customer counterparty:
Interest rate swaps	300,588		16,206		—		222,394		4,393		84
Interest rate caps and collars	73,094		—		6		90,093		—		11
Total derivatives not designated as hedging instruments	747,364		16,212		17,376		$	624,974	4,509		4,831
Offsetting derivative assets/liabilities			6		6				(2,895)		(2,895)
Total Derivatives	$	1,497,364	18,743		21,318		$	899,974	4,967		1,936

Derivative Instruments, Gain (Loss)


	For the Three Months Ended June 30, 2020										For the Three Months Ended June 30, 2019
	Net gain recognized in other comprehensive income on derivative		Gain (loss) reclassified from accumulated other comprehensive income into income		Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income		Net Gain recognized in other comprehensive income on derivative		Loss reclassified from accumulated other comprehensive income into income		Location of Loss Reclassified from Accumulated Other Comprehensive Income into Income
Derivatives designated as hedging instruments (cash flow hedges):
Interest rate swap on borrowing advances	$	(2,089)	$	—	Interest Expense		$	—	$	—
Interest rate swap on money market deposit account payments	(2,033)		(215)		Interest Expense		—		—
Commercial loan interest rate floor	(546)		546		Interest Income		1,620		(139)		Interest Income
Total	$	(4,668)	$	331			$	1,620	$	(139)

					Gain recognized in other noninterest income						Loss recognized in other noninterest income
Derivatives not designated as hedging instruments:
Interest rate swaps, caps and collars					$	75					$	(120)


	For the Six Months Ended June 30, 2020										For the Six Months Ended June 30, 2019
	Net gain recognized in other comprehensive income on derivative		Gain (loss) reclassified from accumulated other comprehensive income into income		Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income		Net Gain recognized in other comprehensive income on derivative		Loss reclassified from accumulated other comprehensive income into income		Location of Loss Reclassified from Accumulated Other Comprehensive Income into Income
Derivatives designated as hedging instruments (cash flow hedges):
Interest rate swap on borrowing advances	$	2,525	$	—	Interest Expense		$	—	$	—
Interest rate swap on money market deposit account payments	(3,936)		(215)		Interest Expense		—		—
Commercial loan interest rate floor	475		831		Interest Income		1,620		(139)		Interest Income
Total	$	(936)	$	616			$	1,620	$	(139)


Derivatives not designated as hedging instruments:					Gain recognized in other noninterest income						Gain recognized in other noninterest income
Interest rate swaps, caps and collars					$	576					$	130

Schedule of Derivative Instruments Outstanding

The following is a summary of the interest rate swaps, caps and collars outstanding as of June 30, 2020 and December 31, 2019.


	June 30, 2020
	Notional Amount		Fixed Rate	Floating Rate	Maturity	Fair Value
Non-hedging derivative instruments:
Customer interest rate derivatives:
Interest rate swaps - receive fixed/pay floating	$	300,588	3.140 - 8.470%	LIBOR 1 month + —% - 5.00% PRIME H15 - 0.250%	Wtd. Avg. 4.2 years	$	(17,370)
Interest rate caps and collars	$	73,094	2.500% / 3.100%	LIBOR 1 month + —%	Wtd. Avg. 1.4 years	$	6

Correspondent interest rate derivatives:
Interest rate swaps - pay fixed/receive floating	$	300,588	3.140 - 8.470%	LIBOR 1 month + —% - 5.00% PRIME H15 - 0.250%	Wtd. Avg. 4.2 years	$	16,206
Interest rate caps and collars	$	73,094	3.000% / 5.000%	LIBOR 1 month + —% - 2.50%	Wtd. Avg. 1.4 years	$	(6)

	December 31, 2019
	Notional Amount		Fixed Rate	Floating Rate	Maturity	Fair Value
Non-hedging derivative instruments:
Customer interest rate derivatives:
Interest rate swaps - receive fixed/pay floating	$	222,394	2.944 - 8.470%	LIBOR 1 month + —% - 5.00% PRIME H15 - 0.250%	Wtd. Avg. 3.3 years	$	(4,632)
Interest rate caps and collars	$	90,093	2.430% / 5.800%	LIBOR 1 month + —% - 3.75%	Wtd. Avg. 1.5 years	$	11

Correspondent interest rate derivatives:
Interest rate swaps - pay fixed/receive floating	$	222,394	2.944 - 8.470%	LIBOR 1 month + —% - 5.00% PRIME H15 - 0.250%	Wtd. Avg. 3.3 years	$	4,309
Interest rate caps and collars	$	90,093	3.000% / 5.800%	LIBOR 1 month + —% - 3.75%	Wtd. Avg. 1.5 years	$	(11)

Tabular disclosure of pertinent information about a derivative or group of derivatives on a disaggregated basis, such as for individual instruments, or small groups of similar instruments. May include a combination of the type of instrument, risks being hedged, notional amount, hedge designation, related hedged item, inception date, maturity date, or other relevant item.

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Financial Instruments with Off-Balance Sheet Risk (Tables)

6 Months Ended

Jun. 30, 2020

Schedule of the Approximate Amounts of Financial Instruments with Off-Balance Sheet Risk

The following table sets forth the approximate amounts of these financial instruments as of June 30, 2020 and December 31, 2019:


	June 30,		December 31,
	2020		2019
Commitments to extend credit	$	2,243,122	$	1,950,350
Standby and commercial letters of credit	39,454		27,196
Total	$	2,282,576	$	1,977,546

Schedule of Allowance for Unfunded Commitments

This allowance is recorded in accounts payable and other liabilities on the condensed consolidated balance sheets:


	June 30,		December 31,
	2020		2019
Beginning balance for allowance for unfunded commitments	$	878	$	878
Impact of CECL adoption	840		—
Provision for unfunded commitments	6,680		—
Ending balance of allowance for unfunded commitments	$	8,398	$	878

Stock-Based Awards (Tables)

6 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

Summary of Option Activity

A summary of option activity under the 2010 Incentive Plan for the six months ended June 30, 2020 and 2019, and changes during the periods then ended, is presented below:


	2010 Incentive Plan
	Non-Performance Based Stock Options
	Shares Underlying Options	Weighted Exercise Price		Weighted Average Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2019	275,000	$	10.12	2.39 years



Exercised	(15,000)	10.28
Outstanding and exercisable at June 30, 2019	260,000	$	10.12	1.86 years


Outstanding at January 1, 2020	257,500	$	10.28	1.37 years	$	4,971



Exercised	(207,500)	10.14
Outstanding and exercisable at June 30, 2020	50,000	$	10.84	1.98 years	$	414

A summary of the status of the Company’s stock options under the 2019 Amended Plan as of June 30, 2020 and 2019, and changes during the six months then ended, is as follows:


	2019 Amended Plan
	Non-performance Based Stock Options
	Equity Awards										Liability Awards
	Shares Underlying Options	Weighted Exercise Price		Weighted Average Contractual Term	Aggregate Intrinsic Value		Shares Underlying Options	Weighted Exercise Price		Weighted Average Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2019	449,520	$	24.47	8.24 years			—	$	—
Granted	151,730	23.72					253,633	21.38
Conversion to equity awards	253,633	21.38					(253,633)	21.38
Forfeited	(26,789)	25.82					—	—

Exercised	(11,848)	15.37					—	—
Outstanding at June 30, 2019	816,246	$	23.45	8.65 years			—	$	—		—
Options exercisable at June 30, 2019	418,896	$	24.58	7.78 years			—	$	—

Outstanding at January 1, 2020	849,768	$	23.61	8.24 years	$	4,687	—	$	—
Granted	170,025	27.31					—	—

Forfeited	(22,456)	28.00					—	—

Exercised	(33,439)	19.19					—	—
Outstanding at June 30, 2020	963,898	$	24.32	8.08 years	$	(6,390)	—	$	—		$	—
Options exercisable at June 30, 2020	487,983	$	24.21	7.31 years	$	(4,440)	—	$	—
Weighted average fair value of options granted during the period		$	27.31					$	—

A summary of the status of the Company’s stock options under the Veritex (Green) 2014 Plan as of June 30, 2020 and 2019, and changes during the six months then ended, is as follows:


	Veritex (Green) 2014 Plan
	Non-performance Based Stock Options
	Shares Underlying Options	Weighted Exercise Price		Weighted Average Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2019	—	$	—
Converted in acquisition of Green	304,778	15.41
Granted	211,793	21.38
Forfeited	(1,317)	21.38

Exercised	(56,193)	13.15
Outstanding at June 30, 2019	459,061	$	18.42	8.15 years
Options exercisable at June 30, 2019	248,585	$	15.92	7.05 years

Outstanding at January 1, 2020	386,969	$	19.30	7.86 years	$	3,800

Granted	31,075	29.13
Forfeited	(27,070)	21.38

Exercised	(34,476)	19.54
Outstanding at June 30, 2020	356,498	$	19.95	7.53 years	$	(878)
Options exercisable at June 30, 2020	214,342	$	17.87	6.65 years	$	(1,106)
Weighted average fair value of options granted during the period		$	29.13

Schedule of Fair Value of Stock Options Exercised or Restricted Stock Units Vested

A summary of the fair value of the Company’s stock options exercised under the 2010 Incentive Plan for the six months ended June 30, 2020 and 2019 is presented below:


	Fair Value of Options Exercised as of June 30,
	2020	2019
Non-performance based stock options exercised	5,851	390

A summary of the fair value of the Company’s stock options exercised and RSUs vested under the 2019 Amended Plan during the six months ended June 30, 2020 and 2019 is presented below:


	Fair Value of Options Exercised or RSUs Vested in the Six Months Ended June 30,
	2020	2019
Non-performance-based stock options exercised	943	315
Non-performance-based RSUs vested	100	5,523
Performance-based RSUs vested	18	1,089

A summary of the fair value of the Company’s stock options exercised and RSUs vested under the Veritex (Green) 2014 Plan during the six months ended June 30, 2020 and 2019 presented below:


	Fair Value of Options Exercised or RSUs Vested in the Six Months Ended June 30,
	2020		2019
Non-performance-based stock options exercised	$	1,001	$	1,431
Non-performance-based RSUs vested	142		—

Schedule of Vesting Percentages

Below is a table showing the range of vesting percentages for the performance-based RSUs based on the Company’s TSR percentile rank.


			Vesting %
Below the 24.9^th percentile of Peer Group TSR			—%
Within the 25^th to 49.9^th percentile of Peer Group TSR			50%
Within the 50^th the 74.9^th percentile of Peer Group TSR			100%
At or above the 75^th percentile of Peer Group TSR			150%

Schedule of Assumptions Used to Measure Fair Value of Each Option Award Estimated On Grant Date Using Black-Scholes Option-Pricing Model

Six Months Ended June 30, 2020

Expected life

5 to 6.51 years

Expected volatility

27.49% to 38.88%

Dividend yield

2.33% to 5.14%

Risk-free interest rate

0.36% to 1.76%

Summary of Status of the Company's Restricted Shares or Restricted Stock Units

A summary of the status of the Company’s non-performance-based RSUs under the 2019 Amended Plan as of June 30, 2020 and 2019, and changes during the six months then ended, is as follows:


	2019 Amended Plan
	Non-performance-Based
	RSUs
	Equity Awards				Liability Awards
	Units	Weighted Average Grant Date Fair Value		Units	Weighted Average Grant Date Fair Value
Outstanding at January 1, 2019	133,455	$	19.67	—	$	—
Granted	99,327	22.94		165,739	21.38
Conversion to equity awards	165,739	21.38		(165,739)	21.38
Vested into shares	(228,531)	23.58

Outstanding at June 30, 2019	169,990	$	22.31	—	$	—

Outstanding at January 1, 2020	175,688	$	21.65	—	$	—
Granted	328,900	26.55		—	—

Vested into shares	(66,874)	24.75		—	—
Forfeited	(470)	29.13		—	—
Outstanding at June 30, 2020	437,244	$	24.83	—	$	—

A summary of the status of the Company’s performance-based RSUs under the 2019 Amended Plan as of June 30, 2020 and 2019, and changes during the six months then ended, is as follows:


	2019 Amended Plan
	Performance-Based
	RSUs
	Equity Awards				Liability Awards
	Units	Weighted Average Grant Date Fair Value		Units	Weighted Average Grant Date Fair Value
Outstanding at January 1, 2019	63,988	$	21.28	—	$	—
Granted	36,532	22.30		32,249	21.38
Conversion to equity awards	32,249	21.38		(32,249)	21.38
Vested into shares	(51,284)	25.31		—	—
Forfeited	(17,122)	21.38		—	—
Outstanding at June 30, 2019	64,363	$	22.73	—	$	—

Outstanding at January 1, 2020	63,727	$	22.76	—	$	—
Granted	39,398	29.13		—	—

Vested into shares	(1,841)	26.65		—	—

Outstanding at June 30, 2020	101,284	$	25.22	—	$	—

A summary of the status of the Company’s non-performance-based RSUs under the Veritex (Green) 2014 Plan as of June 30, 2020 and 2019 and changes during the six months then ended, is as follows:


	Veritex (Green) 2014 Plan
	Non-performance-Based
	RSUs
	Units	Weighted Average Grant Date Fair Value
Outstanding at January 1, 2019	—	$	—
Granted	116,250	21.38


Outstanding at June 30, 2019	116,250	$	21.38

Outstanding at January 1, 2020	116,250	$	21.38
Granted	93,918	28.47
Vested into shares	(38,744)	29.13
Forfeited	(4,402)	29.13
Outstanding at June 30, 2020	167,022	$	25.33

A summary of the status of the Company’s performance-based RSUs under the Veritex (Green) 2014 Plan as of June 30, 2020 and 2019 and changes during the six months then ended, is as follows:


	Veritex (Green) 2014 Plan
	Performance-Based
	RSUs
	Units	Weighted Average Grant Date Fair Value
Outstanding at January 1, 2019	—	$	—
Granted	26,145	$	21.38

Forfeited	(508)	$	21.38
Outstanding at June 30, 2019	25,637	$	21.38

Outstanding at January 1, 2020	25,320	$	21.38
Granted	8,531	29.13


Outstanding at June 30, 2020	33,851	$	23.33

Income Taxes (Tables)

6 Months Ended

Jun. 30, 2020

Income Tax Disclosure [Abstract]

Schedule of Income Tax Expense

Income tax expense for the three and six months ended June 30, 2020 and 2019 was as follows:


	Three Months Ended June 30,									Six Months Ended June 30,
	2020			2019			2020			2019
Income tax expense for the period	$	3,987		$	7,369		$	3,303		$	9,358
Effective tax rate	14.2		%	21.5		%	10.5		%	21.4		%

Capital Requirements and Restrictions on Retained Earnings (Tables)

6 Months Ended

Jun. 30, 2020

Banking and Thrift [Abstract]

Schedule of Comparison of the Company's and Bank's Actual Capital Amounts and Ratios to Required Capital Amounts and Ratios

A comparison of the Company’s and Bank’s actual capital amounts and ratios to required capital amounts and ratios is presented in the following table:


	Actual						For Capital Adequacy Purposes							To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount			Ratio		Amount		Ratio
As of June 30, 2020
Total capital (to risk-weighted assets)
Company	$	955,220	12.71	%	$	601,240		8.0	%	n/a		n/a
Bank	938,457		12.49	%	601,093			8.0	%	$	751,367	10.0	%
Tier 1 capital (to risk-weighted assets)
Company	755,141		10.05	%	450,830			6.0	%	n/a		n/a
Bank	848,508		11.29	%	450,934			6.0	%	601,246		8.0	%
Common equity tier 1 to risk-weighted assets
Company	726,006		9.66	%	338,202			4.5	%	n/a		n/a
Bank	848,508		11.29	%	338,201			4.5	%	488,512		6.5	%
Tier 1 capital (to average assets)
Company	755,121		9.16	%	329,747			4.0	%	n/a		n/a
Bank	848,508		10.29	%	329,838			4.0	%	412,297		5.0	%
As of December 31, 2019
Total capital (to risk-weighted assets)
Company	$	917,939	13.10	%	$	560,573		8.0	%	n/a		n/a
Bank	870,838		12.44	%	560,024			8.0	%	$	700,031	10.0	%
Tier 1 capital (to risk-weighted assets)
Company	771,679		11.02	%	420,152			6.0	%	n/a		n/a
Bank	840,126		12.00	%	420,063			6.0	%	560,084		8.0	%
Common equity tier 1 to risk-weighted assets
Company	742,675		10.60	%	315,287			4.5	%	n/a		n/a
Bank	840,126		12.00	%	315,047			4.5	%	455,068		6.5	%
Tier 1 capital (to average assets)
Company	771,679		10.17	%	303,512			4.0	%	n/a		n/a
Bank	840,126		11.07	%	303,569			4.0	%	379,461		5.0	%

Summary of Significant Accounting Policies - Additional Information (Details) $ in Thousands		1 Months Ended	3 Months Ended		6 Months Ended
	Jan. 01, 2020 USD ($)	Jun. 30, 2020 USD ($) modification	Jun. 30, 2020 USD ($) modification shares	Jun. 30, 2019 USD ($) shares	Jun. 30, 2020 USD ($) branch mortgage_office segment modification shares	Jun. 30, 2019 USD ($) shares
Segment Reporting Information [Line Items]
Number of reportable segments \| segment					1
Government guaranteed loan income, net			$ 11,006	$ 961	$ 11,445	$ 3,218
Equity Securities, FV-NI, Unrealized Gain (Loss)			$ 462	$ 157	$ 213	$ 293
Excluded from diluted EPS weighted average shares (in shares) \| shares			1,651	0	1,353	0
Number of loan modifications \| modification		759	759		759
Coronavirus Aid Relief And Economic Security Act, Amount Qualified For Temporary Suspension Of TDR Requirements, CARES ACT		$ 1,200,000
Deferred Principle and Interest Payments, Deferment Period One (in days)		90 days
Deferred Principle and Interest Payments, CARES ACT		$ 288,100
Deferred Principle And Interest Payments, Deferment Period Two (in days)		180 days
Change in fair value of government guaranteed loans and PPP loans - CARES Act			$ 10,567	$ 2,257	$ 8,227	$ 2,507
Government guaranteed loan income, fee income - CARES Act			$ 12,516		$ 12,516
Dallas-Fort Worth
Segment Reporting Information [Line Items]
Number of branches \| branch					25
Number of mortgage offices \| mortgage_office					1
Houston
Segment Reporting Information [Line Items]
Number of branches \| branch					12
Louisville, Kentucky
Segment Reporting Information [Line Items]
Number of branches \| branch					1
Accounting Standards Update 2016-13
Segment Reporting Information [Line Items]
Decrease to retained earnings	$ (15,505)
Impact of adoption ASC 326 PCD loans	19,710
Accounting Standards Update 2016-13 \| Retained Earnings
Segment Reporting Information [Line Items]
Decrease to retained earnings	$ (15,505)

Summary of Significant Accounting Policies - Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Earnings (numerator)
Net income	$ 24,028	$ 26,876	$ 28,162	$ 34,283
Shares (denominator)
Weighted average shares outstanding for basic EPS (in shares)	49,597	53,969	50,161	54,130
Dilutive effect of employee stock based awards (in shares)	130	960	222	901
Adjusted weighted average shares outstanding (in shares)	49,727	54,929	50,383	55,031
EPS:
Basic (in dollars per share)	$ 0.48	$ 0.50	$ 0.56	$ 0.63
Diluted (in dollars per share)	$ 0.48	$ 0.49	$ 0.56	$ 0.62

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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