vbtx-202104270001501570false00015015702021-04-272021-04-27
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): April 27, 2021
VERITEX HOLDINGS, INC.
(Exact name of Registrant as specified in its charter)
| | | | | | | | | | | | | | |
Texas | | 001-36682 | | 27-0973566 |
(State or other jurisdiction of incorporation or organization) | | (Commission File Number) | | (I.R.S. Employer Identification Number) |
8214 Westchester Drive, Suite 800
Dallas, Texas 75225
(Address of principal executive offices)
(972) 349-6200
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | | | | | | | |
Title of each class | | Trading Symbol | | Name of each exchange on which registered |
Common Stock, par value $0.01 per share | | VBTX | | Nasdaq Global Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| | | | | |
Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 2.02 Results of Operations and Financial Condition
On April 27, 2021, Veritex Holdings, Inc. (the “Company”), the holding company for Veritex Community Bank (the “Bank”), a Texas state chartered bank, issued a press release describing its results of operations for the quarter ended March 31, 2021. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
As provided in General Instruction B.2 to Form 8-K, the information furnished in this Item 2.02 (including Exhibit 99.1) of this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and such information shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 7.01 Regulation FD Disclosure
On Wednesday, April 28, 2021 at 8:30 a.m., Central Time, the Company will host an investor conference call and webcast to review its first quarter financial results. The webcast will include a slide presentation that consists of information regarding the Company’s operating and growth strategies and financial performance. The presentation materials will be posted on the Company’s website on April 27, 2021. The presentation materials are attached hereto as Exhibit 99.2 and are incorporated herein by reference.
As provided in General Instruction B.2 to Form 8-K, the information furnished in this Item 7.01 (including Exhibit 99.2) of this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, and such information shall not be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 8.01 Other Events
On April 27, 2021, the Company issued a press release announcing the declaration of a quarterly cash dividend of $0.17 per share on its outstanding common stock. The dividend will be paid on or after May 20, 2021 to shareholders of record as of the close of business on May 6, 2021. The press release is attached hereto as Exhibit 99.3 and is incorporated herein by reference.
On April 27, 2021, the Company issued a press release announcing the execution by the Bank of a definitive agreement pursuant to which the Bank will acquire a 49% interest in Thrive Mortgage, LLC ("Thrive") for $53.9 million in cash. Upon completion of the investment, the Company will obtain the right to designate a member to Thrive’s board of directors. The investment, which is expected to close in the middle of 2021, is subject to receipt of required regulatory approvals and other customary closing conditions. The press release is attached hereto as Exhibit 99.4 and is incorporated herein by reference.
Forward Looking Statement
This Current Report on Form 8-K contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on various facts and derived utilizing assumptions, current expectations, estimates and projections and are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements include, without limitation, statements relating to the anticipated closing of the Company’s investment in Thrive, the expected payment date of the Company’s quarterly cash dividend, the impact of certain changes in the Company’s accounting policies, standards and interpretations, the effects of the COVID-19 pandemic and actions taken in response thereto, the Company’s future financial performance, business and growth strategy, projected plans and objectives, as well as other projections based on macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact broader economic and industry trends, and any such variations may be material. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing words. We refer you to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 and any updates to those risk factors set forth in the Company’s Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings with the Securities and Exchange
Commission (“SEC”), which are available on the SEC’s website at www.sec.gov. If one or more events related to these or other risks or uncertainties materialize, or if the Company’s underlying assumptions prove to be incorrect, actual results may differ materially from what the Company anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made. The Company does not undertake any obligation, and specifically declines any obligation, to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by law. All forward-looking statements, expressed or implied, included in this Current Report are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that the Company or persons acting on the Company’s behalf may issue.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
| | | | | | | | |
Exhibit Number | | Description |
| | |
| | |
| | |
| | |
104 | | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| | | | | | | | |
Veritex Holdings, Inc. | | |
| | |
By: | | /s/ C. Malcolm Holland, III |
| | C. Malcolm Holland, III |
| | Chairman and Chief Executive Officer |
Date: | | April 27, 2021 |
DocumentVERITEX HOLDINGS, INC. REPORTS FIRST QUARTER OPERATING RESULTS
Dallas, TX — April 27, 2021 —Veritex Holdings, Inc. (“Veritex” or the “Company”) (Nasdaq: VBTX), the holding company for Veritex Community Bank, today announced the results for the quarter ended March 31, 2021.
“We are very pleased with our operating results for the first quarter of 2021. Our business momentum continues to build as a result of our investments in talent and the accelerated reopening of the Texas economy,” said C. Malcolm Holland, III, the Company’s Chairman and Chief Executive Officer. “Our loan and deposit growth remains good, credit trends are improving and our balance sheet it strong. We couldn’t be more excited about the future of Veritex including today’s announcement of our partnership with Thrive Mortgage.”
First Quarter Highlights
•Net income of $31.8 million, or $0.64 diluted earnings per share (“EPS”), compared to $22.8 million, or $0.46 diluted EPS, for the quarter ended December 31, 2020 and $4.1 million, or $0.08 diluted EPS, for the quarter ended March 31, 2020;
•Pre-tax, pre-provision operating earnings1 totaled $40.2 million, compared to $38.4 million for the quarter ended December 31, 2020 and $39.1 million for the quarter ended March 31, 2020;
•Operating return on average tangible common equity1 of 17.39% for the three months ended March 31, 2021 compared to 16.44% for the three months ended December 31, 2020;
•Total loans held for investment, excluding PPP loans, grew $137.0 million from the fourth quarter of 2020, or 8.65% annualized. Total loans held for investment, excluding PPP loans, grew $337.6 million, or 5.42%, year over year;
•Total deposits grew $391.7 million from the fourth quarter of 2020, or 24.0% annualized, with the average cost of total deposits decreasing to 0.31% for the three months ended March 31, 2021 from 0.38% and 1.02% for the three months ended December 31, 2020 and March 31, 2020, respectively;
•Declared quarterly cash dividend of $0.17 payable on May 20, 2021;
•Extended the expiration date of the stock buyback program to December 31, 2021.
| | | | | | | | | | | | | | | | | | |
| | | | |
Financial Highlights | | Q1 2021 | | Q4 2020 | | | | |
| | (Dollars in thousands) (unaudited) |
GAAP | | | | | | | | |
Net income | | $ | 31,787 | | | $ | 22,801 | | | | | |
Diluted EPS | | 0.64 | | | 0.46 | | | | | |
Book value per common share | | 24.96 | | | 24.39 | | | | | |
Return on average assets2 | | 1.44 | % | | 1.04 | % | | | | |
Efficiency ratio | | 49.62 | | | 62.52 | | | | | |
| | | | | | | | |
Non-GAAP1 | | | | | | | | |
Operating earnings | | $ | 32,213 | | | $ | 29,730 | | | | | |
Diluted operating EPS | | 0.64 | | | 0.60 | | | | | |
Tangible book value per common share | | 16.34 | | | 15.70 | | | | | |
Pre-tax, pre-provision operating earnings | | 40,210 | | | 38,407 | | | | | |
Pre-tax, pre-provision operating return on average assets2 | | 1.82 | % | | 1.75 | % | | | | |
Operating return on average assets2 | | 1.46 | | | 1.35 | | | | | |
Operating efficiency ratio | | 49.62 | | | 49.49 | | | | | |
Return on average tangible common equity | | 17.17 | | | 12.84 | | | | | |
Operating return on average tangible common equity | | 17.39 | | | 16.44 | | | | | |
1 Refer to the section titled “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of these non-generally accepted accounting principles (“”GAAP”) financial measures to their most directly comparable GAAP measures.
2 Annualized ratio.
Results of Operations for the Three Months Ended March 31, 2021
Net Interest Income
For the three months ended March 31, 2021, net interest income before provision for credit losses was $65.6 million and net interest margin was 3.22% compared to $66.8 million and 3.29%, respectively, for the three months ended December 31, 2020. Net interest margin decreased 7 basis point from the three months ended December 31, 2020 primarily due to a decrease in the average yields earned on loans slightly offset by the average rates paid on interest-bearing demand and savings deposits and certificate and other time deposits for the three months ended March 31, 2021. As a result, the average cost of interest-bearing deposits decreased 10 basis points to 0.45% for the three months ended March 31, 2021 from 0.55% for the three months ended December 31, 2020.
Net interest income before provision for credit losses decreased by $1.8 million from $67.4 million to $65.6 million and net interest margin decreased by 45 basis points from 3.67% to 3.22% for the three months ended March 31, 2021 as compared to the same period in 2020. The decrease in net interest income before provision for credit losses was primarily due to a $10.5 million decrease in interest income on loans and a $1.2 million increase in interest expense on subordinated debentures and subordinated notes, partially offset by $4.6 million and $5.2 million decrease in interest expenses on transaction and savings deposits and certificates and other time deposits, respectively, during the three months ended March 31, 2021 compared to the three months ended March 31, 2020. Net interest margin decreased 45 basis points from the three months ended March 31, 2020 primarily due to a decrease in yields earned on loan balances, partially offset by decreases in the average rate paid on interest-bearing demand and savings deposits and certificates and other time deposits for the three months ended March 31, 2021. As a result, the average cost of interest-bearing deposits decreased 92 basis points to 0.45% for the three months ended March 31, 2021 from 1.37% for the three months ended March 31, 2020.
Noninterest Income
Noninterest income for the three months ended March 31, 2021 was $14.2 million, an increase of $5.2 million, or 57.3%, compared to the three months ended December 31, 2020. The increase was primarily due to a $6.1 million increase in government guaranteed loan income, net, driven by $6.6 million of fee income earned on PPP loans during the three months ended March 31, 2021 with no corresponding fee income earned on PPP loans earned during the three months ended December 31, 2020. This was partially offset by a $1.5 million decrease in derivative income.
Compared to the three months ended March 31, 2020, noninterest income for the three months ended March 31, 2021 increased by $6.9 million, or 95.6%. The increase was primarily due to a $6.1 million increase in government guaranteed loan income, net, as a result of the fee income earned on PPP loans for the three months ended March 31, 2021 with no corresponding fee income earned on PPP loans during the three months ended March 31, 2020.
Noninterest Expense
Noninterest expense was $39.6 million for the three months ended March 31, 2021, compared to $47.4 million for the three months ended December 31, 2020, a decrease of $7.8 million, or 16.4%. The decrease was primarily driven by a $9.7 million decrease in debt extinguishment costs on Federal Home Loan Bank ("FHLB") advances that were pre-paid during the three months ended December 31, 2020 with no corresponding FHLB advance prepayments during the three months ended March 31, 2021. This decrease was partially offset by a $2.9 million increase in salaries and employee benefits primarily driven by a $980 thousand decrease in deferred origination costs, a $515 thousand increase in FICA taxes and a $331 thousand increase in employee stock based compensation.
Compared to the three months ended March 31, 2020, noninterest expense for the three months ended March 31, 2021 increased by $4.1 million, or 11.4%. The increase was primarily driven by a $4.1 million increase in salaries and employee benefits as a result of a $1.9 million increase in accrued bonus, a $1.2 million increase in lender incentive and a $487 thousand increase in employee stock based compensation.
Financial Condition
Total loans were $7.0 billion at March 31, 2021, an increase of $184.8 million, or 10.9% annualized, compared to December 31, 2020. The increase was the result of the continued execution and success of our loan growth strategy.
Total deposits were $6.9 billion at March 31, 2021, an increase of $391.7 million, or 24.0% annualized, compared to December 31, 2020. The increase was primarily the result of increases of $231.2 million in interest-bearing transaction and savings deposits, $85.9 million in certificates and other time deposits, and $74.6 million in noninterest-bearing demand deposits.
Asset Quality
Nonperforming assets totaled $85.0 million, or 0.92% of total assets at March 31, 2021, compared to $87.6 million, or 0.99% of total assets, at December 31, 2020. Included in nonperforming assets is $9.1 million of accruing loans 90 or more days past due that are considered well-secured and in the process of collection. Excluding accruing loans 90 or more days past due, nonperforming assets represented 0.82% of total assets at March 31, 2021, a 13 basis point decrease compared to December 31, 2020. The Company’s net charge-offs for the three months ended March 31, 2021 were nominal.
The Company recorded no provision for credit losses for the three months ended March 31, 2021 and December 31, 2020, compared to $31.8 million for the three months ended March 31, 2020. The decrease in the recorded provision for credit losses for the three months ended March 31, 2021, compared to the three months ended March 31, 2020, was primarily attributable to improvement in the Texas economic forecasts used in the Current Expected Credit Losses (“CECL”) model in the first quarter of 2021 to reflect the expected impact of the COVID-19 pandemic as of March 31, 2021, as compared to our Texas economic forecasts and expected impact of the COVID-19 pandemic as of March 31, 2020. In the first quarter of 2021, we also recorded a $570 thousand recovery in our provision for unfunded commitments which was attributable to improvement in the Texas economic forecasts compared to a $902 thousand provision for unfunded commitments recorded for the three months ended December 31, 2020. Allowance for credit losses as a percentage of LHI, excluding MW and PPP loans, was 1.76%, 1.80% and 1.73% at March 31, 2021, December 31, 2020 and March 31, 2020, respectively.
Dividend Information
On April 27, 2021, Veritex’s Board of Directors declared a quarterly cash dividend of $0.17 per share on its outstanding shares of common stock. The dividend will be paid on or after May 20, 2021 to stockholders of record as of the close of business on May 6, 2021.
Non-GAAP Financial Measures
Veritex’s management uses certain non-GAAP (U.S. generally accepted accounting principles) financial measures to evaluate its operating performance and provide information that is important to investors. However, non-GAAP financial measures are supplemental and should be viewed in addition to, and not as an alternative for, Veritex’s reported results prepared in accordance with GAAP. Specifically, Veritex reviews and reports tangible book value per common share, operating earnings, tangible common equity to tangible assets, return on average tangible common equity, pre-tax, pre-provision operating earnings, pre-tax, pre-provision operating return on average assets, diluted operating earnings per share, operating return on average assets, operating return on average tangible common equity and operating efficiency ratio. Veritex has included in this earnings release information related to these non-GAAP financial measures for the applicable periods presented. Please refer to “Reconciliation of Non-GAAP Financial Measures” after the financial highlights at the end of this earnings release for a reconciliation of these non-GAAP financial measures.
Conference Call
The Company will host an investor conference call to review the results on Tuesday, April 27, 2021 at 8:30 a.m. Central Time. Participants may pre-register for the call by visiting https://edge.media-server.com/mmc/p/vz2jxi3a and will receive a unique PIN, which can be used when dialing in for the call. This will allow attendees to access the call immediately. Alternatively, participants may call toll-free at (877) 703-9880.
The call and corresponding presentation slides will be webcast live on the home page of the Company's website, https://ir.veritexbank.com/. An audio replay will be available one hour after the conclusion of the call at (855) 859-2056, Conference
#4978885. This replay, as well as the webcast, will be available until May 4, 2021.
About Veritex Holdings, Inc.
Headquartered in Dallas, Texas, Veritex is a bank holding company that conducts banking activities through its wholly owned subsidiary, Veritex Community Bank, with locations throughout the Dallas-Fort Worth metroplex and in the Houston metropolitan area. Veritex Community Bank is a Texas state chartered bank regulated by the Texas Department of Banking and the Board of Governors of the Federal Reserve System. For more information, visit www.veritexbank.com.
Media and Investor Relations:
investorrelations@veritexbank.com
Forward-Looking Statements
This earnings release contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on various facts and derived utilizing assumptions, current expectations, estimates and projections and are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements include, without limitation, statements relating to the expected payment date of Veritex’s quarterly cash dividend, the impact of certain changes in Veritex’s accounting policies, standards and interpretations, the effects of the COVID-19 pandemic and actions taken in response thereto, Veritex’s future financial performance, business and growth strategy, projected plans and objectives, as well as other projections based on macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact broader economic and industry trends, and any such variations may be material. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing words. We refer you to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Veritex’s Annual Report on Form 10-K for the year ended December 31, 2020 and any updates to those risk factors set forth in Veritex’s Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings with the Securities and Exchange Commission (“SEC”), which are available on the SEC’s website at www.sec.gov. If one or more events related to these or other risks or uncertainties materialize, or if Veritex’s underlying assumptions prove to be incorrect, actual results may differ materially from what Veritex anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made. Veritex does not undertake any obligation, and specifically declines any obligation, to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by law. All forward-looking statements, expressed or implied, included in this earnings release are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that Veritex or persons acting on Veritex’s behalf may issue.
VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended | | |
| | Mar 31, 2021 | | Dec 31, 2020 | | Sep 30, 2020 | | Jun 30, 2020 | | Mar 31, 2020 | | | | |
| | (Dollars and shares in thousands) |
Per Share Data (Common Stock): | | | | | | | | | | | | | | |
Basic EPS | | $ | 0.64 | | | $ | 0.46 | | | $ | 0.46 | | | $ | 0.48 | | | $ | 0.08 | | | | | |
Diluted EPS | | 0.64 | | | 0.46 | | | 0.46 | | | 0.48 | | | 0.08 | | | | | |
Book value per common share | | 24.96 | | | 24.39 | | | 23.87 | | | 23.45 | | | 23.19 | | | | | |
Tangible book value per common share1 | | 16.34 | | | 15.70 | | | 15.19 | | | 14.71 | | | 14.39 | | | | | |
| | | | | | | | | | | | | | |
Common Stock Data: | | | | | | | | | | | | | | |
Shares outstanding at period end | | 49,433 | | | 49,340 | | | 49,650 | | | 49,633 | | | 49,557 | | | | | |
Weighted average basic shares outstanding for the period | | 49,394 | | | 49,571 | | | 49,647 | | | 49,597 | | | 50,725 | | | | | |
Weighted average diluted shares outstanding for the period | | 49,998 | | | 49,837 | | | 49,775 | | | 49,727 | | | 51,056 | | | | | |
| | | | | | | | | | | | | | |
Summary of Credit Ratios: | | | | | | | | | | | | | | |
ACL to total LHI, excluding mortgage warehouse and PPP loans | | 1.76 | % | | 1.80 | % | | 2.10 | % | | 2.01 | % | | 1.73 | % | | | | |
Nonperforming assets to total assets | | 0.92 | | | 0.99 | | | 1.11 | | | 0.62 | | | 0.60 | | | | | |
Net charge-offs to average loans outstanding | | — | | | 0.28 | | | 0.04 | | | 0.03 | | | — | | | | | |
| | | | | | | | | | | | | | |
Summary Performance Ratios: | | | | | | | | | | | | | | |
Return on average assets2 | | 1.44 | | | 1.04 | | | 1.06 | | | 1.11 | | | 0.20 | | | | | |
Return on average equity2 | | 10.53 | | | 7.58 | | | 7.74 | | | 8.36 | | | 1.41 | | | | | |
Return on average tangible common equity1, 2 | | 17.17 | | | 12.84 | | | 13.27 | | | 14.49 | | | 3.27 | | | | | |
Efficiency ratio | | 49.62 | | | 62.52 | | | 48.12 | | | 46.02 | | | 47.61 | | | | | |
| | | | | | | | | | | | | | |
Selected Performance Metrics - Operating: | | | | | | | | | | | | | | |
Diluted operating EPS1 | | $ | 0.64 | | | $ | 0.60 | | | $ | 0.46 | | | $ | 0.43 | | | $ | 0.08 | | | | | |
Pre-tax, pre-provision operating return on average assets1, 2 | | 1.82 | % | | 1.75 | % | | 1.82 | % | | 2.11 | % | | 1.94 | % | | | | |
Operating return on average assets1, 2 | | 1.46 | | | 1.35 | | | 1.06 | | | 0.98 | | | 0.20 | | | | | |
Operating return on average tangible common equity1, 2 | | 17.39 | | | 16.44 | | | 13.27 | | | 12.90 | | | 3.27 | | | | | |
Operating efficiency ratio1 | | 49.62 | | | 49.49 | | | 48.11 | | | 45.74 | | | 47.61 | | | | | |
| | | | | | | | | | | | | | |
Veritex Holdings, Inc. Capital Ratios: | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Tier 1 capital to average assets (leverage) | | 9.50 | | | 9.43 | | | 9.54 | | | 9.16 | | | 9.49 | | | | | |
Common equity tier 1 capital | | 9.27 | | | 9.30 | | | 9.67 | | | 9.66 | | | 9.53 | | | | | |
Tier 1 capital to risk-weighted assets | | 9.61 | | | 9.66 | | | 10.05 | | | 10.05 | | | 9.92 | | | | | |
Total capital to risk-weighted assets | | 13.38 | | | 13.56 | | | 12.70 | | | 12.71 | | | 12.48 | | | | | |
Tangible common equity to tangible assets1 | | 9.17 | | | 9.23 | | | 9.12 | | | 8.96 | | | 8.81 | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
1Refer to the section titled “Reconciliation of Non-GAAP Financial Measures” after the financial highlights for a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures.
2Annualized ratio for quarterly metrics.
VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(In thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Mar 31, 2021 | | Dec 31, 2020 | | Sep 30, 2020 | | Jun 30, 2020 | | Mar 31, 2020 |
| | (unaudited) | | | | (unaudited) | | (unaudited) | | (unaudited) |
ASSETS | | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
Cash and cash equivalents | | $ | 468,029 | | | $ | 230,825 | | | $ | 128,767 | | | $ | 160,306 | | | $ | 430,842 | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
Debt securities | | 1,077,860 | | | 1,055,201 | | | 1,091,440 | | | 1,112,061 | | | 1,117,804 | |
Other investments | | 87,226 | | | 87,192 | | | 98,023 | | | 104,213 | | | 112,775 | |
| | | | | | | | | | |
Loans held for sale | | 19,864 | | | 21,414 | | | 13,928 | | | 28,041 | | | 15,048 | |
Loans held for investment, Paycheck Protection Program (“PPP”) loans, carried at fair value | | 407,353 | | | 358,042 | | | 405,465 | | | 398,949 | | | — | |
Loans held for investment, mortgage warehouse (“MW”) | | 599,001 | | | 577,594 | | | 544,845 | | | 441,992 | | | 371,161 | |
Loans held for investment, excluding MW and PPP | | 5,963,493 | | | 5,847,862 | | | 5,789,293 | | | 5,726,873 | | | 5,853,735 | |
Total loans | | 6,989,711 | | | 6,804,912 | | | 6,753,531 | | | 6,595,855 | | | 6,239,944 | |
Allowance for credit losses (“ACL”) | | (104,936) | | | (105,084) | | | (121,591) | | | (115,365) | | | (100,983) | |
Bank-owned life insurance | | 83,318 | | | 82,855 | | | 82,366 | | | 81,876 | | | 81,395 | |
Bank premises, furniture and equipment, net | | 114,585 | | | 115,063 | | | 115,794 | | | 115,560 | | | 116,056 | |
Other real estate owned (“OREO”) | | 2,337 | | | 2,337 | | | 5,796 | | | 7,716 | | | 7,720 | |
Intangible assets, net of accumulated amortization | | 59,236 | | | 61,733 | | | 64,716 | | | 66,705 | | | 69,444 | |
Goodwill | | 370,840 | | | 370,840 | | | 370,840 | | | 370,840 | | | 370,840 | |
Other assets | | 89,304 | | | 114,997 | | | 112,693 | | | 88,091 | | | 85,787 | |
| | | | | | | | | | |
Total assets | | $ | 9,237,510 | | | $ | 8,820,871 | | | $ | 8,702,375 | | | $ | 8,587,858 | | | $ | 8,531,624 | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | | |
Deposits: | | | | | | | | | | |
Noninterest-bearing deposits | | $ | 2,171,719 | | | $ | 2,097,099 | | | $ | 1,920,715 | | | $ | 1,907,697 | | | $ | 1,549,260 | |
Interest-bearing transaction and savings deposits | | 3,189,693 | | | 2,958,456 | | | 2,821,945 | | | 2,714,149 | | | 2,536,865 | |
Certificates and other time deposits | | 1,543,158 | | | 1,457,291 | | | 1,479,896 | | | 1,503,701 | | | 1,713,820 | |
Total deposits | | 6,904,570 | | | 6,512,846 | | | 6,222,556 | | | 6,125,547 | | | 5,799,945 | |
Accounts payable and other liabilities | | 55,902 | | | 61,928 | | | 69,540 | | | 68,713 | | | 61,746 | |
| | | | | | | | | | |
Advances from Federal Home Loan Bank | | 777,679 | | | 777,718 | | | 1,082,756 | | | 1,087,794 | | | 1,377,832 | |
Subordinated debentures and subordinated notes | | 262,774 | | | 262,778 | | | 140,158 | | | 140,283 | | | 140,406 | |
Securities sold under agreements to repurchase | | 2,777 | | | 2,225 | | | 2,028 | | | 1,772 | | | 2,426 | |
| | | | | | | | | | |
Total liabilities | | 8,003,702 | | | 7,617,495 | | | 7,517,038 | | | 7,424,109 | | | 7,382,355 | |
Commitments and contingencies | | | | | | | | | | |
Stockholders’ equity: | | | | | | | | | | |
Common stock | | 557 | | | 555 | | | 555 | | | 555 | | | 554 | |
Additional paid-in capital | | 1,131,324 | | | 1,126,437 | | | 1,124,148 | | | 1,122,063 | | | 1,119,757 | |
Retained earnings | | 195,661 | | | 172,232 | | | 157,639 | | | 143,277 | | | 127,812 | |
| | | | | | | | | | |
Accumulated other comprehensive income | | 62,413 | | | 56,225 | | | 47,155 | | | 42,014 | | | 45,306 | |
Treasury stock | | (156,147) | | | (152,073) | | | (144,160) | | | (144,160) | | | (144,160) | |
Total stockholders’ equity | | 1,233,808 | | | 1,203,376 | | | 1,185,337 | | | 1,163,749 | | | 1,149,269 | |
Total liabilities and stockholders’ equity | | $ | 9,237,510 | | | $ | 8,820,871 | | | $ | 8,702,375 | | | $ | 8,587,858 | | | $ | 8,531,624 | |
VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(In thousands, except per share data)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended | | |
| | Mar 31, 2021 | | Dec 31, 2020 | | Sep 30, 2020 | | Jun 30, 2020 | | Mar 31, 2020 | | | | |
Interest income: | | | | | | | | | | | | | | |
Loans, including fees | | $ | 67,399 | | | $ | 69,597 | | | $ | 68,685 | | | $ | 70,440 | | | $ | 77,861 | | | | | |
Debt securities | | 7,437 | | | 7,652 | | | 7,852 | | | 7,825 | | | 7,397 | | | | | |
Deposits in financial institutions and Fed Funds sold | | 127 | | | 99 | | | 65 | | | 186 | | | 871 | | | | | |
Equity securities and other investments | | 663 | | | 752 | | | 827 | | | 891 | | | 850 | | | | | |
Total interest income | | 75,626 | | | 78,100 | | | 77,429 | | | 79,342 | | | 86,979 | | | | | |
Interest expense: | | | | | | | | | | | | | | |
Transaction and savings deposits | | 1,980 | | | 2,105 | | | 2,105 | | | 2,471 | | | 6,552 | | | | | |
Certificates and other time deposits | | 3,061 | | | 3,919 | | | 5,004 | | | 6,515 | | | 8,240 | | | | | |
Advances from FHLB | | 1,812 | | | 2,222 | | | 2,707 | | | 2,801 | | | 2,879 | | | | | |
Subordinated debentures and subordinated notes | | 3,138 | | | 3,088 | | | 1,743 | | | 1,798 | | | 1,903 | | | | | |
Total interest expense | | 9,991 | | | 11,334 | | | 11,559 | | | 13,585 | | | 19,574 | | | | | |
Net interest income | | 65,635 | | | 66,766 | | | 65,870 | | | 65,757 | | | 67,405 | | | | | |
Provision for credit losses | | — | | | — | | | 8,692 | | | 16,172 | | | 31,776 | | | | | |
(Benefit) provision for unfunded commitments | | (570) | | | 902 | | | 1,447 | | | 2,799 | | | 3,881 | | | | | |
Net interest income after provisions | | 66,205 | | | 65,864 | | | 55,731 | | | 46,786 | | | 31,748 | | | | | |
Noninterest income: | | | | | | | | | | | | | | |
Service charges and fees on deposit accounts | | 3,629 | | | 3,971 | | | 3,130 | | | 2,960 | | | 3,642 | | | | | |
Loan fees | | 1,341 | | | 684 | | | 1,787 | | | 1,240 | | | 845 | | | | | |
(Loss) gain on sales of investment securities | | — | | | (256) | | | (8) | | | 2,879 | | | — | | | | | |
Gain on sales of mortgage loans held for sale | | 507 | | | 317 | | | 472 | | | 308 | | | 142 | | | | | |
Government guaranteed loan income, net | | 6,548 | | | 448 | | | 2,257 | | | 11,006 | | | 439 | | | | | |
| | | | | | | | | | | | | | |
Other | | 2,147 | | | 3,848 | | | 2,157 | | | 2,897 | | | 2,014 | | | | | |
Total noninterest income | | 14,172 | | | 9,012 | | | 9,795 | | | 21,290 | | | 7,247 | | | | | |
Noninterest expense: | | | | | | | | | | | | | | |
Salaries and employee benefits | | 22,932 | | | 20,011 | | | 20,553 | | | 20,019 | | | 18,870 | | | | | |
Occupancy and equipment | | 4,096 | | | 4,116 | | | 3,980 | | | 3,994 | | | 4,273 | | | | | |
Professional and regulatory fees | | 3,441 | | | 3,578 | | | 3,159 | | | 2,796 | | | 2,196 | | | | | |
Data processing and software expense | | 2,319 | | | 2,238 | | | 2,452 | | | 2,434 | | | 2,089 | | | | | |
Marketing | | 909 | | | 945 | | | 1,062 | | | 561 | | | 1,083 | | | | | |
Amortization of intangibles | | 2,537 | | | 2,558 | | | 2,840 | | | 2,696 | | | 2,696 | | | | | |
Telephone and communications | | 337 | | | 340 | | | 345 | | | 308 | | | 319 | | | | | |
| | | | | | | | | | | | | | |
COVID expenses | | — | | | — | | | 132 | | | 1,245 | | | — | | | | | |
Debt extinguishment costs | | — | | | 9,746 | | | — | | | 1,561 | | | — | | | | | |
Other | | 3,026 | | | 3,841 | | | 1,885 | | | 4,447 | | | 4,019 | | | | | |
Total noninterest expense | | 39,597 | | | 47,373 | | | 36,408 | | | 40,061 | | | 35,545 | | | | | |
Income before income tax expense | | 40,780 | | | 27,503 | | | 29,118 | | | 28,015 | | | 3,450 | | | | | |
Income tax expense (benefit) | | 8,993 | | | 4,702 | | | 6,198 | | | 3,987 | | | (684) | | | | | |
Net income | | $ | 31,787 | | | $ | 22,801 | | | $ | 22,920 | | | $ | 24,028 | | | $ | 4,134 | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Basic EPS | | $ | 0.64 | | | $ | 0.46 | | | $ | 0.46 | | | $ | 0.48 | | | $ | 0.08 | | | | | |
Diluted EPS | | $ | 0.64 | | | $ | 0.46 | | | $ | 0.46 | | | $ | 0.48 | | | $ | 0.08 | | | | | |
Weighted average basic shares outstanding | | 49,394 | | | 49,571 | | | 49,647 | | | 49,597 | | | 50,725 | | | | | |
Weighted average diluted shares outstanding | | 49,998 | | | 49,837 | | | 49,775 | | | 49,727 | | | 51,056 | | | | | |
````````````````````````````````````VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(In thousands except percentages)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended |
| | March 31, 2021 | | December 31, 2020 | | March 31, 2020 |
| | Average Outstanding Balance | | Interest Earned/ Interest Paid | | Average Yield/ Rate | | Average Outstanding Balance | | Interest Earned/ Interest Paid | | Average Yield/ Rate | | Average Outstanding Balance | | Interest Earned/ Interest Paid | | Average Yield/ Rate |
Assets | | | | | | | | | | | | | | | | | | |
Interest-earning assets: | | | | | | | | | | | | | | | | | | |
Loans1 | | $ | 5,897,815 | | | $ | 62,702 | | | 4.31 | % | | $ | 5,798,692 | | | $ | 65,259 | | | 4.48 | % | | $ | 5,784,965 | | | $ | 76,527 | | | 5.32 | % |
Loans held for investment, MW | | 510,678 | | | 3,815 | | | 3.03 | | | 446,027 | | | 3,355 | | | 2.99 | | | 163,646 | | | 1,334 | | | 3.28 | |
PPP loans | | 356,356 | | | 882 | | | 1.00 | | | 390,509 | | | 983 | | | 1.00 | | | — | | | — | | | — | |
Debt securities | | 1,063,538 | | | 7,437 | | | 2.84 | | | 1,076,031 | | | 7,652 | | | 2.83 | | | 1,038,954 | | | 7,397 | | | 2.86 | |
Interest-bearing deposits in other banks | | 341,483 | | | 127 | | | 0.15 | | | 258,687 | | | 99 | | | 0.15 | | | 308,546 | | | 871 | | | 1.14 | |
Equity securities and other investments | | 87,178 | | | 663 | | | 3.08 | | | 95,706 | | | 752 | | | 3.13 | | | 91,917 | | | 850 | | | 3.72 | |
Total interest-earning assets | | 8,257,048 | | | 75,626 | | | 3.71 | | | 8,065,652 | | | 78,100 | | | 3.85 | | | 7,388,028 | | | 86,979 | | | 4.74 | |
Allowance for credit losses | | (105,972) | | | | | | | (121,162) | | | | | | | (44,270) | | | | | |
Noninterest-earning assets | | 790,195 | | | | | | | 805,651 | | | | | | | 782,024 | | | | | |
Total assets | | $ | 8,941,271 | | | | | | | $ | 8,750,141 | | | | | | | $ | 8,125,782 | | | | | |
| | | | | | | | | | | | | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | | | | | | | | | | | | | |
Interest-bearing liabilities: | | | | | | | | | | | | | | | | | | |
Interest-bearing demand and savings deposits | | $ | 3,038,586 | | | $ | 1,980 | | | 0.26 | % | | $ | 2,862,084 | | | $ | 2,105 | | | 0.29 | % | | $ | 2,638,633 | | | $ | 6,552 | | | 1.00 | % |
Certificates and other time deposits | | 1,509,836 | | | 3,061 | | | 0.82 | | | 1,467,250 | | | 3,919 | | | 1.06 | | | 1,650,678 | | | 8,240 | | | 2.01 | |
Advances from FHLB | | 777,694 | | | 1,812 | | | 0.94 | | | 885,014 | | | 2,222 | | | 1.00 | | | 937,901 | | | 2,879 | | | 1.23 | |
Subordinated debentures and subordinated notes | | 265,356 | | | 3,138 | | | 4.80 | | | 259,581 | | | 3,088 | | | 4.73 | | | 145,189 | | | 1,903 | | | 5.27 | |
Total interest-bearing liabilities | | 5,591,472 | | | 9,991 | | | 0.72 | | | 5,473,929 | | | 11,334 | | | 0.82 | | | 5,372,401 | | | 19,574 | | | 1.47 | |
| | | | | | | | | | | | | | | | | | |
Noninterest-bearing liabilities: | | | | | | | | | | | | | | | | | | |
Noninterest-bearing deposits | | 2,069,233 | | | | | | | 2,011,995 | | | | | | | 1,523,702 | | | | | |
Other liabilities | | 56,272 | | | | | | | 67,943 | | | | | | | 46,563 | | | | | |
Total liabilities | | 7,716,977 | | | | | | | 7,553,867 | | | | | | | 6,942,666 | | | | | |
Stockholders’ equity | | 1,224,294 | | | | | | | 1,196,274 | | | | | | | 1,183,116 | | | | | |
Total liabilities and stockholders’ equity | | $ | 8,941,271 | | | | | | | $ | 8,750,141 | | | | | | | $ | 8,125,782 | | | | | |
| | | | | | | | | | | | | | | | | | |
Net interest rate spread2 | | | | | | 2.99 | % | | | | | | 3.03 | % | | | | | | 3.27 | % |
Net interest income | | | | $ | 65,635 | | | | | | | $ | 66,766 | | | | | | | $ | 67,405 | | | |
Net interest margin3 | | | | | | 3.22 | % | | | | | | 3.29 | % | | | | | | 3.67 | % |
1 Includes average outstanding balances of loans held for sale of $16,602, $11,938 and $10,995 for the three months ended March 31, 2021, December 31, 2020, and March 31, 2020, respectively, and average balances of loans held for investment, excluding mortgage warehouse and PPP loans.
2 Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
3 Net interest margin is equal to net interest income divided by average interest-earning assets.
VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
Yield Trend
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended |
| | March 31, 2021 | | December 31, 2020 | | September 30, 2020 | | June 30, 2020 | | March 31, 2020 |
Average yield on interest-earning assets: | | | | | | | | | | |
Loans1 | | 4.31 | % | | 4.48 | % | | 4.49 | % | | 4.68 | % | | 5.32 | % |
Loans held for investment, MW | | 3.03 | | | 2.99 | | | 3.00 | | | 3.01 | | | 3.28 | |
PPP loans | | 1.00 | | | 1.00 | | | 1.00 | | | 1.00 | | | — | |
Debt securities | | 2.84 | | | 2.83 | | | 2.84 | | | 2.82 | | | 2.86 | |
Interest-bearing deposits in other banks | | 0.15 | | | 0.15 | | | 0.15 | | | 0.20 | | | 1.14 | |
Equity securities and other investments | | 3.08 | | | 3.13 | | | 3.17 | | | 3.24 | | | 3.72 | |
Total interest-earning assets | | 3.71 | % | | 3.85 | % | | 3.90 | % | | 3.99 | % | | 4.74 | % |
| | | | | | | | | | |
Average rate on interest-bearing liabilities: | | | | | | | | | | |
Interest-bearing demand and savings deposits | | 0.26 | % | | 0.29 | % | | 0.31 | % | | 0.37 | % | | 1.00 | % |
Certificates and other time deposits | | 0.82 | | | 1.06 | | | 1.36 | | | 1.61 | | | 2.01 | |
Advances from FHLB | | 0.94 | | | 1.00 | | | 1.01 | | | 0.93 | | | 1.23 | |
Subordinated debentures and subordinated notes | | 4.80 | | | 4.73 | | | 4.87 | | | 5.07 | | | 5.27 | |
Total interest-bearing liabilities | | 0.72 | % | | 0.82 | % | | 0.85 | % | | 0.97 | % | | 1.47 | % |
| | | | | | | | | | |
Net interest rate spread2 | | 2.99 | % | | 3.03 | % | | 3.05 | % | | 3.02 | % | | 3.27 | % |
Net interest margin3 | | 3.22 | % | | 3.29 | % | | 3.32 | % | | 3.31 | % | | 3.67 | % |
1Includes average outstanding balances of loans held for sale of $16,602, $11,938, $15,404, $22,958 and $10,995 for the three months ended March 31, 2021, December 31, 2020, September 30, 2020, June 30, 2020 and March 31, 2020, respectively, and average balances of loans held for investment, excluding mortgage warehouse and PPP loans.
2 Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
3 Net interest margin is equal to net interest income divided by average interest-earning assets.
Supplemental Yield Trend
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended |
| | March 31, 2021 | | December 31, 2020 | | September 30, 2020 | | June 30, 2020 | | March 31, 2020 |
Average cost of interest-bearing deposits | | 0.45 | % | | 0.55 | % | | 0.67 | % | | 0.84 | % | | 1.37 | % |
Average costs of total deposits, including noninterest-bearing | | 0.31 | | | 0.38 | | | 0.46 | | | 0.59 | | | 1.02 | |
VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(In thousands except percentages)
Total LHI and Deposit Portfolio Composition
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | March 31, 2021 | | December 31, 2020 | | September 30, 2020 | | June 30, 2020 | | March 31, 2020 |
| | (Dollars in thousands) |
LHI1 | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 1,632,040 | | 27.4 | % | | $ | 1,559,546 | | 26.7 | % | | $ | 1,623,249 | | 28.0 | % | | $ | 1,555,300 | | 27.2 | % | | $ | 1,777,603 | | 30.4 | % |
| | | | | | | | | | | | | | | | | | | | |
Real Estate: | | | | | | | | | | | | | | | | | | | | |
Owner occupied commercial | | 733,310 | | 12.3 | | | 717,472 | | 12.3 | | | 734,939 | | 12.7 | | | 769,952 | | 13.4 | | | 723,839 | | 12.4 | |
Commercial | | 1,970,945 | | 33.0 | | | 1,904,132 | | 32.5 | | | 1,817,013 | | 31.4 | | | 1,847,480 | | 32.3 | | | 1,828,386 | | 31.2 | |
Construction and land | | 723,444 | | 12.1 | | | 693,030 | | 11.8 | | | 623,496 | | 10.8 | | | 599,510 | | 10.5 | | | 566,470 | | 9.7 | |
Farmland | | 14,751 | | 0.2 | | | 13,844 | | 0.2 | | | 14,413 | | 0.2 | | | 14,723 | | 0.3 | | | 14,930 | | 0.3 | |
1-4 family residential | | 492,609 | | 8.3 | | | 524,344 | | 9.0 | | | 548,953 | | 9.5 | | | 528,688 | | 9.2 | | | 536,892 | | 9.2 | |
Multi-family residential | | 386,844 | | 6.5 | | | 424,962 | | 7.3 | | | 412,412 | | 7.1 | | | 394,829 | | 6.8 | | | 388,374 | | 6.7 | |
Consumer | | 12,431 | | 0.2 | | | 13,000 | | 0.2 | | | 14,127 | | 0.1 | | | 14,932 | | 0.3 | | | 15,771 | | 0.3 | |
Total LHI | | $ | 5,966,374 | | 100 | % | | $ | 5,850,330 | | 100 | % | | $ | 5,788,602 | | 100 | % | | $ | 5,725,414 | | 100 | % | | $ | 5,852,265 | | 100 | % |
| | | | | | | | | | | | | | | | | | | | |
MW | | 599,001 | | | | 577,594 | | | | 544,845 | | | | 441,992 | | | | 373,161 | | |
PPP loans | | 407,353 | | | | 358,042 | | | | 405,465 | | | | 398,949 | | | | — | | |
| | | | | | | | | | | | | | | | | | | | |
Total LHI1 | | $ | 6,972,728 | | | | $ | 6,785,966 | | | | $ | 6,738,912 | | | | $ | 6,566,355 | | | | $ | 6,225,426 | | |
| | | | | | | | | | | | | | | | | | | | |
Deposits | | | | | | | | | | | | | | | | | | | | |
Noninterest-bearing | | $ | 2,171,719 | | 31.6 | % | | $ | 2,097,099 | | 32.3 | % | | $ | 1,920,715 | | 30.9 | % | | $ | 1,907,697 | | 31.1 | % | | $ | 1,549,260 | | 26.7 | % |
Interest-bearing transaction | | 463,343 | | 6.7 | | | 453,110 | | 7.0 | | | 450,739 | | 7.2 | | | 343,640 | | 5.6 | | | 306,641 | | 5.3 | |
Money market | | 2,602,903 | | 37.7 | | | 2,398,526 | | 36.8 | | | 2,267,191 | | 36.4 | | | 2,272,520 | | 37.1 | | | 2,143,874 | | 37.0 | |
Savings | | 123,447 | | 1.8 | | | 106,820 | | 1.6 | | | 104,015 | | 1.7 | | | 97,989 | | 1.6 | | | 86,350 | | 1.5 | |
Certificates and other time deposits | | 1,543,158 | | 22.2 | | | 1,457,291 | | 22.4 | | | 1,479,896 | | 23.7 | | | 1,503,701 | | 24.5 | | | 1,713,820 | | 29.6 | |
Total deposits | | $ | 6,904,570 | | 100 | % | | $ | 6,512,846 | | 100 | % | | $ | 6,222,556 | | 100 | % | | $ | 6,125,547 | | 100 | % | | $ | 5,799,945 | | 100 | % |
| | | | | | | | | | | | | | | | | | | | |
Loan to Deposit Ratio | | 101.0 | % | | | | 104.2 | % | | | | 108.3 | % | | | | 107.2 | % | | | | 107.3 | % | | |
| | | | | | | | | | | | | | | | | | | | |
Loan to Deposit Ratio, excluding MW and PPP loans | | 86.4 | % | | | | 89.8 | % | | | | 93.0 | % | | | | 93.5 | % | | | | 100.9 | % | | |
1 Total LHI does not include deferred fees of $2.9 million, $2.5 million, and $691 thousand at March 31, 2021, December 31, 2020 and September 30, 2020, respectively, deferred costs of $1.5 million and $1.5 million at June 30, 2020 and March 31, 2020, respectively.
VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(In thousands except percentages)
Asset Quality
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended | | |
| Mar 31, 2021 | | Dec 31, 2020 | | Sep 30, 2020 | | Jun 30, 2020 | | Mar 31, 2020 | | | | |
| (Dollars in thousands) | | | | |
Nonperforming Assets (“NPAs”): | | | | | | | | | | | | | |
Nonaccrual loans | $ | 73,594 | | $ | 81,096 | | $ | 88,877 | | $ | 43,594 | | $ | 38,836 | | | | |
Accruing loans 90 or more days past due1 | 9,093 | | 4,204 | | 1,689 | | 2,021 | | 4,764 | | | | |
Total nonperforming loans held for investment (“NPLs”) | 82,687 | | 85,300 | | 90,566 | | 45,615 | | 43,600 | | | | |
OREO | 2,337 | | 2,337 | | 5,796 | | 7,716 | | 7,720 | | | | |
Total NPAs | $ | 85,024 | | $ | 87,637 | | $ | 96,362 | | $ | 53,331 | | $ | 51,320 | | | | |
| | | | | | | | | | | | | |
Charge-offs: | | | | | | | | | | | | | |
Residential | $ | (15) | | $ | (18) | | $ | — | | $ | — | | $ | — | | | | |
Owner occupied commercial real estate | — | | — | | (2,421) | | — | | — | | | | |
Nonowner occupied commercial real estate | — | | (2,865) | | — | | — | | — | | | | |
Commercial | (346) | | (13,699) | | (68) | | (1,740) | | — | | | | |
Consumer | (18) | | (26) | | (11) | | (57) | | (68) | | | | |
Total charge-offs | (379) | | (16,608) | | (2,500) | | (1,797) | | (68) | | | | |
| | | | | | | | | | | | | |
Recoveries: | | | | | | | | | | | | | |
Residential | 3 | | 49 | | 7 | | — | | 1 | | | | |
Commercial | 226 | | 52 | | 14 | | 7 | | 29 | | | | |
Consumer | 2 | | — | | 13 | | — | | 274 | | | | |
Total recoveries | 231 | | 101 | | 34 | | 7 | | 304 | | | | |
| | | | | | | | | | | | | |
Net charge-offs | $ | (148) | | $ | (16,507) | | $ | (2,466) | | $ | (1,790) | | $ | 236 | | | | |
| | | | | | | | | | | | | |
CECL transition adjustment | $ | — | | $ | — | | $ | — | | $ | — | | $ | 39,137 | | | | |
| | | | | | | | | | | | | |
Allowance for credit losses (“ACL”) at end of period | $ | 104,936 | | $ | 105,084 | | $ | 121,591 | | $ | 115,365 | | $ | 100,983 | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Asset Quality Ratios: | | | | | | | | | | | | | |
NPAs to total assets | 0.92 | % | | 0.99 | % | | 1.11 | % | | 0.62 | % | | 0.60 | % | | | | |
NPLs to total LHI, excluding MW and PPP loans | 1.39 | | | 1.46 | | | 1.56 | | | 0.80 | | | 0.75 | | | | | |
ACL to total LHI, excluding MW and PPP loans | 1.76 | | | 1.80 | | | 2.10 | | | 2.01 | | | 1.73 | | | | | |
| | | | | | | | | | | | | |
Net charge-offs to average loans outstanding | — | | | 0.28 | | | 0.04 | | | 0.03 | | | — | | | | | |
1 Accruing loans greater than 90 days past due exclude purchase credit deteriorated loans greater than 90 days past due that are accounted for on a pooled basis.
VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
We identify certain financial measures discussed in this earnings release as being “non-GAAP financial measures.” In accordance with SEC rules, we classify a financial measure as being a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles as in effect from time to time in the United States (“GAAP”), in our statements of income, balance sheets or statements of cash flows. Non-GAAP financial measures do not include operating and other statistical measures or ratios calculated using exclusively either one or both of (i) financial measures calculated in accordance with GAAP and (ii) operating measures or other measures that are not non-GAAP financial measures.
The non-GAAP financial measures that we present in this earnings release should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which we calculate the non-GAAP financial measures that we present in this earnings release may differ from that of other companies reporting measures with similar names. You should understand how such other financial institutions calculate their financial measures that appear to be similar or have similar names to the non-GAAP financial measures we have discussed in this earnings release when comparing such non-GAAP financial measures.
Tangible Book Value Per Common Share. Tangible book value is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) tangible common equity as total stockholders’ equity less goodwill and core deposit intangibles, net of accumulated amortization; and (b) tangible book value per common share as tangible common equity (as described in clause (a)) divided by number of common shares outstanding. For tangible book value per common share, the most directly comparable financial measure calculated in accordance with GAAP is book value per common share.
We believe that this measure is important to many investors in the marketplace who are interested in changes from period to period in book value per common share exclusive of changes in core deposit intangibles. Goodwill and other intangible assets have the effect of increasing total book value while not increasing our tangible book value.
The following table reconciles, as of the dates set forth below, total stockholders’ equity to tangible common equity and presents our tangible book value per common share compared with our book value per common share:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | As of |
| | Mar 31, 2021 | | Dec 31, 2020 | | Sep 30, 2020 | | Jun 30, 2020 | | Mar 31, 2020 |
| | (Dollars in thousands, except per share data) |
Tangible Common Equity | | | | | | | | | | |
Total stockholders' equity | | $ | 1,233,808 | | | $ | 1,203,376 | | | $ | 1,185,337 | | | $ | 1,163,749 | | | $ | 1,149,269 | |
Adjustments: | | | | | | | | | | |
Goodwill | | (370,840) | | | (370,840) | | | (370,840) | | | (370,840) | | | (370,840) | |
Core deposit intangibles | | (55,311) | | | (57,758) | | | (60,209) | | | (62,661) | | | (65,112) | |
Tangible common equity | | $ | 807,657 | | | $ | 774,778 | | | $ | 754,288 | | | $ | 730,248 | | | $ | 713,317 | |
Common shares outstanding | | 49,433 | | | 49,340 | | | 49,650 | | | 49,633 | | | 49,557 | |
| | | | | | | | | | |
Book value per common share | | $ | 24.96 | | | $ | 24.39 | | | $ | 23.87 | | | $ | 23.45 | | | $ | 23.19 | |
Tangible book value per common share | | $ | 16.34 | | | $ | 15.70 | | | $ | 15.19 | | | $ | 14.71 | | | $ | 14.39 | |
VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
Tangible Common Equity to Tangible Assets. Tangible common equity to tangible assets is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) tangible common equity as total stockholders’ equity, less goodwill and core deposit intangibles, net of accumulated amortization; (b) tangible assets as total assets less goodwill and core deposit intangibles, net of accumulated amortization; and (c) tangible common equity to tangible assets as tangible common equity (as described in clause (a)) divided by tangible assets (as described in clause (b)). For tangible common equity to tangible assets, the most directly comparable financial measure calculated in accordance with GAAP is total stockholders’ equity to total assets.
We believe that this measure is important to many investors in the marketplace who are interested in the relative changes from period to period in common equity and total assets, in each case, exclusive of changes in core deposit intangibles. Goodwill and other intangible assets have the effect of increasing both total stockholders’ equity and assets while not increasing our tangible common equity or tangible assets.
The following table reconciles, as of the dates set forth below, total stockholders’ equity to tangible common equity and total assets to tangible assets and presents our tangible common equity to tangible assets:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | As of |
| | Mar 31, 2021 | | Dec 31, 2020 | | Sep 30, 2020 | | Jun 30, 2020 | | Mar 31, 2020 |
| | (Dollars in thousands) |
Tangible Common Equity | | | | | | | | | | |
Total stockholders' equity | | $ | 1,233,808 | | | $ | 1,203,376 | | | $ | 1,185,337 | | | $ | 1,163,749 | | | $ | 1,149,269 | |
Adjustments: | | | | | | | | | | |
Goodwill | | (370,840) | | | (370,840) | | | (370,840) | | | (370,840) | | | (370,840) | |
Core deposit intangibles | | (55,311) | | | (57,758) | | | (60,209) | | | (62,661) | | | (65,112) | |
Tangible common equity | | $ | 807,657 | | | $ | 774,778 | | | $ | 754,288 | | | $ | 730,248 | | | $ | 713,317 | |
Tangible Assets | | | | | | | | | | |
Total assets | | $ | 9,237,510 | | | $ | 8,820,871 | | | $ | 8,702,375 | | | $ | 8,587,858 | | | $ | 8,531,624 | |
Adjustments: | | | | | | | | | | |
Goodwill | | (370,840) | | | (370,840) | | | (370,840) | | | (370,840) | | | (370,840) | |
Core deposit intangibles | | (55,311) | | | (57,758) | | | (60,209) | | | (62,661) | | | (65,112) | |
Tangible Assets | | $ | 8,811,359 | | | $ | 8,392,273 | | | $ | 8,271,326 | | | $ | 8,154,357 | | | $ | 8,095,672 | |
Tangible Common Equity to Tangible Assets | | 9.17 | % | | 9.23 | % | | 9.12 | % | | 8.96 | % | | 8.81 | % |
VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
Return on Average Tangible Common Equity. Return on average tangible common equity is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) net income available for common stockholders adjusted for amortization of core deposit intangibles (which we refer to as “return”) as net income, plus amortization of core deposit intangibles, less tax benefit at the statutory rate; (b) average tangible common equity as total average stockholders’ equity less average goodwill and average core deposit intangibles, net of accumulated amortization; and (c) return (as described in clause (a)) divided by average tangible common equity (as described in clause (b)). For return on average tangible common equity, the most directly comparable financial measure calculated in accordance with GAAP is return on average equity.
We believe that this measure is important to many investors in the marketplace who are interested in the return on common equity, exclusive of the impact of core deposit intangibles. Goodwill and core deposit intangibles have the effect of increasing total stockholders’ equity while not increasing our tangible common equity. This measure is particularly relevant to acquisitive institutions that may have higher balances in goodwill and core deposit intangibles than non-acquisitive institutions.
The following table reconciles, as of the dates set forth below, average tangible common equity to average common equity and net income available for common stockholders adjusted for amortization of core deposit intangibles, net of taxes to net income and presents our return on average tangible common equity:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended | | |
| | Mar 31, 2021 | | Dec 31, 2020 | | Sep 30, 2020 | | Jun 30, 2020 | | Mar 31, 2020 | | | | |
| | (Dollars in thousands) | | | | |
Net income available for common stockholders adjusted for amortization of core deposit intangibles | | | | | | | | | | | | | | |
Net income | | $ | 31,787 | | | $ | 22,801 | | | $ | 22,920 | | | $ | 24,028 | | | $ | 4,134 | | | | | |
Adjustments: | | | | | | | | | | | | | | |
Plus: Amortization of core deposit intangibles | | 2,447 | | | 2,451 | | | 2,451 | | | 2,451 | | | 2,451 | | | | | |
Less: Tax benefit at the statutory rate | | 514 | | | 515 | | | 515 | | | 515 | | | 515 | | | | | |
Net income available for common stockholders adjusted for amortization of core deposit intangibles | | $ | 33,720 | | | $ | 24,737 | | | $ | 24,856 | | | $ | 25,964 | | | $ | 6,070 | | | | | |
| | | | | | | | | | | | | | |
Average Tangible Common Equity | | | | | | | | | | | | | | |
Total average stockholders' equity | | $ | 1,224,294 | | | $ | 1,196,274 | | | $ | 1,177,882 | | | $ | 1,155,798 | | | $ | 1,183,116 | | | | | |
Adjustments: | | | | | | | | | | | | | | |
Average goodwill | | (370,840) | | | (370,840) | | | (370,840) | | | (370,840) | | | (370,840) | | | | | |
Average core deposit intangibles | | (56,913) | | | (59,010) | | | (61,666) | | | (64,151) | | | (66,439) | | | | | |
Average tangible common equity | | $ | 796,541 | | | $ | 766,424 | | | $ | 745,376 | | | $ | 720,807 | | | $ | 745,837 | | | | | |
Return on Average Tangible Common Equity (Annualized) | | 17.17 | % | | 12.84 | % | | 13.27 | % | | 14.49 | % | | 3.27 | % | | | | |
VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
Operating Earnings, Pre-tax, Pre-provision Operating Earnings and performance metrics calculated using Operating Earnings and Pre-tax, Pre-provision Operating Earnings, including Diluted Operating Earnings per Share, Operating Return on Average Assets, Pre-tax, Pre-Provision Operating Return on Average Assets, Operating Return on Average Tangible Common Equity and Operating Efficiency Ratio. Operating earnings, pre-tax, pre-provision operating earnings and the performance metrics calculated using these metrics, listed below, are non-GAAP measures used by management to evaluate the Company’s financial performance. We calculate (a) operating earnings as net income plus loss (gain) on sale of securities, net, plus loss (gain) on sale of disposed branch assets, plus FHLB pre-payment fees, plus merger and acquisition expenses, less tax impact of adjustments, plus other merger and acquisition tax items, plus re-measurement of deferred tax assets as a result of the reduction in the corporate income tax rate under the Tax Cuts and Jobs Act. We calculate (b) diluted operating earnings per share as operating earnings as described in clause (a) divided by weighted average diluted shares outstanding. We calculate (c) pre-tax, pre-provision operating earnings as operating earnings as described in clause (a) plus provision for income taxes, plus provision for loan losses. We calculate (d) pre-tax, pre-provision operating return on average assets as pre-tax, pre-provision operating earnings as described in clause (a) divided by average total assets. We calculate (e) operating return on average assets as operating earnings as described in clause (a) divided by average total assets. We calculate (f) operating return on average tangible common equity as operating earnings as described in clause (a), adjusted for the amortization of intangibles and tax benefit at the statutory rate, divided by total average tangible common equity (average stockholders’ equity less average goodwill and average core deposit intangibles, net of accumulated amortization). We calculate (g) operating efficiency ratio as non interest expense plus adjustments to operating non interest expense divided by (i) non interest income plus adjustments to operating non interest income plus (ii) net interest income.
We believe that these measures and the operating metrics calculated utilizing these measures are important to management and many investors in the marketplace who are interested in understanding the ongoing operating performance of the Company and provide meaningful comparisons to its peers.
The following tables reconcile, as of the dates set forth below, operating net income and pre-tax, pre-provision operating earnings and related metrics:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended | | |
| | Mar 31, 2021 | | Dec 31, 2020 | | Sep 30, 2020 | | Jun 30, 2020 | | Mar 31, 2020 | | | | |
| | (Dollars in thousands) |
Operating Earnings | | | | | | | | | | | | | | |
Net income | | $ | 31,787 | | | $ | 22,801 | | | $ | 22,920 | | | $ | 24,028 | | | $ | 4,134 | | | | | |
Plus: Loss (gain) on sale of securities available for sale, net | | — | | | 256 | | | 8 | | | (2,879) | | | — | | | | | |
| | | | | | | | | | | | | | |
Plus: Debt extinguishment costs1 | | — | | | 9,746 | | | — | | | 1,561 | | | — | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Operating pre-tax income | | 31,787 | | | 32,803 | | | 22,928 | | | 22,710 | | | 4,134 | | | | | |
Less: Tax impact of adjustments | | — | | | 2,100 | | | — | | | (277) | | | — | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Plus: Nonrecurring tax adjustments2 | | 426 | | | (973) | | | — | | | (1,799) | | | — | | | | | |
Operating earnings | | $ | 32,213 | | | $ | 29,730 | | | $ | 22,928 | | | $ | 21,188 | | | $ | 4,134 | | | | | |
| | | | | | | | | | | | | | |
Weighted average diluted shares outstanding | | 49,998 | | | 49,837 | | | 49,775 | | | 49,727 | | | 51,056 | | | | | |
Diluted EPS | | $ | 0.64 | | | $ | 0.46 | | | $ | 0.46 | | | $ | 0.48 | | | $ | 0.08 | | | | | |
Diluted operating EPS | | 0.64 | | | 0.60 | | | 0.46 | | | 0.43 | | | 0.08 | | | | | |
1 Debt extinguishment costs relate to prepayment penalties paid in connection with the early payoff of FHLB structured advances.
2 A nonrecurring tax adjustment of $426 thousand recorded in the first quarter of 2021 was due to a true-up of a deferred tax liability. A nonrecurring tax adjustment of $973 thousand recorded in the fourth quarter of 2020 was primarily due the reversal of acquired deferred tax liabilities resulting in a tax benefit of $1.2 million offset by tax expense of $281 thousand for the setup of an uncertain tax position liability relating to state tax exposure for tax years prior to the year ending December 31, 2020. A nonrecurring tax adjustment of $1,799 was recorded in the second quarter of 2020 as a result of the Company amending a prior year 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 CARES Act which permits NOLs generated in tax years 2018, 2019 or 2020 to be carried back five years.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended | | |
| | Mar 31, 2021 | | Dec 31, 2020 | | Sep 30, 2020 | | Jun 30, 2020 | | Mar 31, 2020 | | | | |
| | (Dollars in thousands) |
Pre-Tax, Pre-Provision Operating Earnings | | | | | | | | | | | | | | |
Net income | | $ | 31,787 | | | $ | 22,801 | | | $ | 22,920 | | | $ | 24,028 | | | $ | 4,134 | | | | | |
Plus: Provision (benefit) for income taxes | | 8,993 | | | 4,702 | | | 6,198 | | | 3,987 | | | (684) | | | | | |
Pus: (Benefit) provision for credit losses and unfunded commitments | | (570) | | | 902 | | | 10,139 | | | 18,971 | | | 35,657 | | | | | |
Plus: Loss (gain) on sale of securities, net | | — | | | 256 | | | 8 | | | (2,879) | | | — | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Plus: Merger and acquisition expenses | | — | | | — | | | — | | | — | | | — | | | | | |
Pre-tax, pre-provision operating earnings | | $ | 40,210 | | | $ | 38,407 | | | $ | 39,265 | | | $ | 45,668 | | | $ | 39,107 | | | | | |
| | | | | | | | | | | | | | |
Average total assets | | $ | 8,941,271 | | | $ | 8,750,141 | | | $ | 8,585,926 | | | $ | 8,689,774 | | | $ | 8,125,782 | | | | | |
Pre-tax, pre-provision operating return on average assets1 | | 1.82 | % | | 1.75 | % | | 1.82 | % | | 2.11 | % | | 1.94 | % | | | | |
| | | | | | | | | | | | | | |
Average total assets | | $ | 8,941,271 | | | $ | 8,750,141 | | | $ | 8,585,926 | | | $ | 8,689,774 | | | $ | 8,125,782 | | | | | |
Return on average assets1 | | 1.44 | % | | 1.04 | % | | 1.06 | % | | 1.11 | % | | 0.20 | % | | | | |
Operating return on average assets1 | | 1.46 | | | 1.35 | | | 1.06 | | | 0.98 | | | 0.20 | | | | | |
| | | | | | | | | | | | | | |
Operating earnings adjusted for amortization of core deposit intangibles | | | | | | | | | | | | | | |
Operating earnings | | $ | 32,213 | | | $ | 29,730 | | | $ | 22,928 | | | $ | 21,188 | | | $ | 4,134 | | | | | |
Adjustments: | | | | | | | | | | | | | | |
Plus: Amortization of core deposit intangibles | | 2,447 | | | 2,451 | | | 2,451 | | | 2,451 | | | 2,451 | | | | | |
Less: Tax benefit at the statutory rate | | 514 | | | 515 | | | 515 | | | 515 | | | 515 | | | | | |
Operating earnings adjusted for amortization of core deposit intangibles | | $ | 34,146 | | | $ | 31,666 | | | $ | 24,864 | | | $ | 23,124 | | | $ | 6,070 | | | | | |
| | | | | | | | | | | | | | |
Average Tangible Common Equity | | | | | | | | | | | | | | |
Total average stockholders' equity | | $ | 1,224,294 | | | $ | 1,196,274 | | | $ | 1,177,882 | | | $ | 1,155,798 | | | $ | 1,183,116 | | | | | |
Adjustments: | | | | | | | | | | | | | | |
Less: Average goodwill | | (370,840) | | | (370,840) | | | (370,840) | | | (370,840) | | | (370,840) | | | | | |
Less: Average core deposit intangibles | | (56,913) | | | (59,010) | | | (61,666) | | | (64,151) | | | (66,439) | | | | | |
Average tangible common equity | | $ | 796,541 | | | $ | 766,424 | | | $ | 745,376 | | | $ | 720,807 | | | $ | 745,837 | | | | | |
Operating return on average tangible common equity1 | | 17.39 | % | | 16.44 | % | | 13.27 | % | | 12.90 | % | | 3.27 | % | | | | |
| | | | | | | | | | | | | | |
Efficiency ratio | | 49.62 | % | | 62.52 | % | | 48.12 | % | | 46.02 | % | | 47.61 | % | | | | |
Operating efficiency ratio | | 49.62 | % | | 49.49 | % | | 48.11 | % | | 45.74 | % | | 47.61 | % | | | | |
1 Annualized ratio.
a1q21veritexinvestorpres
1st Quarter Earnings Conference Call April 28, 2021 Veritex Holdings, Inc.
2 Safe Harbor Statement Forward-looking statements This presentation contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on various facts and derived utilizing assumptions, current expectations, estimates and projections and are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward- looking statements include, without limitation, statements relating to Veritex Holdings, Inc. (“Veritex”) investment in Thrive Mortgage, the expected payment date of Veritex’s quarterly cash dividend, impact of certain changes in Veritex’s accounting policies, standards and interpretations, the effects of the COVID-19 pandemic and actions taken in response thereto, Veritex’s future financial performance, business and growth strategy, projected plans and objectives, as well as other projections based on macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact broader economic and industry trends, and any such variations may be material. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing words. We refer you to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Veritex’s Annual Report on Form 10-K for the year ended December 31, 2020 and any updates to those risk factors set forth in Veritex’s Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings with the Securities and Exchange Commission (“SEC”), which are available on the SEC’s website at www.sec.gov. If one or more events related to these or other risks or uncertainties materialize, or if Veritex’s underlying assumptions prove to be incorrect, actual results may differ materially from what Veritex anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made. Veritex does not undertake any obligation, and specifically declines any obligation, to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by law. All forward-looking statements, expressed or implied, included in this presentation are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that Veritex or persons acting on Veritex’s behalf may issue. This presentation also includes industry and trade association data, forecasts and information that Veritex has prepared based, in part, upon data, forecasts and information obtained from independent trade associations, industry publications and surveys, government agencies and other information publicly available to Veritex, which information may be specific to particular markets or geographic locations. Some data is also based on Veritex's good faith estimates, which are derived from management's knowledge of the industry and independent sources. Industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable. Although Veritex believes these sources are reliable, Veritex has not independently verified the information contained therein. While Veritex is not aware of any misstatements regarding the industry data presented in this presentation, Veritex's estimates involve risks and uncertainties and are subject to change based on various factors. Similarly, Veritex believes that its internal research is reliable, even though such research has not been verified by independent sources.
3 Non-GAAP Financial Measures Veritex reports its results in accordance with United States generally accepted accounting principles (“GAAP”). However, management believes that certain supplemental non-GAAP financial measures used in managing its business provide meaningful information to investors about underlying trends in its business. Management uses these non-GAAP measures to assess the Company’s operating performance and believes that these non-GAAP measures provide information that is important to investors and that is useful in understanding Veritex’s results of operations. However, non-GAAP financial measures are supplemental and should be viewed in addition to, and not as an alternative for, Veritex’s reported results prepared in accordance with GAAP. The following are the non-GAAP measures used in this presentation: • Tangible book value per common share; • Tangible common equity to tangible assets; • Return on average tangible common equity (“ROTCE”); • Operating net income; • Pre-tax, pre-provision (“PTPP”) operating earnings; • Diluted operating earnings per share (“EPS”); • Operating return on average assets (“ROAA”); • PTPP operating ROAA; • Operating ROTCE; • Operating efficiency ratio; • Operating noninterest income; • Operating noninterest expense; and • Adjusted net interest margin (“NIM”). Please see “Reconciliation of Non-GAAP Financial Measures” at the end of this presentation for reconciliations of non-GAAP measures to the most directly comparable financial measures calculated in accordance with GAAP.
Strong Earnings Loan and Deposit Growth Capital • Net income of $31.8 million, or $0.64 diluted earnings per share (“EPS”), for 1Q21 compared to $22.8 million, or $0.46 diluted EPS, for 4Q20 • Operating net income1 of $32.2 million, or $0.64 diluted operating EPS1, for 1Q21 compared to $29.7 million, or $0.60 diluted operating EPS, for 4Q20 • Operating ROATCE1 increased to 17.39% in 1Q21 compared to 16.44% in 4Q20 • Total loans, excluding Paycheck Protection Program (“PPP”) loans, increased $137.0 million, or 8.6% linked quarter annualized (“LQA”). Excluding PPP and mortgage warehouse (“MW”), total loans grew 7.9% LQA • Total deposits grew $391.7 million, or 24.0% LQA • Average cost of total deposits decreased to 0.31% for 1Q21 from 0.38% for 4Q20 • Tangible book value per common share increased to $16.34 from $15.70 at December 31, 2020 • Declared quarterly dividend of $0.17 in 1Q21 • Repurchased 147,622 shares during 1Q21 at an average price of $25.92 and extended the expiration date of the stock buyback program to December 31, 2021 1 Please refer to the “Reconciliation of Non-GAAP Financial Measures” at the end of this presentation for a description and reconciliation of these non-GAAP financial measures. 4 First Quarter Overview
Key Financial Metrics 46.02% 48.12% 62.52% 47.61% 45.74% 48.11% 49.49% 49.62% 1Q20 2Q20 3Q20 4Q20 1Q21 Reported Operating Efficiency Ratio 1.11% 1.06% 1.04% 1.44% 0.20% 1.35% 1.94% 2.11% 1.82% 1.75% 1.82% 1Q20 2Q20 3Q20 4Q20 1Q21 Reported Operating ROAA PTPP Operating 0.98% $14.39 $14.71 $15.19 $15.70 $16.34 1Q20 2Q20 3Q20 4Q20 1Q21 NPAs / Total Assets Return on Average Tangible Common Equity1 $0.08 $0.48 $0.64 $0.43 $0.46 $0.60 1Q20 2Q20 3Q20 4Q20 1Q21 Diluted EPS Diluted Operating EPS $0.46 3.27% 14.49% 13.27% 12.84% 17.17% 1Q20 2Q20 3Q20 4Q20 1Q21 ROATCE Operating ROATCE Diluted EPS Tangible Book Value per Common Share1 5 16.44% ($ in millions) $51.3 $53.3 $96.4 $87.6 $85.0 0.60% 0.62% 1.11% 0.99% 0.92% 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% 1Q20 2Q20 3Q20 4Q20 1Q21 NPAs NPAs/Total Assets 1 Please refer to the “Reconciliation of Non-GAAP Financial Measures” at the end of this presentation for a description and reconciliation of these non-GAAP financial measures. 1 11 1 1 12.90% 17.39% 1.46% ROAA 1
• Net interest income of $65.6 million, down $1.2 million from 4Q20 primarily driven by a decrease in the number of days in 1Q21 compared to 4Q20 • Average earning assets grew $191.4 million, or 9.5% LQA, during 1Q21 • 1Q21 weighted average loan production rate of 3.64%, excluding MW loans • 1Q21 weighted average interest-bearing deposit rate of 25 bps on production Net Interest Income 6 $65.8 $65.9 $66.8 $65.6 3.67% 3.31% 3.32% 3.29% 3.22% 3.39% 3.13% 3.10% 3.15% 3.12% 1Q20 2Q20 3Q20 4Q20 1Q21 Net Interest Income NIM Adjusted NIM (Excludes All Purchase Accounting) 1 $67.4 $8,002 $7,900 $8,066 $8,257 1Q20 2Q20 3Q20 4Q20 1Q21 Average Earning Assets $7,388 Average Earning Assets Net Interest Income Rollforward ($ in millions) ($ in millions) 1 1 Please refer to the “Reconciliation of Non-GAAP Financial Measures” at the end of this presentation for a description and reconciliation of these non-GAAP financial measures. 4Q20 Net Interest Income 66,766 Day Count < 1,451 > Purchase Accounting Accretion < 755 > Loan Rates < 510 > Deposit Volume < 393 > Deposit Rates 1,128 Loan Volume 721 Other changes 129 1Q21 Net Interest Income 65,635
Loans, excluding PPP, totaled $6.4 billion at December 31, 2020 Loan portfolio 69% ($4.5 billion) variable at December 31, 2020 (excludes PPP) 70% of variable loans are LIBOR-based 86% of the LIBOR loans are tied to 1 month LIBOR; 14% of the LIBOR loans are tied to 1 year LIBOR 30% of variable loans are tied to WSJ Prime Net Interest Income at risk from rate shocks Risk to Veritex is rates falling or staying lower for longer To compensate for this risk, the following actions were taken in 1Q21: Terminated $500 million forward starting 10 year swap at a gain of $43 million that will be recognized on a straight-line basis starting March 2022 Initiated $375 million of average 8 year received fixed / pay variable swaps (receive 131 bps, pay 1 month LIBOR) Interest Rate Risk 7 12/31/2020 3/31/2021 Year 1 +100 Shock 5.40% 4.77% +200 Shock 12.10% 10.33% Year 2 +100 Shock 8.30% 5.43% +200 Shock 17.10% 11.48%
Operating Noninterest Inc./Exp. 8 Operating Noninterest Income1 Composition $3,642 $2,960 $3,130 $3,971 $3,629 $845 $1,240 $1,787 $684 $1,341 $2,179 $2,897 $2,141 $3,336 $2,147 1Q20 2Q20 3Q20 4Q20 1Q21 Other Government guaranteed loan income, net Gain on sale of mortgage loans Loan fees Service charges and fees on deposit accounts 1 Please refer to the “Reconciliation of Non-GAAP Financial Measures” at the end of this presentation for a description and reconciliation of these non-GAAP financial measures. Operating Noninterest Expense1 Composition $18,870 $20,019 $20,553 $20,011 $22,932 $4,273 $3,994 $3,980 $4,116 $4,096 $2,196 $2,796 $3,159 $3,578 $3,441 $2,696 $2,696 $2,840 $2,558 $2,537 $7,510 $7,750 $5,744 $7,364 $6,591 1Q20 2Q20 3Q20 4Q20 1Q21 Salaries and employee benefits Occupany and equipment Professional and regulatory fees Amortization of intangibles COVID related expenses Other ($ in thousands) $7,247 $35,545 $18,411 $11,006 $38,500 $9,803 $36,408 $2,257 $9,268 $448 $37,627 $14,172 $39,597 $6,548 $1,245 $132
1.37% 0.84% 0.67% 0.55% 0.45% 1.02% 0.59% 0.46% 0.38% 0.31% 1Q20 2Q20 3Q20 4Q20 1Q21 Average cost of interest-bearing deposits Average cost of total deposits Cost of Interest-bearing Deposits and Total Deposits Total deposit balances increased $392 million, or 24% LQA1, and increased $1.1 billion, or 19% YOY1 Total deposit cost down 7 bps compared to 4Q20 due to pricing diligence and product mix Excluding MW and PPP loans, the loan to deposit ratio was 86.4% at March 31, 2021 compared to 89.8% at December 31, 2020 Certificates & Time Maturity Table $2,537 $2,958 $3,190 $1,549 $2,097 $2,172 $1,714 $1,457 $1,543 1 Q 2 0 4 Q 2 1 1 Q 2 1 Demand & Savings Non-Int Bearing Certificates & Time Deposits Deposits Composition 46.2% 31.5% 22.3%$5,800 $6,512 $6,905 Deposit Growth LQA YOY Demand & Savings +31.3% +25.7% Non-Int Bearing +14.2% +40.2% Certificates and Time Deposits +23.6% -10.0% 1 Linked quarter annualized (“LQA”), Year-over-year (“YOY”) 9 ($ in millions) Balance ($000) WA Rate Q2 2021 419,368 0.88% Q3 2021 289,208 0.73% Q4 2021 214,176 0.77% Q1 2022 260,384 0.60% Q2 2022 47,601 0.73% Q3 2022 118,958 0.35% Q4 2022 63,972 0.47% Q1 2023 88,435 0.44% Q2 2023 + 41,056 1.81% Total 1,543,158 0.73%
Total loans, excluding PPP and MW, increased $116.0 million, or 7.9% LQA , and increased $114.1 million, or 2.0% YOY Loan Growth 10 $1.2 Billion ($ in millions) $3,521 $3,753 $3,829 $1,778 $1,560 $1,632 $373 $578 $599 $553 $537 $505 1Q20 4Q20 1Q21 Secured by RE Commercial MW Mortgage/Consumer Loans Held for Investment (excluding PPP) $6,225 $6,428 $6,565 9.1% 24.9% 58.3% 14.1% 8.8% 17.7% -35.9% 18.6% 14.8% -24.1% LQA % Change by Portfolio 7.7% $0.0 $0.2 $0.4 $0.6 $0.8 $1.0 $1.2 $1.4 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar CRE ADC Construction LOC Unfunded (Non Revolving) 2021 Unfunded 2020 Unfunded ($ in billions) 40% 42% 44% 46% 48% 50% 52% 54% 56% 58% Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Revolving C&I Utilization 2020 2021 Down 1200 bps YOY and from peak
PPP Update 11 Loan Origination Pool Fair Value of Total Funded (in thousands) # of Loans Fair Value of Loans Forgiven (in thousands) % Forgiven $ Fee Collected in 2020 (in millions) < $50,000 $ 23,569 1,118 $ 5,079 24% $ 1.2 $50,001 -$150,000 $ 52,086 591 $ 14,797 28% $ 2.6 $150,001 -$350,000 $ 71,368 314 $ 31,702 44% $ 3.6 $350,000 - $2,000,000 $ 143,395 210 $ 85,052 57% $ 4.3 > $2,000,000 $ 115,047 32 $ 7,124 6% $ 1.1 TOTAL $ 405,465 2,265 $ 143,754 36% $ 12.8 ROUND 1 UPDATE ROUND 2 UPDATE Loan Origination Pool Fair Value of Total Funded (in thousands) # of Loans Fair Value of Loans Forgiven % Forgiven $ Fee Collected in 2021 (in millions) < $50,000 $ 10,809 459 - - $ 1.1 $50,001 -$150,000 $ 25,306 278 - - $ 1.3 $150,001 -$350,000 $ 29,744 135 - - $ 1.5 $350,000 - $2,000,000 $ 79,783 97 - - $ 2.4 TOTAL $ 145,642 969 - - $ 6.3 1Q21 Remaining Valuation Allowance = $2.1 Million
Capital Build 12 10.76% 10.89% 11.89% 10.89% 9.50% 9.61% 13.38% 9.27% Leverage Ratio Tier 1 Ratio Total Capital Ratio CET1 Bank VBTX 1 Estimated capital measures inclusive of CECL capital transition provisions as of March 31, 2021. 2 Total assets includes PPP loans that we did not utilize the Paycheck Protection Program Liquidity Facility to fund. 3 Please refer to the “Reconciliation of Non-GAAP Financial Measures” at the end of this presentation for a description and reconciliation of these non-GAAP financial measures. Ratios as of March 31, 2021 $0.64 $0.44 $0.05 $0.05 $15.70 $16.34 $(0.17) $(0.04)$(0.02) TBVPS Rollforward ($ in thousands) March 31, 2021 December 31, 2020 $ Change Basel III Standarized1 CET1 capital 779,057$ 753,261$ 25,796$ CET1 capital ratio 9.3% 9.3% Leverage capital 808,338$ 782,487$ 25,851$ Leverage capital ratio 9.6% 9.4% Tier 1 capital 808,338$ 782,487$ 25,851$ Tier 1 capital ratio 9.5% 9.7% Total capital 1,124,859$ 1,099,031$ 25,828$ Total capital ratio 13.4% 13.6% Risk weighted assets 8,401,800$ 8,105,484$ 296,316$ Total assets2 9,237,510$ 8,820,871$ 416,639$ Tangible common equity / Tangible Assets3 9.17% 9.23% $(0.31)
1 Past due (“PD”) loans exclude purchased credit deteriorated loans that are accounted for on a pooled basis and non-accrual (“NA”) loans. 2 Total loans excludes Loans Held for Sale, MW and PPP loans. 1Q20 2Q20 3Q20 4Q20 1Q21 0.00% 0.10% 0.20% 0.30% 0.40% 30-59 Past Due 60-89 Past Due 90+ Past Due Past Due1 Trends % of Total Loans2 Asset Quality and ACL 13 ($ in millions) 1Q20 2Q20 3Q20 4Q20 1Q21 Acquired $- $1,740 $2,421 $16,462 $130 Originated $(236) $50 $45 $45 $18 Net Charge-offs ($ in thousands) Totals $34,501 $24,120 $11,738 $18,691 $101.0 $115.4 $121.6 $105.1 $104.9 1.73% 2.01% 2.10% 1.80% 1.76% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 1Q20 2Q20 3Q20 4Q20 1Q21 ACL ACL/Total Loans ACL / Total Loans2 ($ in millions) 1Q20 2Q20 3Q20 4Q20 1Q21 NA loans Accruing 90+ PD OREO Nonperforming Assets Trend $46,556 ($ in millions) NA+OREO $51,310 $94,673 $83,433 $75,931 0.55% 0.60% 1.09% 0.95% 0.82% NA+OREO/Total Assets $22,637
Credit 14 Portfolio continues to show improving trends Revenues increased by 11.4% QOQ2 Occupancy improved 9.8% QOQ March 2021 was the high water mark for revenue, occupancy and revenue per available room since the COVID-19 pandemic began One NPA in the hospitality book totaling $7.1 million was resolved after quarter end Hospitality Portfolio Non-Owner Occupied (“NOO”) Office Portfolio ($ in millions) # $ Commitment $ Outstanding Avg. Loan Amount Term 82 $ 337.9 $ 334.5 $ 4.0 In-Process Construction 4 $ 65.4 $ 45.4 $ 6.8 SBA / USDA 24 $ 14.0 $ 14.0 $ 0.3 Total 110 $ 417.3 $ 393.9 $ 2.9 % of Total Loans1 6.6% ($ in millions) # $ Commitment $ Outstanding Avg. Loan Amount NOO Office 98 $ 698.9 $ 602.4 $ 5.8 Constructi on 7 $ 118.9 $ 82.7 $ 11.8 Total 105 $ 817.8 $ 685.1 $ 6.2 % of Total Loans1 9.8% 9.8% of the funded loan portfolio A weighted average LTV of 59% 51% of the exposure is in the DFW market and 29% is in the Houston market Top 10 relationships make up 32% of our office portfolio and have an average DSCR of 1.78x Only one credit in the Top 10 office exposure is rated as a watch credit 1.6% of the office portfolio is classified in one credit1 Total loans excludes loans held for sale and PPP loans. 2 Quarter-over-quarter (“QOQ”)
Thrive Mortgage Investment
16 Company Background o The first company in Texas to close a fully electronic note with a remote notary. GSEs will purchase these notes within 24 hours of closing o Markets include TX, OH, CO, KY, NC, KS, VA, FL, MD and IN o Experienced management team with an average company tenure of 10+ years o Originate/underwrite/sell mortgages of all types o Efficient business model with comparable cultures Investment Summary 49% interest for $53.9 million (all cash transaction) VBTX obtains one board seat (25%) Fee income engine with limited integration Projected close date middle of 2021
17 Strategic Rationale + Financially compelling to increase fee income with a counter cyclical business to a rate and asset sensitive balance sheet Robust capital generation profile Deploys excess liquidity and capital Preserves bandwidth for other strategic core growth and/or acquisitive opportunities Strong cultural fit focused on risk controls, operating efficiency and strong, consistent financial performance Continuity of highly experienced leadership with all founders still with the Company Accounted for as an equity method investment
18 Historical Financial Information ($ in thousand) 1Q21 1Q20 Loans HFS 167,354 63,269 Total Assets 227,985 107,277 Members Equity 42,670 11,396 Pre-Tax Net Income 6,349 819 audited 1Q20 2Q20 3Q20 4Q20 1Q21 Purchase Refinance audited 2020 2019 179,702 70,774 242,169 108,891 36,906 10,934 31,942 5,817 unaudited unaudited 1Q20 2Q20 3Q20 4Q20 1Q21 Retail Correspondent 1Q20 2Q20 3Q20 4Q20 1Q21 Digital Traditional 69% 31% 52% 36% 48% 49% 51%64% 48% 52% 1% 3% 6% 16% 18% 74% 80% 85% 92% 90% 99% 97% 94% 84% 82% 26% 20% 15% 8% 10% 1Q20 2Q20 3Q20 4Q20 1Q21 $262.5 $546.0 $623.9 $822.4 $715.5 Total Quarterly Volume (in millions) Purchase v. Refinance Retail v. Correspondent Digital v. Traditional 4.67% 4.92% 5.59% 4.98% 4.79% 4.2% 4.7% 5.2% 5.7% 6.2% 6.7% 1Q20 2Q20 3Q20 4Q20 1Q21 Origination/Seconday Income GOS % Income and GOS % $11.6 $38.8 $34.0 $33.6 $23.4 (in millions)
Veritex Holdings, Inc. Supplemental Information
20 Reconciliation of Non-GAAP Financial Measures 3/31/2021 12/31/2020 9/30/2020 6/30/2020 3/31/2020 Tangible Common Equity Total stockholders' equity $ 1,233,808 $ 1,203,376 $ 1,185,337 $ 1,163,749 $ 1,149,269 Adjustments: Goodwill (370,840) (370,840) (370,840) (370,840) (370,840) Core deposit intangibles (55,311) (57,758) (60,209) (62,661) (65,112) Tangible common equity $ 807,657 $ 774,778 $ 754,288 $ 730,248 $ 713,317 Common shares outstanding 49,433 49,340 49,650 49,633 49,557 Book value per common share $ 24.96 $ 24.39 $ 23.87 $ 23.45 $ 23.19 Tangible book value per common share $ 16.34 $ 15.70 $ 15.19 $ 14.71 $ 14.39 3/31/2021 12/31/2020 9/30/2020 6/30/2020 3/31/2020 Tangible Common Equity Total stockholders' equity $ 1,233,808 $ 1,203,376 $ 1,185,337 $ 1,163,749 $ 1,149,269 Adjustments: Goodwill (370,840) (370,840) (370,840) (370,840) (370,840) Core deposit intangibles (55,311) (57,758) (60,209) (62,661) (65,112) Tangible common equity $ 807,657 $ 774,778 $ 754,288 $ 730,248 $ 713,317 Tangible Assets Total assets $ 9,237,510 $ 8,820,871 $ 8,702,375 $ 8,587,858 $ 8,531,624 Adjustments: Goodwill (370,840) (370,840) (370,840) (370,840) (370,840) Core deposit intangibles (55,311) (57,758) (60,209) (62,661) (65,112) Tangible Assets $ 8,811,359 $ 8,392,273 $ 8,271,326 $ 8,154,357 $ 8,095,672 Tangible Common Equity to Tangible Assets 9.17% 9.23% 9.12% 8.96% 8.81% As of (Dollars in thousands, except per share data) (Dollars in thousands) As of
21 Reconciliation of Non-GAAP Financial Measures 3/31/2021 12/31/2020 9/30/2020 6/30/2020 3/31/2020 Net income available for common stockholders adjusted for amortization of core deposit intangibles Net income $ 31,787 $ 22,801 $ 22,920 $ 24,028 $ 4,134 Adjustments: Plus: Amortization of core deposit intangibles 2,447 2,451 2,451 2,451 2,451 Less: Tax benefit at the statutory rate 514 515 515 515 515 Net income available for common stockholders adjusted for amortization of core deposit intangibles $ 33,720 $ 24,737 $ 24,856 $ 25,964 $ 6,070 Average Tangible Common Equity Total average stockholders' equity $ 1,224,294 $ 1,196,274 $ 1,177,882 $ 1,155,798 $ 1,183,116 Adjustments: Average goodwill (370,840) (370,840) (370,840) (370,840) (370,840) Average core deposit intangibles (56,913) (59,010) (61,666) (64,151) (66,439) Average tangible common equity 796,541 766,424 745,376 720,807 745,837 Return on Average Tangible Common Equity (Annualized) 17.17% 12.84% 13.27% 14.49% 3.27% For the Quarter Ended (Dollars in thousands)
22 Reconciliation of Non-GAAP Financial Measures 1 Debt extinguishment costs relate to prepayment penalties paid in connection with the early payoff of FHLB structured advances. 2 A nonrecurring tax adjustment of $426 thousand recorded in the first quarter of 2021 was due to a true-up of a deferred tax liability. A nonrecurring tax adjustment of $973 thousand recorded in the fourth quarter of 2020 was primarily due the reversal of acquired deferred tax liabilities resulting in a tax benefit of $1.2 million offset by tax expense of $281 thousand for the setup of an uncertain tax position liability relating to state tax exposure for tax years prior to the year ending December 31, 2020. A nonrecurring tax adjustment of $1,799 was recorded in the second quarter of 2020 as a result of the Company amending a prior year 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 CARES Act which permits NOLs generated in tax years 2018, 2019 or 2020 to be carried back five years.
23 Reconciliation of Non-GAAP Financial Measures 3/31/2021 12/31/2020 9/30/2020 6/30/2020 3/31/2020 Pre-Tax, Pre-Provision Operating Earnings Net Income $ 31,787 $ 22,801 $ 22,920 $ 24,028 $ 4,134 Plus: Provision for income taxes 8,993 4,702 6,198 3,987 (684) Pus: Provision for credit losses and unfunded commitments (570) 902 10,139 18,971 35,657 Plus: Loss (gain) on sale of securities, net - 256 8 (2,879) - Plus: Debt extinguishment costs - 9,746 - 1,561 - Net pre-tax, pre-provision operating earnings $ 40,210 $ 38,407 $ 39,265 $ 45,668 $ 39,107 Total average assets $ 8,941,271 $ 8,750,141 $ 8,585,926 $ 8,689,774 $ 8,125,782 Pre-tax, pre-provision operating return on average assets1 1.82% 1.75% 1.82% 2.11% 1.94% Average Total Assets $ 8,941,271 $ 8,750,141 $ 8,585,926 $ 8,689,744 $ 8,125,782 Return on average assets1 1.44% 1.04% 1.06% 1.11% 0.20% Operating return on average assets1 1.46% 1.35% 1.06% 0.98% 0.20% Operating earnings adjusted for amortization of core deposit intangibles Operating earnings $ 32,213 $ 29,730 $ 22,928 $ 21,188 $ 4,134 Adjustments: Plus: Amortization of core deposit intangibles 2,447 2,451 2,451 2,451 2,451 Less: Tax benefit at the statutory rate 514 515 515 515 515 Operating earnings adjusted for amortization of core deposit intangibles 34,146 31,666 24,864 23,124 6,070 Average Tangible Common Equity Total average stockholders' equity $ 1,224,294 $ 1,196,274 $ 1,177,882 $ 1,155,798 $ 1,183,116 Adjustments: Average goodwill (370,840) (370,840) (370,840) (370,840) (370,840) Average core deposit intangibles (56,913) (59,010) (61,666) (64,151) (66,439) Average tangible common equity $ 796,541 $ 766,424 $ 745,376 $ 720,807 $ 745,837 Operating return on average tangible common equity1 17.39% 16.44% 13.27% 12.90% 3.27% Efficiency ratio 49.62% 62.52% 48.12% 46.02% 47.61% Operating efficiency ratio 49.62% 49.49% 48.11% 45.74% 47.61% 1 Annualized ratio for quarterly metrics. For the Quarter Ended (Dollars in thousands)
24 Reconciliation of Non-GAAP Financial Measures 3/31/2021 12/31/2020 9/30/2020 6/30/2020 3/31/2020 Operating noninterest income Noninterest income $ 14,172 $ 9,012 $ 9,795 $ 21,290 $ 7,247 Plus: Loss (gain) on sale of securities available for sale, net $ - $ 256 8 (2,879) - Operating noninterest income $ 14,172 $ 9,268 $ 9,803 $ 18,411 $ 7,247 Operating noninterest expense Noninterest expense $ 39,597 $ 47,373 $ 36,408 $ 40,061 $ 35,545 Less: FHLB prepayment fees $ - $ 9,746 - 1,561 - Operating noninterest expense $ 39,597 $ 37,627 $ 36,408 $ 38,500 $ 35,545 3/31/2021 12/31/2020 9/30/2020 6/30/2020 3/31/2020 Adjusted net interest margin Net interest income 65,635$ 66,766$ $ 65,870 $ 65,757 $ 67,405 Less: Loan accretion 1,911$ 2,652$ 3,953 3,134 4,455 Less: Deposit premium amortization 76$ 89$ 110 263 423 Adjusted net interest margin $ 63,648 $ 64,025 $ 61,807 $ 62,360 $ 62,527 Total interest-earning assets 8,257,048$ 8,065,652$ $7,899,837 $8,001,485 $7,388,028 Adjusted net interest margin 3.12% 3.15% 3.10% 3.13% 3.39% As of (Dollars in thousands, except per share data) For the Quarter Ended (Dollars in thousands, except per share data)
1st Quarter Earnings Conference Call April 28, 2021 Veritex Holdings, Inc.
DocumentPRESS RELEASE
FOR IMMEDIATE RELEASE
Veritex Holdings, Inc. Declares Cash Dividend on Common Stock
Dallas, TX – April 27, 2021 – Veritex Holdings, Inc. (Nasdaq: VBTX) (“Veritex” or the “Company”), the parent holding company for Veritex Community Bank, today announced the declaration of a quarterly cash dividend of $0.17 per share on its outstanding common stock. The dividend will be paid on or after May 20, 2021 to shareholders of record as of May 6, 2021.
About Veritex Holdings, Inc.
Headquartered in Dallas, Texas, Veritex is a bank holding company that conducts banking activities through its wholly-owned subsidiary, Veritex Community Bank, with locations throughout the Dallas-Fort Worth metroplex and in the Houston metropolitan area. Veritex Community Bank is a Texas state chartered bank regulated by the Texas Department of Banking and the Board of Governors of the Federal Reserve System. For more information, visit www.veritexbank.com.
Forward Looking Statement
This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements include statements regarding Veritex's projected plans and objectives, including the expected payment date of its common stock dividend. Forward-looking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “target,” “estimate,” “continue,” “positions,” “prospects” or “potential,” by future conditional verbs such as “will,” “would,” “should,” “could” or “may”, or by variations of such words or by similar expressions. These forward-looking statements are subject to numerous assumptions, risks and uncertainties which change over time. Forward-looking statements speak only as of the date they are made and Veritex assumes no duty to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.
Source: Veritex Holdings, Inc.
Media Contact:
LaVonda Renfro
972-349-6200
lrenfro@veritexbank.com
Investor Relations:
Susan Caudle
972-349-6132
scaudle@veritexbank.com
DocumentPRESS RELEASE
FOR IMMEDIATE RELEASE
Veritex Holdings, Inc. Partners with Thrive Mortgage
Dallas, TX – April 27, 2021 – Veritex Holdings, Inc. (Nasdaq: VBTX) (“Veritex” or the “Company”), the parent holding company for Veritex Community Bank (the “Bank”), today announced the execution by the Bank of a definitive agreement pursuant to which the Bank will acquire a 49% interest in Thrive Mortgage, LLC (“Thrive”) for $53.9 million in cash. Upon completion of the investment, the Company will obtain the right to designate a member to Thrive’s board of directors. The investment, which is expected to close in the middle of 2021, is subject to receipt of required regulatory approvals and other customary closing conditions.
Thrive, headquartered in Georgetown, Texas, is a family-owned business led by Roy Jones, Chairman and Chief Executive Officer, along with an experienced management team with on average 10+ years of tenure with Thrive. Thrive is an industry leader in transforming the home financing process into a customer centered digital experience and is the first company in Texas to close a fully electronic note with a remote notary. Thrive’s markets include, among others, Texas, Ohio, Colorado, Kentucky, North Carolina, Kansas, Virginia, Florida, Maryland and Indiana.
Veritex Chairman and Chief Executive Officer C. Malcolm Holland stated, “I couldn’t be more excited about our partnership with Thrive. The breadth of management and experience, coupled with an industry leader in cutting-edge technology, provides a powerful earnings investment to drive consistent shareholder return and mitigates business cycle volatility to our commercial-focused portfolio.”
Roy Jones, Chairman and Chief Executive Officer of Thrive, said, “We are proud to further our relationship with a valued business partner of over 7 years. With a similar culture and alignment of values, Veritex has helped Thrive grow by understanding our business and assisting Thrive with tailored financing, including construction warehouse lending. This expanded partnership, while retaining our nimble operating practices, will allow us to better serve our customers and employees with unequaled products and positions the company for a strong decade of growth.”
Veritex’s investment in Thrive is anticipated to increase fee income with a counter cyclical business to our asset sensitive balance sheet. The investment is also anticipated to leverage excess liquidity and capital while preserving bandwidth for other Veritex strategic core growth and/or acquisitive opportunities.
Stephens Inc. is serving as Veritex’s financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal counsel to Veritex.
About Veritex Holdings, Inc.
Headquartered in Dallas, Texas, Veritex is a bank holding company that conducts banking activities through its wholly-owned subsidiary, Veritex Community Bank, with locations throughout the Dallas-Fort Worth metroplex and in the Houston metropolitan area. Veritex Community Bank is a Texas state chartered bank regulated by the Texas Department of Banking and the Board of Governors of the Federal Reserve System. For more information, visit www.veritexbank.com.
Forward Looking Statement
This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including regarding the proposed investment in Thrive by Veritex and Veritex’s expectations regarding building shareholder value, as well as others that may be identified by words such as “believe,” “expect,” “anticipate,” “intend,” “target,” “estimate,” “continue,” “positions,” “prospects” or “potential,” by future conditional verbs such as “will,” “would,” “should,” “could” or “may”, or by variations of such words or by similar expressions. Forward-looking statements involve and are subject to numerous assumptions, risks and uncertainties, many of which are outside of Veritex’s control, which may change over time. There can be no assurance that Veritex’s proposed investment in Thrive will be completed or the timing thereof. Such factors include, but are not limited to, the occurrence of any event, development, change or circumstance that could give rise to the termination of the definitive agreement with Thrive and the inability to complete the proposed investment due to the failure to satisfy the conditions to the closing of the proposed investment, including that a regulatory authority may prohibit, delay or refuse to grant approval for the consummation of the proposed investment. Veritex’s management cautions that the foregoing list of factors is not exhaustive. Forward-looking statements speak only as of the date they are made and, unless legally required, Veritex assumes no duty or obligation to update, supplement or revise any forward-looking statements, whether as a result of new information, future developments or otherwise. Veritex’s actual results could differ materially from those expressed or implied in the forward-looking statements due to a variety of important factors, both positive and negative, that may be revised or supplemented in subsequent statements and reports filed with the Securities and Exchange Commission (“SEC”), including in our reports on Forms 10-K, 10-Q, and 8-K. These risks and other important factors discussed under the caption “Risk Factors” in our most recent Annual Report on Form 10-K filed with the SEC, and our other reports filed with the SEC could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release.
Source: Veritex Holdings, Inc.
Investor Relations:
972-349-6132
investorrelations@veritexbank.com