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): August 31, 2021
(Exact name of Registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification Number) | ||||||||||||
(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:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||||||||
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 7.01 Regulation FD Disclosure
The attached presentation contains information that the members of Veritex Holdings, Inc. (the "Company" or "Veritex") management will use during visits with investors, analysts, and other interested parties to assist their understanding of the Company from time to time throughout the third quarter of 2021.
As provided in General Instruction B.2 to Form 8-K, the information furnished in this Item 7.01 (including Exhibit 99.1) 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.
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, 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: | August 31, 2021 | |||||||
Veritex Holdings, Inc. 3rd Quarter, 2021 Investor Meetings Exhibit 99.1
2 Franchise Overview • Headquartered in Dallas, Texas • Commenced banking operations in 2010; completed IPO in 2014 • Focused on relationship-driven commercial and private banking across a variety of industries, predominantly in Texas Overview Footprint Company Highlights Balance Sheet Asset Quality 1 Please refer to “Reconciliation of Non-GAAP Financial Measures” at the end of this presentation for a description and reconciliation of these non-GAAP financial measures. 2 Total Loans Held for Investment excludes mortgage warehouse (“MW”) and Paycheck Protection Program (“PPP”) loans. 3 Net charge-offs for the quarter ended June 30, 2021. Second Quarter 2021 Consolidated Capital Ratios Market Cap as of August 24, 2021 $1.74 B Total Branches 31 Price/TBV as of August 24, 2021 1.96x Dividend Yield as of August 24, 2021 2.27% ROAA 1.27% PTPP ROAA1 1.66% ROAE 9.42% Operating ROATCE1 15.42% Efficiency Ratio 52.42% Total Assets ($mm) $9,350 Total Loans Held for Investment2 ($mm) $6,272 Total Deposits ($mm) $6,979 NCO / Average Loans3 0.09% NPAs / Total Assets 0.85% ACL / Total Loans Held for Investment2 1.59% Common Equity / Assets 13.61% TCE / TA1 9.51% CET1 Ratio 9.03% Leverage Ratio 9.38% Tier 1 Capital Ratio 9.36% Total Capital Ratio 12.86%
3 Investment Thesis • Experienced management team – 35+ years average banking experience • Strong presence in rapidly expanding DFW and Houston – Texas is experiencing continued strong population inflow and projected population growth is nearly double the U.S. average – Significant growth opportunities within our footprint from demographic growth and M&A disruption • Scarcity value – 3rd largest bank solely focused on major Texas MSAs • Excellent core earnings profile has supported reserves – 1.66% PTPP ROAA1 for 2Q21 and 1.59% ACL / Total Loans HFI • Steady balance sheet growth2 – Total loans, excluding MW and PPP, increased $545.2 million, or 9.5% year over year – Total deposits grew $853.4 million, or 14.0% year over year • Improving revenue diversification with Thrive Mortgage investment – 49% investment completed on July 16, 2021 – Thrive reported 2Q21 YTD income of $11.6 million with an 86% year over year increase in volume • Track record of successfully integrating acquisitions – Completed 7 whole bank acquisitions since 2010 – Acquired $4.4 billion in loans and $4.7 billion in loans 1 Please refer to “Reconciliation of Non-GAAP Financial Measures” at the end of this presentation for a description and reconciliation of these non-GAAP financial measures. 2 Financial data as of June 30, 2021.
4 Scarcity Value in Texas Metro Markets Includes all U.S. banks headquartered in Texas; sorted by Total Assets Indicates banks with less than 75% of deposits in major Texas MSAs Total Texas Metro Deposits1 / Assets Company Total Deposits Company Name Ticker ($mm) (%) 1 Comerica Incorporated CMA 88,355 15.0% 2 Cullen/Frost Bankers, Inc. CFR 46,698 82.4 3 Prosperity Bancshares, Inc. PB 36,100 44.2% 4 Texas Capital Bancshares, Inc. TCBI 35,229 100.0 5 Independent Bank Group, Inc. IBTX 18,448 69.4 6 Hil ltop Holdings Inc. HTH 17,665 71.9 7 International Bancshares Corporation IBOC 15,311 19.2 8 First Financial Bankshares, Inc. FFIN 12,329 28.9 9 Veritex Holdings, Inc. VBTX 9,350 94.9 10 Amaril lo National Bancorp, Inc. - 7,528 0.9 11 Beal Financial Corporation - 7,221 24.4 12 Southside Bancshares, Inc. SBSI 7,182 24.2 13 Allegiance Bancshares, Inc. ABTX 6,509 94.2 14 Happy Bancshares, Inc. - 6,262 8.8 15 Triumph Bancorp, Inc. TBK 6,016 41.2 16 Industry Bancshares, Inc. - 5,427 29.0 17 Broadway Bancshares, Inc. - 5,120 93.8 18 The ANB Corporation - 4,947 96.3 19 CBTX, Inc. - 4,067 58.8 20 Inwood Bancshares, Inc. - 3,891 100.0 Source: S&P Global and FDIC Summary of Deposits. Deposit data as of 6/30/2020. Asset data as of 6/30/2021. 1 Texas metro markets includes Austin MSA, Dallas-Fort Worth MSA, Houston MSA, and San Antonio MSA.
5 Well Positioned in Attractive Texas Markets • Despite the COVID-19 pandemic, Texas remains one of the more attractive states in the U.S. from a demographic and commercial opportunity perspective: – Population growth expected to more than double U.S. average – If Texas were a sovereign nation, it would rank the 9th largest economy in the world based on GDP, ahead of Australia, Mexico, Spain, Russia and many others – Pro-business environment with no personal or corporate income taxes and is the leading destination for companies relocating from other states – Behind Texas’ strong economy are 49 Fortune 500 companies headquartered in Texas, more than 1,600 foreign companies and 2.7 million small businesses – Texas is the #1 exporting state in the nation for the 19th consecutive year, exporting $279 billion in goods in 2020 – 14.0 million in the Texan workforce, representing the second largest civilian workforce in the U.S. Source: Texas Office of the Governor (Economic Development and Tourism) Examples of Corporate Relocations during ‘20-’21 to TEXAS Charles Schwab Tesla Hewlett Packard Enterprise CBRE AECOM Tech. Corp. MSA Deposits ($ in billion) (Top 25 Rank1) 2021-2026 Est. Pop. Growth (Top 25 Rank1) 2021-2026 Est. HHI Growth (Top 25 Rank1) Houston, TX $368 (#8) 7.6% (#2) 3.8% (#25) DFW $670 (#3) 7.5% (#3) 11.9% (#9) Texas $1,428 6.8% 6.6% United States $13,768 2.9% 9.0% Source: FDIC, S&P Global Market Intelligence, 1Represents Houston and DFW rank amongst the Top 25 largest U.S. MSAs by population
6 Well Positioned in Attractive Texas Markets DFW Houston Trade, Transportati on & Utilities 20% Professional Services 16% Govt. 13% Edu. & Health Svcs. 13% Leisure & Hospitality 10% Construction 10% Manufacturing 8% Other 10% Houston Employment• 5th most populous MSA in the U.S. (7.1 million residents) • 3rd most headquartered location for Fortune 500 companies (24 companies) • Largest export market in the U.S., with a diverse economy • Since May 2020, recouped 59.1% of pandemic job losses (16th in the nation) • 4th most populous MSA in the U.S. (7.6 million residents), adding more than 1 million people in an eight-year period • 4th most headquartered location for Fortune 500 companies (22 companies) • 1st MSA in the U.S. for talent attraction • Since May 2020, recouped 87.5% of pandemic job losses (2nd in the nation) Veritex Regional Distribution as of June 30, 2021 DFW 66% Houston 34% Branches DFW 55% Houston 44% Other 1% Loans DFW 71% Houston 28% Other 1% Deposits Total Branches: 31 Total Loans1: $6,272 Total Deposits: $6,979 Source: Texas Workforce Commission, Greater Houston Partnership 1 Excludes mortgage warehouse and PPP loans Trade, Transportati on & Utilities 20% Professional Services 16% Govt. 11% Edu. & Health Svcs. 12% Leisure & Hospitality 10% Financing 8% Manufacturing 7% Other 16% DFW Employment
7 Impressive Organic and Acquisitive Growth Organic Growth Strategic Acquisitions • Strategic M&A has been an important growth driver • Disciplined acquisition strategy to supplement organic growth • Since 2010: – Completed 7 whole-bank transactions – Acquired $4.4 billion in loans – Acquired $4.7 billion in deposits 983 1,156 2,556 2,730 5,848 6,272 2016 2017 2018 2019 2020 2Q21 Total Loans Acquired in Period Total Loans, excluding mortgage warehouse and PPP 1,120 1,080 2,622 2,825 6,513 6,979 2016 2017 2018 2019 2020 2Q21 Total Deposits Total Deposits Acquired in Period • Highly productive origination teams actively generating loans and deposits and serving as the primary point of contact for our customers – Private and business bankers focus on emerging and small business customers – Commercial and specialty bankers focus on C&I, real estate, mortgage warehouse and SBA loans • Continue to drive increasing productivity of existing bankers through balanced scorecard incorporating loan & deposit growth, spread and credit – “Inspect what you expect” – Weighted toward deposit generation • Strong organic growth has been a major focus of management since inception ($ in millions) $1,065 $3,202 $1,199 $3,473
8 Proven Track Record as a Strategic Acquirer Overview Acquisition History • Selective use of strategic acquisitions to augment growth and efficient scale • Focused on well-managed banks in our target markets with: – Favorable market share – Low-cost deposit funding – Compelling fee income generating business – Growth potential – Other unique attractive characteristics • Key metrics used when evaluating acquisitions: – EPS accretion – TBVPS earn-back – IRR • Reputation as an experienced acquirer • We expect to maintain discipline in pricing and pursue transactions expected to produce attractive risk adjusted returns • We strive to build, maintain and support Veritex culture during integrations Date Target Loans Branches Jan. 2019 Green $3,254.9 21 Dec. 2017 Liberty $312.6 5 Aug. 2017 Sovereign $752.5 9 July 2015 Independent Bank $88.5 2 Oct. 2011 Bank of Las Colinas $40.4 1 Mar. 2011 Fidelity $108.1 3 Sept. 2010 Professional $91.7 3
9 Stock Performance History Our peer group includes Allegiance Bancshares, Inc., Bancfirst Corporation, Cadence Bancorp LLC, CBTX, Inc., CVB Financial Corp., Eagle Bancorp, Inc., First Financial Bankshares, Inc., Origin Bancorp, Inc., Hilltop Holdings, Inc., Independent Bank Group, Inc.., Servisfirst Bancshares, Inc., Simmons First National Corporation, Southside Bancshares, Inc. Pacific Premier Bancorp, Inc and Independent Bank Corporation. Comparison of Cumulative Total Return 1
Efficiency Ratio < 52% 13 Banks U.S Community Banks with Asset Size of $5 - $10 Billion 64 Banks ROATCE > 10% 43 Banks PTPP ROAA > 1.5% 41 Banks Gross Loan HFI Growth > 5% 2 6 Banks U.S. Community Banks ROATCE PTPP ROAA Efficiency Ratio Gross Loan HFI Growth (1) Projected Population Growth Top Performer $9.4B 15.2% 1.66% 51.6% 20.7% 7.5% VBTX Key Criteria High-Performing Bank Screen VBTX Metrics as of June 30, 2021 Source: S&P Global Market Intelligence. Note: Market data as of 6/30/21. 1 Balance sheet items as of June 30, 2021; Financial metrics are operating based 2 Annualized and excludes MW and PPP loans. 3 Projected 2021-2026 Averages 4 Average of projected ‘22 P/E from investment firms 2.0x TBV 12.0x ’22 P/E4 MSA Population Growth > 5% 3 1 Bank 10 High-Performing Community Bank Franchise
11 Analyst Remain Bullish Post 2Q21 Earnings Firm Rating Price Target 2021 Estimate 2022 Estimate Stephens Inc. Overweight $43.00 $2.53 $2.74 Raymond James & Associates Strong Buy $42.00 $2.60 $2.75 Keefe Bruyette & Woods Outperform $42.00 $2.51 $2.75 D.A. Davidson & Co. Buy $40.00 $2.63 $2.81 Piper Sandler Overweight $39.00 $2.60 $2.80 Consensus $41.20 $2.57 $2.77
12 Analyst Remain Bullish Post 2Q21 Earnings VBTX : Loan Growth Inflects Higher; Increasing Price Target Matt Olney, CFA; Stephens Inc. “Over the last a few quarters, the bank has detailed new producer investments, and it's clear that 2Q21 results demonstrate such investments are now paying off. The Bank’s 2Q21 core loan growth (ex PPP, MW) of +21% LQA will likely represent the highest levels among Southwest peers in 2Q21.” VBTX : Raising Estimates; Reiterating Strong Buy Michael Rose, CFA; Raymond James & Associates “The star of this quarter's results was notably stronger than forecast ex. PPP/mortgage warehouse loan growth of $309 million (+20.7% ann.). With strength in loan pipelines, continued momentum across most lending categories, and the prospect of bringing on additional lenders/ teams, we have upwardly revised our loan growth projections.” VBTX : 2Q21 Brings Robust Loan Growth, Revenue Beat, Dividend Hike and Higher EPS/T Brady Gailey, CFA; Keefe Bruyette & Woods “We believe Veritex is a valuable, growth-focused commercial bank with exposure to attractive Texas markets. Veritex has a strong record of both solid organic and acquisitive growth with an asset-sensitive balance sheet and clean credit quality. Additionally, given Veritex's size and geographic focus, it could also be an attractive target longer term for a larger bank looking for more scale in Texas. In the near-term, we actually believe VBTX is a bank buyer and likely to cross $10 billion in assets.” VBTX : Loan Growth Hits The Mark; Raising Estimates Gary Tenner, CFA; D.A. Davidson & Co. “VBTX has benefited from Texas' reopening via strong loan growth metrics, driving positive estimate revisions along with the recent Thrive Mortgage investment. We continue to view VBTX as an attractive investment opportunity given a consistent recruiting effort that should drive an above peer growth profile, improving core profitability metrics, and optionality as it relates to the long-term status of the company.” VBTX : VBTX Remains One of Our Favorite Small Caps Brad Milsaps, CFA; Piper Sandler “VBTX remains one of our favorite small cap bank stocks as we continue to believe that VBTX will report better loan and earnings growth given a number of new lending hires and strength in the Texas economy.”
13 Attractive Valuation Price / 2022 Estimated EPS1 Median = 13.3X 10.9 11.4 11.9 12.4 12.6 13.1 13.3 13.3 14.1 14.4 15.3 18.9 20.8 33.5 - 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 SPFI STXB CADE GNTY ABTX VBTX PB HTH SBSI IBTX TCBI CBTX CFR FFIN 1 Mean consensus EPS estimates as compiled by FactSet. Source: SNL Financial. Peers comprised of major exchange traded U.S. banks in VBTX custom peer group. Trading multiples based on closing prices as of August 27, 2021.
Strong Earnings Solid Loan and Deposit Growth Capital Build • Net income of $29.5 million, or $0.59 diluted EPS, for 2Q21 compared to $31.8 million, or $0.64 diluted EPS, for 1Q21 • Operating earnings1 of $30.0 million, or $0.60 diluted operating EPS1, for 2Q21 compared to $32.2 million, or $0.64 diluted operating EPS, for 1Q21 • Return on average equity of $9.42% in 2Q21 and 9.96% YTD • Operating ROATCE1 of 15.42% in 2Q21 and 16.38% YTD • Total loans held for investment (“LHI”), excluding mortgage warehouse (“MW”) and Paycheck Protection Program (“PPP”) loans, increased $308.6 million, or 20.7% linked quarter annualized (“LQA”) • Total LHI, excluding MW and PPP, grew $424.2 million from December 31, 2020, or 14.5% annualized, and $545.2 million, or 9.5%, year over year (“YOY”) • Total deposits grew $74.3 million, or 4.3% LQA, and $853.4 million, or 14.0%, YOY • Total noninterest-bearing deposits grew $216.3 million over 1Q21, representing 34.2% of total deposits as of June 30, 2021 • Average cost of total deposits decreased to 0.23% for 2Q21 from 0.31% for 1Q21 • Book value per common share increased to $25.72 from $24.96 at March 31, 2021 • Tangible book value per common share1 increased to $17.16 from $16.34 at March 31, 2021 • Declared quarterly dividend of $0.20 in 2Q21, a 17.6% increase over 1Q21 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. 14 Second Quarter Overview
Key Financial Metrics 48.12% 62.52% 49.62% 45.74% 48.11% 49.49% 49.62% 51.63% 2Q20 3Q20 4Q20 1Q21 2Q21 Reported Operating Efficiency Ratio 1.06% 1.04% 1.44% 1.27% 1.46% 2.11% 1.82% 1.75% 1.82% 1.66% 2Q20 3Q20 4Q20 1Q21 2Q21 Reported Operating ROAA PTPP Operating 0.98% 1.11% 1.35% 1.29% $14.71 $15.19 $15.70 $16.34 $17.16 2Q20 3Q20 4Q20 1Q21 2Q21 NPAs / Total Assets Return on Average Tangible Common Equity1 $0.48 $0.46 $0.59 $0.60 $0.64 2Q20 3Q20 4Q20 1Q21 2Q21 Diluted EPS Diluted Operating EPS $0.46 14.49% 13.27% 12.84% 17.17% 15.18% 2Q20 3Q20 4Q20 1Q21 2Q21 ROATCE Operating ROATCE Diluted EPS Tangible Book Value per Common Share1 15 ($ in millions) $53.3 $96.4 $87.6 $85.0 $79.9 0.62% 1.11% 0.99% 0.92% 0.86% 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% 2Q20 3Q20 4Q20 1Q21 2Q21 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% ROAA 1 $0.60 $0.43 16.44% 15.42% 46.02% 52.42%
3.90% weighted average rate of new and renewed Q2 loan production, excluding MW and PPP Loan Growth 16 $1.2 Billion ($ in billions) 1 Excludes MW and PPP and represents portfolios with growth for the respective periods. 2 Year to date annualized (“YTDA”) $0.0 $0.5 $1.0 $1.5 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun CRE ADC Construction LOC Current Unfunded (Non Revolving) 2021 Unfunded 2020 Unfunded $1.71 Billion +165% YOY 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 Total Loans, exc. MW and PPP +5.9% +8.1% -8.7% +4.4% +4.0% +7.9% +20.7% Quarterly Loan Growth (annualized and excludes MW and PPP) 40% 41% 42% 43% 44% 45% 46% 47% Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Revolving C&I Utilization 2020 2021 Down 1,127 bps YOY from peak $62,372 $46,356 $593,284 $556,204 $84,104 $164,812 $54,854 $357,470 $423,090 LQA Growth1 YTDA Growth1,2 ($ in thousands) +20.7% +14.5% $6.3 B $5.6 B
2nd Quarter Loan Production 17 $688.3 $321.7 $180.6 $94.7 $70.2 Construction C&I CRE 1-4 Resi Other $1.36 Billion in Q2 Production by Portfolio ($ in millions, excludes PPP) $50 $63 $115 $445 25 10 7 12 7 0 5 10 15 20 25 30 < $5 $5 - $10 $10 - $25 $25 - $50 > $50 $25 $125 $225 $325 $425 $525 $625 Commitments per Lender Range # of Lenders 2Q21 Lenders Production by Total Commitment Range $682 $489,506 $718,082 $436,866 $574,889 $655,616 $1,152,644 $923,347 $1,355,582 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 Total Loans, exc. MW and PPP Quarterly Commitment Production ($ in thousands) Construction Loans > $10 Million (76% of Total Q2 Construction Production) • Weighted average LTV - 54% • Weighted average LTC - 64% • Weighted average DSCR - 1.6x • 50% in Industrial Production / 40% in Multifamily Production • 73% of production to existing customers • Return on talent investment within new builder portfolio ($ in millions) Data as of June 30, 2021
Net Interest Income 18 $65.9 $66.8 $65.6 $67.1 3.31% 3.32% 3.29% 3.22% 3.11% 3.13% 3.10% 3.15% 3.12% 3.03% 2Q20 3Q20 4Q20 1Q21 2Q21 Net Interest Income ("NII") NIM Adjusted NIM (Excludes All Purchase Accounting) $65.8 $7,900 $8,066 $8,257 $8,659 2Q20 3Q20 4Q20 1Q21 2Q21 Average Earning Assets $8,001 Average Earning Assets Net Interest Income Rollforward ($ in thousands) ($ in millions) ($ in millions) 1Q21 Net Interest Income $65,635 Loan Volume 2,871 Deposit Rates 1,159 2021 Interest Rate Hedges 1,030 Day Count 729 Loan Rates < 2,104 > PCD Loan Interest Reversals < 1,332 > Purchase Accounting Accretion < 413 > 2019 Interest Rate Hedges Expired < 325 > Other < 119 > 2Q21 Net Interest Income $67,131 Floating Rate Loan Repricing Floor Reprice Grouping ($ in thousands) Total Balance % of Total Balance Cumulative % of Total Balance No Floor $ 2,565.5 53% 53% Floor reached 654.2 14% 67% 0-25 bps to Reprice 169.3 3% 70% 26-50 bps to Reprice 185.5 4% 74% 51-75 bps to Reprice 364.8 8% 82% 76-100 bps to Reprice 556.6 12% 94% 101-125 bps to Reprice 123.3 3% 97% 126-150 bps to Reprice 74.4 1% 98% 151+ bps to Reprice 107.3 2% 100% Totals $ 4,800.9 100% Asset Sensitivity as of June 30, 2021 -2.2% 5.0% 11.2% 17.4% 23.7% -3.0% 2.0% 7.0% 12.0% 17.0% 22.0% 27.0% -100 Shock +100 Shock +200 Shock +300 Shock +400 Shock Static Shock Impact on NII 1
Operating Noninterest Income 19 Change in Operating Noninterest Income Quarter-over-Quarter Quarter-over-Quarter Commentary • Other noninterest income increased 38%, primarily driven by a $663 thousand increase in insurance income received during 2Q21 associated with the Company’s bank owned life insurance policy • Loan fees increased 36%, primarily driven by a $418 thousand increase in syndication fees compared to 1Q21. Over the last year, the Company has invested in a Syndication Group with direct results reflected in 2Q21 noninterest income • Government guaranteed loan income, net, decreased 47%, primarily as a result of a $5.6 million decrease fee income earned on PPP loans offset by a $2.0 million increase on gain on sale of SBA loans -47% -24% 6% 36% 38% ($3,100) ($122) +$218 +$482 +$806 Govt. guar. loan income, net: Gain on sales of MLHFS: Deposit svc. chgs: Loan fees: Other: $7,900 $7,835 $10,831 2Q20 1Q21 2Q21 Total Operating Noninterest Income, exc. PPP income1 Service charges and fees on deposits 31% Govt. guar. loan income, net 28% Loan fees 15% Gain on sale of MLHFS 2% Other 24% 2Q21 Operating Noninterest Income Breakdown + 37.1% ($ in thousands) ($ in thousands) 1 Excludes PPP income of $1.6 million, $6.3 million and $10.5 million as of June 30, 2021, March 31, 2021 and June 30, 2020, respectively. PPP income includes upfront fees and changes in fair value recognized as the Company elected to report PPP loans at fair value using the fair value option.
Operating Noninterest Expense 20 Change in Operating Noninterest Expense Quarter-over-Quarter Quarter-over-Quarter Commentary • Marketing increased 103% from 1Q21, primarily resulting from an approximate increase of $842 thousand in annual sponsorship fees • Other noninterest expense increased 23% as a result of a $203 thousand write down of certain other real estate owned properties and approximately $194 thousand of loan related legal expenses -10% -1% 0% 2% 3% 9% 23% 103% ($355) ($108) ($20) $0 +$137 +$217 +$690 +$932 Professional and regulatory fees Salaries and employee benefits Amortization of intangibles Telephone and communications Occupancy and equipment Data processing and software Other Marketing $38,500 $39,597 $41,090 2Q20 1Q21 2Q21 Total Operating Noninterest Expense + 6.7% Continued investment in talent driving YOY expense growth ($ in thousands) ($ in thousands)
0.84% 0.67% 0.55% 0.45% 0.35% 0.59% 0.46% 0.38% 0.31% 0.23% 2Q20 3Q20 4Q20 1Q21 2Q21 Average cost of interest-bearing deposits Average cost of total deposits Cost of Interest-bearing Deposits and Total Deposits Total deposit balances increased $74.3 million, or 4.3% LQA, and increased $1.1 billion, or 14% YOY Total deposit cost down 8 bps compared to 1Q21 due to pricing diligence and product mix Excluding MW and PPP loans, the loan to deposit ratio was 89.9% at June 30, 2021 2Q21 weighted average of interest-bearing deposit rate of 24 bps on production Certificates & Time Maturity Table $2,714 $3,190 $3,113 $1,908 $2,172 $2,388 $1,504 $1,543 $1,478 2 Q 2 0 1 Q 2 1 2 Q 2 1 Interest Bearing Non-Int Bearing Certificates & Time Deposits Deposits Composition 44.6% 34.2% 21.2% $6,126 $6,979$6,905 Deposit Growth LQA YOY Demand & Savings -9.6% +14.7% Non-Int Bearing +39.8% +25.2% Certificates and Time Deposits -16.9% -1.7% 21 ($ in millions) Balance ($000) W A Rate Q3 2021 373,686 0.62% Q4 2021 260,082 0.67% Q1 2022 265,169 0.59% Q2 2022 163,701 0.38% Q3 2022 123,332 0.34% Q4 2022 86,211 0.39% Q1 2023 100,902 0.40% Q2 2023 65,896 0.44% Q3 2023+ 38,881 1.65% Total 1,477,860 0.56%
Capital Build 22 10.70% 10.68% 11.57% 10.68% 9.38% 9.36% 12.86% 9.03% Leverage Ratio Tier 1 Ratio Total Capital Ratio CET1 Bank VBTX 1 Estimated capital measures inclusive of CECL capital transition provisions as of June 30, 2021 and 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 June 30, 2021 $0.60 $0.16 $0.14 $0.05 $0.05 $16.34 $(0.17) $(0.01) TBVPS Rollforward $17.16 VBTX Amounts ($ in thousands) June 30, 2021 March 31, 2021 $ Change Basel III Standardized1 CET1 capital 804,619$ 779,057$ 25,562$ CET1 capital ratio 9.03% 9.27% Leverage capital 833,956$ 808,338$ 25,618$ Leverage capital ratio 9.38% 9.50% Tier 1 capital 833,956$ 808,338$ 25,618$ Tier 1 capital ratio 9.36% 9.61% Total capital 1,146,015$ 1,124,859$ 21,156$ Total capital ratio 12.86% 13.38% Risk weighted assets 8,913,134$ 8,401,800$ 511,334$ Total assets2 9,349,525$ 9,237,510$ 112,015$ Tangible common equity / Tangible assets3 9.51% 9.17%
Thrive Mortgage Investment 2021 Financial Information ($ in thousands) 2Q21 1Q21 Loans HFS 154,622 167,354 Total Assets 223,635 227,985 Members Equity 47,112 42,670 Pre-Tax Income 5,233 6,349 2Q20 3Q20 4Q20 1Q21 2Q21 Purchase Refinance unaudited unaudited 1Q21 2Q21 YTD 2020 YTD 2021 $786.2 $715.5 Quarterly and YTD Volume ($ in millions) 4.92% 5.59% 4.98% 4.79% 3.62% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 2Q20 3Q20 4Q20 1Q21 2Q21 Origination/Seconday Income GOS % Income and GOS % $33.6 $38.8 $34.0 $23.4 ($ in millions) + 86% YOY $28.6 Purchased v. Refinance 52% 36% 48% 49% 64% 48% 52% 51% 25% 75% 49% Investment Completed July 16, 2021 + 40% LQA $1,501.7 $808.5 $786.2 ($ in millions) 23
1 Past due loans exclude purchased credit deteriorated loans that are accounted for on a pooled basis and non-accrual loans. 2 Total loans excludes Loans Held for Sale, MW and PPP loans. 2Q20 3Q20 4Q20 1Q21 2Q21 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 24 ($ in millions) 2Q20 3Q20 4Q20 1Q21 2Q21 Acquired $1,740 $2,421 $16,462 $130 $4,124 Originated $50 $45 $45 $18 $1,269 Net Charge-offs ($ in thousands) Totals $24,120 $11,738 $18,691 $115.4 $121.6 $105.1 $104.9 $99.5 2.01% 2.10% 1.80% 1.76% 1.59% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 2Q20 3Q20 4Q20 1Q21 2Q21 ACL ACL/Total Loans ACL / Total Loans2 ($ in millions) $22,637 $10,017 Quarterly Criticized Loans $448.6 $497.6 $449.0 $418.1 $388.5 2Q20 3Q20 4Q20 1Q21 2Q21 $100 $200 $300 $400 $500 Criticized Loans ($ in millions, excludes PCD loans) -21.9% +10.9%
Veritex Holdings, Inc. Supplemental Information
26 Reconciliation of Non-GAAP Financial Measures 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 Tangible Common Equity Total stockholders' equity $ 1,272,907 $ 1,233,808 $ 1,203,376 $ 1,185,337 $ 1,163,749 Adjustments: Goodwill (370,840) (370,840) (370,840) (370,840) (370,840) Core deposit intangibles (52,873) (55,311) (57,758) (60,209) (62,661) Tangible common equity $ 849,194 $ 807,657 $ 774,778 $ 754,288 $ 730,248 Common shares outstanding 49,498 49,433 49,340 49,650 49,633 Book value per common share $ 25.72 $ 24.96 $ 24.39 $ 23.87 $ 23.45 Tangible book value per common share $ 17.16 $ 16.34 $ 15.70 $ 15.19 $ 14.71 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 Tangible Common Equity Total stockholders' equity $ 1,272,907 $ 1,233,808 $ 1,203,376 $ 1,185,337 $ 1,163,749 Adjustments: Goodwill (370,840) (370,840) (370,840) (370,840) (370,840) Core deposit intangibles (52,873) (55,311) (57,758) (60,209) (62,661) Tangible common equity $ 849,194 $ 807,657 $ 774,778 $ 754,288 $ 730,248 Tangible Assets Total assets $ 9,349,525 $ 9,237,510 $ 8,820,871 $ 8,702,375 $ 8,587,858 Adjustments: Goodwill (370,840) (370,840) (370,840) (370,840) (370,840) Core deposit intangibles (52,873) (55,311) (57,758) (60,209) (62,661) Tangible Assets $ 8,925,812 $ 8,811,359 $ 8,392,273 $ 8,271,326 $ 8,154,357 Tangible Common Equity to Tangible Assets 9.51% 9.17% 9.23% 9.12% 8.96% As of (Dollars in thousands, except per share data) (Dollars in thousands) As of
27 Reconciliation of Non-GAAP Financial Measures 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 6/30/2021 6/30/2020 Net income available for common stockholders adjusted for amortization of core deposit intangibles Net income $ 29,456 $ 31,787 $ 22,801 $ 22,920 $ 24,028 $ 61,243 $ 28,162 Adjustments: Plus: Amortization of core deposit intangibles 2,438 2,447 2,451 2,451 2,451 4,885 4,902 Less: Tax benefit at the statutory rate 512 514 515 515 515 1,026 1,030 Net income available for common stockholders adjusted for amortization of core deposit intangibles $ 31,382 $ 33,720 $ 24,737 $ 24,856 $ 25,964 $ 65,102 $ 32,034 Average Tangible Common Equity Total average stockholders' equity $ 1,254,371 $ 1,224,294 $ 1,196,274 $ 1,177,882 $ 1,155,798 $ 1,239,415 $ 1,142,626 Adjustments: Average goodwill (370,840) (370,840) (370,840) (370,840) (370,840) (370,840) (370,840) Average core deposit intangibles (54,471) (56,913) (59,010) (61,666) (64,151) (55,685) (65,296) Average tangible common equity 829,060 796,541 766,424 745,376 720,807 812,890 706,490 Return on Average Tangible Common Equity (Annualized) 15.18% 17.17% 12.84% 13.27% 14.49% 16.15% 9.12% For the Quarter Ended For the Year Ended (Dollars in thousands)
28 Reconciliation of Non-GAAP Financial Measures 1 Severance payments relate to branch restructurings made during the three months ended June 30, 2021. 2 Debt extinguishment costs relate to prepayment penalties paid in connection with the early payoff of FHLB structured advances. 3 A nonrecurring tax adjustment of $426 thousand recorded in the first quarter of 2021 was due to a true-up of a deferred tax liability. 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 Bancorp, Inc. tax return to carry back a net operating loss ("NOL") incurred by Green Bancorp, Inc. 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. 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 6/30/2021 6/30/2020 Operating Earnings Net income $ 29,456 $ 31,787 $ 22,801 $ 22,920 $ 24,028 $ 61,243 $ 28,162 Plus: Severance payments1 627 - - - - 627 - Plus: Loss (gain) on sale of securities available for sale, net - - 256 8 (2,879) - (2,879) Plus: Debt extinguishment costs2 - - 9,746 - 1,561 - 1,561 Operating pre-tax income 30,083 31,787 32,803 22,928 22,710 61,870 26,844 Less: Tax impact of adjustments 131 - 2,100 - (277) 131 (277) Plus: Discrete tax adjustments3 - 426 (973) - (1,799) 426 (1,799) Operating earnings $ 29,952 $ 32,213 $ 29,730 $ 22,928 $ 21,188 $ 62,165 $ 25,322 Weighted average diluted shares outstanding 50,331 49,998 49,837 49,775 49,727 50,187 50,383 Diluted EPS $ 0.59 $ 0.64 $ 0.46 $ 0.46 $ 0.48 $ 1.22 $ 0.56 Diluted operating EPS $ 0.60 $ 0.64 $ 0.60 $ 0.46 $ 0.43 $ 1.24 $ 0.50 (Dollars in thousands) For the Quarter Ended For the Year Ended
29 Reconciliation of Non-GAAP Financial Measures 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 6/30/2021 6/30/2020 Pre-Tax, Pre-Provision Operating Earnings Net Income $ 29,456 $ 31,787 $ 22,801 $ 22,920 $ 24,028 $ 61,243 $ 28,162 Plus: Provision for income taxes 7,837 8,993 4,702 6,198 3,987 16,830 3,303 Pus: Provision for credit losses and unfunded commitments 577 (570) 902 10,139 18,971 7 54,628 Plus: Severance payments 627 - - - - 627 - Plus: Loss (gain) on sale of securities, net - - 256 8 (2,879) - (2,879) Plus: Debt extinguishment costs - - 9,746 - 1,561 - 1,561 Net pre-tax, pre-provision operating earnings $ 38,497 $ 40,210 $ 38,407 $ 39,265 $ 45,668 $ 78,707 $ 84,775 Total average assets $ 9,321,279 $ 8,941,271 $ 8,750,141 $ 8,585,926 $ 8,689,774 $ 9,132,347 $ 8,380,947 Pre-tax, pre-provision operating return on average assets1 1.66% 1.82% 1.75% 1.82% 2.11% 1.74% 2.03% Average Total Assets $ 9,321,279 $ 8,941,271 $ 8,750,141 $ 8,585,926 $ 8,689,744 $ 9,132,347 $ 8,380,947 Return on average assets1 1.27% 1.44% 1.04% 1.06% 1.11% 1.35% 0.68% Operating return on average assets1 1.29% 1.46% 1.35% 1.06% 0.98% 1.37% 0.61% Operating earnings adjusted for amortization of core deposit intangibles Operating earnings $ 29,952 $ 32,213 $ 29,730 $ 22,928 $ 21,188 $ 62,165 $ 25,322 Adjustments: Plus: Amortization of core deposit intangibles 2,438 2,447 2,451 2,451 2,451 4,885 4,902 Less: Tax benefit at the statutory rate 512 514 515 515 515 1,026 1,030 Operating earnings adjusted for amortization of core deposit intangibles 31,878 34,146 31,666 24,864 23,124 66,024 29,194 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 6/30/2021 6/30/2020 Average Tangible Common Equity Total average stockholders' equity $ 1,254,371 $ 1,224,294 $ 1,196,274 $ 1,177,882 $ 1,155,798 $ 1,239,415 $ 1,142,626 Adjustments: Average goodwill (370,840) (370,840) (370,840) (370,840) (370,840) (370,840) (370,840) Average core deposit intangibles (54,471) (56,913) (59,010) (61,666) (64,151) (55,685) (65,296) Average tangible common equity $ 829,060 $ 796,541 $ 766,424 $ 745,376 $ 720,807 $ 812,890 $ 706,490 Operating return on average tangible common equity1 15.42% 17.39% 16.44% 13.27% 12.90% 16.38% 8.31% 1 Annualized ratio. For the Quarter Ended For the Year Ended (Dollars in thousands) For the Quarter Ended For the Year Ended (Dollars in thousands)
30 Reconciliation of Non-GAAP Financial Measures 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 6/30/2021 6/30/2020 Efficiency ratio 52.42% 49.62% 62.52% 48.12% 46.02% 51.01% 46.76% Net interest income $ 67,131 $ 65,635 $ 66,766 $ 65,870 $ 65,757 $ 132,766 $ 133,162 Noninterest income 12,456 14,172 9,012 9,795 21,290 26,628 28,537 Plus: Loss (gain) on sale of securities available for sale, net - - 256 8 (2,879) - (2,879) Operating noninterest income 12,456 14,172 9,268 9,803 18,411 26,628 25,658 Noninterest expense 41,717 39,597 47,373 36,408 40,061 81,314 75,606 Less: Severance payments 627 - - - - 627 - Less: Debt extinguishment costs - - 9,746 - 1,561 - 1,561 Operating noninterest expense $ 41,090 $ 39,597 $ 37,627 $ 36,408 $ 38,500 $ 80,687 $ 74,045 Operating efficiency ratio 51.63% 49.62% 49.49% 48.11% 45.74% 50.62% 46.62% 1 Annualized ratio. For the Quarter Ended For the Year Ended (Dollars in thousands) 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 Adjusted net interest margin Net interest income 67,131$ 65,635$ 66,766$ $ 65,870 $ 65,757 Less: Loan accretion 1,536$ 1,911$ 2,652$ 3,953 3,134 Less: Deposit premium amortization 34$ 76$ 89$ 110 263 Adjusted net interest income $ 65,561 $ 63,648 $ 64,025 $ 61,807 $ 62,360 Total interest-earning assets 8,659,059$ 8,257,048$ 8,065,652$ $7,899,837 $8,001,485 Adjusted net interest margin 3.03% 3.12% 3.15% 3.10% 3.13% For the Quarter Ended (Dollars in thousands, except per share data)
Veritex Holdings, Inc.