UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
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Item 7.01 Regulation FD Disclosure
On March 3, 2022, Veritex Holdings, Inc. (“Veritex”) (a) issued a press release announcing that it has entered into a definitive agreement pursuant to which Veritex will acquire StoneCastle Insured Sweep, LLC (“interLINK”) and (b) made available on its website electronic presentation slides regarding such acquisition. The press release and the presentation slides are attached as Exhibit 99.1 and Exhibit 99.2, respectively, to this Current Report.
As provided in General Instruction B.2 to Form 8-K, the information furnished in this Item 7.01 (including exhibits) 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 of 1933, as amended or the Securities Exchange Act of 1934, as amended, except as shall be expressly set forth by specific reference in such filing.
Forward Looking Statement
This Current Report on Form 8-K includes “forward-looking statements,” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on various facts and derived utilizing assumptions, current expectations, estimates and projections and are subject to known and unknown risks, uncertainties and other factors, which change over time and are beyond our control, that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements include, without limitation, statements relating to Veritex’s proposed acquisition of interLINK, including the expected timing of the completion of the acquisition, the ability to complete the acquisition, the ability to obtain any required regulatory or other approvals, authorizations or consents in connection with the acquisition, disruption from the acquisition making it more difficult to maintain relationships with employees, customers or other parties with whom Veritex or interLINK have business relationships, diversion of management time on acquisition-related issues, the reaction to the acquisition of the companies’ customers, employees and counterparties, any statements regarding the plans and objectives of management for future operations, products or services arising from the acquisition, including integration plans, and the treatment of certain deposits via interLINK as not being brokered deposits for any supervisory purpose; 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; and Veritex’s future financial performance, business and growth strategy, projected plans and objectives, as well as other projections based on macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact broader economic and industry trends, and any such variations may be material. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “seeks,” “targets,” “outlooks,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing words. We refer you to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Veritex’s Annual Report on Form 10-K for the year ended December 31, 2021 and any updates to those risk factors set forth in Veritex’s Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings with the Securities and Exchange Commission (“SEC”), which are available on the SEC’s website at www.sec.gov. If one or more events related to these or other risks or uncertainties materialize, or if Veritex’s underlying assumptions prove to be incorrect, actual results may differ materially from what Veritex anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made. Veritex does not undertake any obligation, and specifically declines any obligation, to supplement, update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by law. All forward-looking statements, expressed or implied, included in this Current Report on Form 8-K 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.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
| Exhibit Number | Description | |
| 99.1 | Press release, dated March 3, 2022 | |
| 99.2 | Presentation materials | |
| 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: | March 3, 2022 | |
Exhibit 99.1
PRESS RELEASE
FOR IMMEDIATE RELEASE
Veritex Holdings, Inc. Announces Acquisition of interLINK, a Technology-Enabled Deposit Gathering and Processing Platform
Enhances liquidity with flexible access to
approximately $5.7 billion of core deposits
Provides low-cost, stable core deposits to fund sustainable long-term growth
Financially attractive with double-digit run-rate EPS accretion
Dallas, TX – March 3, 2022 – Veritex Holdings, Inc. (Nasdaq: VBTX) (“Veritex” or the “Company”), the parent holding company for Veritex Community Bank, today announced that it has entered into a definitive agreement to acquire StoneCastle Cash Insured Sweep, LLC (d/b/a as interLINK), a subsidiary of StoneCastle Partners, LLC (“StoneCastle”), primarily for Veritex common stock and cash in a transaction valued at approximately $91 million.
Together, Veritex and interLINK are the perfect fit combining a high-growth commercial bank with a tech-enabled core deposit gathering platform. interLINK administers approximately $8 billion of deposits through FDIC-insured cash sweep programs for several of the nation's leading broker/dealers and clearing firms. Once integrated into Veritex’s treasury function, interLINK will provide flexible and scalable access to approximately $5.7 billion of highly diversified, stable core deposits. This core deposit base creates capacity to reliably fund significant multi-year loan growth and optimize overall funding mix over time.
Veritex Chairman and Chief Executive Officer C. Malcolm Holland stated, “We are excited at the opportunity to enhance our funding and liquidity profile with a modern, branchless distribution channel that provides sticky core deposits to fund several years of future growth. Meeting the needs of customers and communities is priority number one and interLINK enables us to do that with low-cost, flexible funding that will continue to scale with minimal overhead to generate positive operating leverage. On top of that, the financial benefits to shareholders are expected to be significant with low-risk given the capital-light nature of the business and our significant expertise buying and integrating businesses over that last 10 years.”
interLINK is a proprietary software platform, purpose-built as a bank treasury function. Its technology is highly flexible, allowing for customized integration into broker/dealer systems and supported by white-glove customer service. Over the last five years, interLINK’s deposits under administration have increased at a 55% compound annual growth rate, with only a minimal increase in operating expenses. Supporting this growth is a compelling value proposition for all parties, whereby Veritex will provide broker/dealers white glove cash administration services at low-cost and banks participating in interLINK’s sweep programs will continue to receive flexible liquidity. Subsequent to the acquisition, Veritex will be able to provide broker/dealers with a range of added services, including private banking, securities lending, and other credit or banking services.
Under the terms of the agreement, Veritex will purchase interLINK for $3 million in cash and issue approximately 2.1 million shares of its common stock to StoneCastle. Upon close of the transaction, StoneCastle will recognize a taxable sale and will hold a minority stake of approximately 4% in Veritex. Concurrent with this announcement, Veritex plans to launch a common stock offering of approximately $150 million with the net proceeds used to support continued growth and general corporate purposes.
On a pro forma basis, including the common stock offering announced today, the transaction is expected to increase Common Equity Tier 1 to approximately 9.9%, be accretive to tangible book value per share at closing, and be neutral to consensus earnings per share estimates in 2023, 8% accretive in 2024, and +14% accretive on a run-rate basis thereafter. The internal rate of return for this transaction is expected to exceed 25%.
Approvals and Timing
The transaction has been unanimously approved by the boards of directors of Veritex and StoneCastle. The transaction is expected to close in the third quarter of 2022, subject to satisfaction of customary closing conditions, including receipt of regulatory approvals from the FDIC and the Texas Department of Banking.
Advisors
Goldman Sachs & Co. LLC is serving as financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal counsel to Veritex. Keefe, Bruyette & Woods, A Stifel Company is serving as financial advisor and Dechert LLP is serving as legal counsel to StoneCastle.
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.
About StoneCastle Partners, LLC
Founded in 2003, StoneCastle Partners (“StoneCastle”) develops businesses focused on banking and associated technologies. StoneCastle creates innovative platforms and disruptive technology to enhance or redefine inefficient banking processes. Many of these initiatives focus on cost reduction and scalability to generate operating efficiencies, creating enormous enterprise value for banks and non-bank financial service companies. For the past 19 years, StoneCastle has built and sold platforms to strategic buyers including banks, asset managers, and fintechs. Over 1,000 banks trust StoneCastle and use its products; for more information, visit www.scpdevco.com..
About StoneCastle Insured Sweep, LLC
StoneCastle Insured Sweep, LLC (d/b/a interLINK) provides cash management solutions to financial intermediaries, facilitating the investment of cash held in thousands of brokerage accounts into FDIC-insured banks. Today, interLINK administers approximately 420,000 retail brokerage accounts on behalf of multiple broker/dealers and clearing platforms. Retail brokerage is a highly competitive industry, and interLINK’s objective is to provide the highest quality service at the lowest cost to enable broker/dealers to better service their retail customers. For more information, visit www.interlinksweep.com.
Forward Looking Statement
This press release includes “forward-looking statements,” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on various facts and derived utilizing assumptions, current expectations, estimates and projections and are subject to known and unknown risks, uncertainties and other factors, which change over time and are beyond our control, that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements include, without limitation, statements relating to Veritex Holdings, Inc.’s (“Veritex”) proposed acquisition of interLINK, including the expected timing of the completion of the acquisition, the ability to complete the acquisition, the ability to obtain any required regulatory or other approvals, authorizations or consents in connection with the acquisition, disruption from the acquisition making it more difficult to maintain relationships with employees, customers or other parties with whom Veritex or interLINK have business relationships, diversion of management time on acquisition-related issues, the reaction to the acquisition of the companies’ customers, employees and counterparties, any statements regarding the plans and objectives of management for future operations, products or services arising from the acquisition, including integration plans, and the treatment of certain deposits via interLINK as not being brokered deposits for any supervisory purpose; 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; and Veritex’s future financial performance, business and growth strategy, projected plans and objectives, as well as other projections based on macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact broader economic and industry trends, and any such variations may be material. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “seeks,” “targets,” “outlooks,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing words. We refer you to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Veritex’s Annual Report on Form 10-K for the year ended December 31, 2021 and any updates to those risk factors set forth in Veritex’s Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings with the Securities and Exchange Commission (“SEC”), which are available on the SEC’s website at www.sec.gov. If one or more events related to these or other risks or uncertainties materialize, or if Veritex’s underlying assumptions prove to be incorrect, actual results may differ materially from what Veritex anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made. Veritex does not undertake any obligation, and specifically declines any obligation, to supplement, update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by law. All forward-looking statements, expressed or implied, included in this press 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.
Source: Veritex Holdings, Inc.
Investor Relations:
972-349-6132
investorrelations@veritexbank.com
Exhibit 99.2
March 3, 2022 Veritex Holdings, Inc. Investor Presentation
2 Safe Harbor Statement Forward - looking statements This presentation includes “forward - looking statements,” within the meaning of the Private Securities Litigation Reform Act of 1 995. 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, un cer tainties and other factors, which change over time and are beyond our control, that may cause actual results, performance or achievements to be materially different from any future res ult s, performance or achievements expressed or implied by such forward - looking statements. Forward - looking statements include, without limitation, statements relating to Veritex Holdings, Inc.’s (“ Veritex ”) proposed acquisition of interLINK , including the expected timing of the completion of the acquisition, the ability to complete the acquisition, the ability to obtain any requ ire d regulatory or other approvals, authorizations or consents in connection with the acquisition, disruption from the acquisition making it more difficult to maintain relationships with empl oye es, customers or other parties with whom Veritex or interLINK have business relationships, diversion of management time on acquisition - related issues, the reaction to the acquisition of the compa nies’ customers, employees and counterparties, any statements regarding the plans and objectives of management for future operations, products or services arising from the acquisition, in clu ding integration plans, and the treatment of certain deposits via interLINK as not being brokered deposits for any supervisory purpose; 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; and Veritex’s future financial performance, business and growth strategy, projected plans and objectives, as well as other projections base d on macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact broader economic a nd industry trends, and any such variations may be material. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “pro jec ts,” “estimates,” “seeks,” “targets,” “outlooks,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward - looking in nature and not historical facts, although not all forward - looking statements include the foregoing words. We refer you to the “Risk Factors” and “Management’s Discussion and Analysis of Finan cia l Condition and Results of Operations” sections of Veritex’s Annual Report on Form 10 - K for the year ended December 31, 2021 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.go v. If one or more events related to these or other risks or uncertainties materialize, or if Veritex’s underlying assumptions prove to be incorrect, actual results may differ materially from what Veritex anticipates. Accordingly, you should not place undue reliance on any such forward - looking statements. Any forward - looking statement speaks only as of the date on which it is made. Veritex does not undertake any obligation, and specifically declines any obligation, to supplement, update or revise any forward - looking statements, whether as a result of new information, future developments or otherwise, except as required by law. All forward - looking statements, expressed or implied, included in this presentation are expressly qualified in their entirety by thi s 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 availab le 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 bel iev ed 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 Proven Executive Management Malcolm Holland III Chairman, President & Chief Executive Officer Terry Earley Senior Executive Vice President & Chief Financial Officer 40 years of banking experience Founded Veritex in 2010 Served in various analyst, lending and executive management positions in Dallas area since 1982 Received Bachelor of Business Administration from Southern Methodist University 30+ years of banking experience Joined Veritex in 2019 via merger with Green Bancorp Previously the CFO of Green Bancorp and Yadkin Financial, the CEO of Rocky Mountain Bank and the CFO of RBC Centura Received Bachelor of Business Administration from the University of North Carolina at Chapel Hill; Certified Public Accountant David Gareis President Joined interLINK’s platform in December 2011 Previously served as President at Intermedium Financial, prior to StoneCastle’s acquisition Spent eight years at Double Rock Corporation, a leading cash management and financial technology company Received Bachelor of Arts from Franklin and Marshall College and an MBA in Finance from the University of Delaware
4 Veritex – a Leading Growth - Centric Texas Bank Note: Financial data as of the twelve months ended December 31, 2021; Source: S&P Global Market Intelligence; American Banker ; F ORTUNE Magazine 1 Please refer to the “Reconciliation of Non - GAAP Financial Measures” at the end of this presentation for a description and reconciliatio n of these non - GAAP financial measures; 2 Loans held for investment excluding mortgage warehouse and PPP loans; 3 Reflects loans re - pricing in the next 12 months; 4 Pro forma CET1 Ratio reflects the impact from the proposed acquisition of interLINK and proposed $150 million common equity base offering 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 By the Numbers FY 2021 Top 10 Texas Based Bank $9.8B Total Assets Scale & Scarcity 49.3% Operating Efficiency Ratio 1 17.6% Operating ROATCE 1 Profitability & Efficiency $5.4B 2021 Loan Production 15.7% 2020 to 2021 Loan Growth 2 Consistent Growth 76% Rate Sensitive Loans / Total Loans 3 +6.6% ▲ in NII to +100bps ▲ in Rates Asset Sensitive 9.9% CET1 Ratio (Pro Forma) 4 0.51% NPAs / Total Assets Capital and Credit Truth in Texas Banking Dallas / Ft. Worth Houston (33) Branches 2021 Fastest Growing Companies By 2020 Fastest Growing Companies By 2019 Best Banks to Work for By
5 Low - Risk Investment Proprietary software platform purpose - built for bank treasury function History of strong broker / dealer retention with granular, retail customer base No assumed credit risk; go - forward asset growth subject to VBTX underwriting standards Financially Attractive Low all - in cost of sticky, core deposit funding Highly - scalable platform with minimal overhead to increase operating leverage Expectation of run - rate double - digit EPS accretion and >25% internal rate of return 1 Transaction agreement entered into on March 3 , 2022, consummation of acquisition subject to satisfaction of customary closing conditions, including receipt of required regulatory approvals; 2 Takes into account single bank pass - through FDIC insurance coverage to underlying broker/dealer customers. Post - closing, interLINK platform to operate within Veritex Community Bank. Expect that deposits allocated by interLINK platform to Veritex Community Bank will not be treated as brokered deposits under FDIC regulations based on self - placement exception and eligibility of certain network broker/dealers for one or more designated exceptions. Deposits not allocated to Veritex Community Bank swept to unaffiliated banks in network The Perfect Match: Veritex’s Acquisition of interLINK 1 High - Growth Commercial Banking Meets Tech - Enabled Core Deposit Gathering Strategically Important Stable core deposit base to fund growth opportunities in VBTX’s markets Enhances liquidity with flexibility to retain deposits on or off balance sheet Modern, branchless distribution aligned with actions to deliver innovative digital - first solutions Tech - enabled deposit gathering platform ~$8B of deposits under administration through 8 broker/dealer customers Flexible access to up to $5.7B of core deposits 2 ~420,000 retail brokerage accounts at an attractive ~25bps all - in cost
6 Veritex Key Investment Highlights Veteran management team with over 35 years of average banking experience A proven growth franchise delivering exceptional shareholder returns Scarcity value in attractive Texas metropolitan markets Highly profitable business model with catalysts for growth Diversification of revenue streams supports consistent earnings growth Leveraging fintech acquisitions and partnerships to complement traditional commercial bank model Strong track record of successfully integrating acquisitions and strategic partnerships Compelling growth - oriented investment with an attractive valuation
7 IPO secured growth capital and a public currency for M&A Added meaningful presence in Houston and became the only Texas bank focused on both the DFW and Houston MSAs Strengthened presence in Dallas and expanded into other key Dallas / Ft. Worth (“DFW”) metroplex areas 1 As of June 30, 2014; 2 Transaction agreement entered into on March 3, 2022, Consummation of acquisition subject to satisfaction of customary closing conditions, including receipt of required regu lat ory approvals; 3 VBTX priced IPO on October 9, 2014. CAGR’s calculated using Q2 2014 and Q4 2021 quarterly financial metrics; 4 Texas Peers include CBTX, CFR, FFIN, HTH, IBTX, PB, SBSI, and TCBI; CBTX excluded from 2022E Loan G rowth due to pending merger with ABTX; 5 Regional Banks defined by the current constituents of the KRX Index; 6 Loan Growth Consensus reflects 2022E; Note: Market data as of March 2 , 2022; Source : S&P Global Market Intelligence, and Factset Our Journey as a Public Company A Proven Growth Franchise Delivering Exceptional Shareholder Returns Boosted fee income and diversified revenue streams Low - cost , tech - enabled deposit gathering business to fund growth engine $710 million Assets 1 2014 $2.9 billion Assets 2017 $8.0 billion Assets 2019 $9.8 billion Assets 2021 +$10 billion Assets 2022 Organic growth and bank M&A created the largest bank focused on Dallas / Ft. Worth and Houston Build upon commercial banking strengths with talent additions and acquiring fee - based and tech - enabled businesses that can scale with existing strategy Delivering Shareholder Value Since Day 1 EPS CAGR Since VBTX IPO 3 TBVPS CAGR Since VBTX IPO 3 Total Shareholder Return Since VBTX IPO 3 Loan Growth Consensus 6 VBTX Texas Peers 4 Regional Banks 5 22.4 % 10.4 % 8.4 % 12.3 % 10.0 % 6.3 % 2 220 % 100 % 129 %
8 Source : Bureau of Labor Statistics; Dallas Chamber of Commerce; Greater Houston Partnership; YTexas ; Houston.org; S&P Global Market Intelligence Well Positioned in Strong, Resilient Texas Markets Our platform is powered by the markets we serve Superior Growth Profile Corporate Relocations to Texas Examples of companies moving to call Texas home during 2020 – 2021 are diverse across sector and size Dallas / Ft. Worth Greater Houston Texas 4 th l argest MSA in the U.S . by population 2 nd highest projected household income among Texas MSAs 22 Fortune 500 companies 176 companies have relocated to DFW since 2010 2 nd best job center in the U.S. for technology professions in 2020 5 th largest MSA in the U.S . by population 7 th largest metro economy in the U.S. by GDP 5 th in U.S. job growth since 2010 3 rd highest concentration of Fortune 500 companies in the U.S. 35 companies have relocated to Houston since 2010 Behind Texas’ strong economy are 49 Fortune 500 companies headquartered in Texas, more than 1,600 foreign companies and 2.7 million small businesses Pro - business environment with no personal or corporate income taxes and the leading destination for companies relocating from other states Texas is the #1 exporting state in the nation for the 19th consecutive year, exporting $279 billion in goods in 2020
9 Total Texas Metro DFW + Houston Percent of Total Deposits: # Company Assets Deposits % of Total % Rank Deposits % of Total % Rank 1 $95B $11B 14.1% #10 $9B 12.4% #9 2 51 35 88.1 #3 18 45.3 #7 3 38 17 57.1 #7 15 50.6 #6 4 35 29 100.0 #1 26 89.0 #2 5 19 10 67.6 #6 9 60.6 #4 6 19 8 70.5 #5 7 55.5 #5 7 16 2 19.9 #9 <1B 7.5 #10 8 13 3 29.2 #8 3 29.2 #8 9 12 7 80.2 #4 7 80.2 #3 10 10 7 99.5 #2 7 99.5 #1 1 As a percent of total deposits; 2 CBTX is shown pro forma for its announced merger with ABTX, excluding purchase accounting adjustments; Note: Shown sorted by assets (as of December 31, 2021); Texas metro markets includes Austin MSA, Dallas - Fort Worth MSA, Houston MSA, and San Antonio MSA ( Deposit market share data as of June 30, 2021, as compiled and reported by the FDIC ); Source : S&P Global and FDIC Summary of Deposits Scarcity Value in Texas Metro Markets Uniquely attractive franchise and #1 Texas bank focused primarily across DFW and Houston MSAs 1 2 DFW Houston Other Markets Other Texas c23
10 “ True You” principles are embedded into our daily interactions with each other and our clients We encourage and acknowledge each person’s unique contributions and talents as integral to our collective success W e retain our best people and attract additional top talent to join us through competitive compensation and benefit programs, as well as personal and career growth opportunities and more Our growth is attributed to our people and winning principals Great people attract more great people Source: Company documents, Glassdoor, Fortune Magazine, Multipliers : How the Best Leaders Make Everyone Smarter by Liz Wiseman and American Banker Our People Make Our Culture Drawn to a Winning Team at a Company that Leads with Integrity and Purpose. The Veritex Way . Always tell the truth. Always be transparent. Always act with integrity. 2020 - 2021 90 % Would Recommend to a Friend 98 % Approve of t he CEO We employ four active practices that together catalyze and sustain the cycle of attraction: Look for talent everywhere Find people’s native genius Utilize people at their fullest Remove the blockers
11 1 Total loans excludes $26.1 million of Loans Held for Sale, $565.6 million Mortgage Warehouse loans and $53.4 million of PPP l oa ns Catalysts for Loan Growth Loan Production vs. Loan Payoffs ($B) Revolving C&I Utilization Employer of Choice Investing In Talent Annualized Quarterly Loan Growth 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 Total Loans, exc. Mortgage Warehouse and PPP COVID - 19 Declared a Pandemic +6% + 8% - 9% + 4% + 4% +8% + 21% $ 6.8 B 1 Total Loans + 22% +9% 35% 45% 55% 65% Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov 2020 2021 Down 360 bps from peak 55+ production hires since March 2020 (44 Bankers; 12 Operations Personnel) Capitalized on disruption from local M&A to attract top talent Adding specialized talent in commercial banking, syndications, sponsors, government guaranteed lending, builder finance, community banking, mortgage, private banking, risk management, and more CRE ADC Construction LOC Current Unfunded (Non Revolving) $0.0B $0.8B $1.5B $2.3B Jan Feb Mar Apr May Jun July Aug Sept Oct Nov Dec 2021 Unfunded 2020 Unfunded $1.8B $0.4 $0.6 $0.7 $1.2 $1.1 $1.6 $1.4 $1.3 $0.3 $0.2 $0.3 $0.4 $0.3 $0.3 $0.5 $0.6 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 Total Loans, exc. PPP Loan Payoffs
12 28% 13% 3% 27% 10% 19% Diverse Revenue Streams Noninterest Income Trends 2021 Noninterest Income Composition Primarily due to increase in government (PPP) guaranteed loan income Increase primarily due to equity income from Thrive Mortgage Investment (only two months impact from North Avenue Capital) Acquisition of Green Bancorp Service Charges & Fees on Deposit Accounts Loan Fees Gain on Sale of Mortgage Loan Held for Sale Government Guaranteed Loan Income, Net Equity Method Investment Income (Thrive) Other $58M $ 7.6M $ 11.1M $ 30.1M $ 47.3M $ 58.4M 10.0% 8.8% 9.5% 15.1% 17.2% 2017 2018 2019 2020 2021 Annual Noninterest Income ($M) Noninterest Income / Total Revenue
13 Our M&A History Proven Track Record as a Strategic Acquirer Across Both Traditional Bank and Non - Bank Deals Selective use of strategic acquisitions to augment growth and build sufficient scale Focused on well - managed targets that drive shareholder value and growth in target markets: • Low - cost deposit funding • Compelling fee income generating business • Growth potential with scale • Differentiated technology • Complementary geographical presence Key metrics used when evaluating acquisitions : • EPS accretion • TBVPS earn - back • IRR We expect to maintain discipline in pricing and pursuing transactions expected to produce attractive risk adjusted returns We strive to build, maintain and support Veritex’s culture during integrations Acquisition History 49 % Investment Mortgage Operation July 2021 Established USDA Lender November 2021 Tech - enabled Sweep Deposit Administrator March 2022 1 Non - Bank M&A 1 Transaction agreement entered into on March 3 , 2022, Consummation of acquisition subject to satisfaction of customary closing conditions, including receipt of required regu lat ory approvals Traditional Bank M&A Loans: $108M Branches: 3 March 2011 Loans: $40M Branches: 1 October 2011 Loans: $753M Branches: 9 August 2017 Loans: $92M Branches: 3 September 2010 Loans: $89M Branches: 2 July 2015 Loans: $ 3,255M Branches: 21 January 2019 Commentary Loans: $313M Branches: 5 December 2017
14 $ 0.9B $ 2.2B $ 4.0B $ 5.5B $ 7.7B $ 8.4B Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 Jan-22 1 Takes into account single bank pass - through FDIC insurance coverage to underlying broker/dealer customers. Post - closing, interLINK platform to operate within Veritex Community Bank. Expect that deposits allocated by interLINK platform to Veritex Community Bank will not be treated as brokered deposits under FDIC regulations based on self - placement exception and eligibility of certain network broker/dealers for one or more designated exceptions. Deposits not allocated to Veritex Community Bank swept to unaffiliated banks in network; 2 Total addressable market per Moody’s estimations using market participants as proxy; 3 Based on $5.7B core deposit balance; Source : Company management, Moody’s : Scalable, Digital - First Deposit Gathering Platform Flexible Access to Readily Deployable Base of up to $ 5.7B of Core Deposits 1 Business Overview …Reflected in Robust Deposit Growth Compelling Value Proposition… o interLINK is a tech - enabled deposit gathering platform with approximately $ 8 billion of deposits belonging to retail accounts under administration o Serves as administrator for deposit sweep programs between 8 broker / dealers and over 50 insured depository institutions o Using purpose - built sweep technology integrated into broker / dealers, interLINK executes complex daily movements of cash for approximately 420,000 retail brokerage accounts Administrator Key Function: Extended FDIC Insurance $600,000 Large cash balance must be sent to at least 3 different banks to retain insurance with <$250,000 each The image part with relationship ID rId7 was not found in the file. The image part with relationship ID rId7 was not found in the file. The image part with relationship ID rId7 was not found in the file. $240,000 $240,000 $120,000 o Retail brokerage customer’s funds are all covered by FDIC insurance as they are spread across multiple insured depository institutions o Broker / dealers generate revenue while tailoring rate paid to end customers o Banks receive flexible liquidity with a low all - in cost of deposits The image part with relationship ID rId7 was not found in the file. ~$8B Administered Deposits 2% of TAM 2 ~5bps Operating Expenses 3 ~420k Retail Accounts 100% Historical Broker / Dealer Retention Business Overview Mar - 22
15 Historical View of interLINK’s Growing Deposit Base Compelling Value Proposition and Long - Term Contracts Support Reliable Source of Core Funding Historical Deposit Balances by Broker / Dealer ($M) Growth Key Themes #1 (Jan - 17) #2 (Nov - 17) #3 (Jan - 18) #4 (Jul - 18) #5 (Dec - 18) #6 (Aug - 19) #7 (Jan - 21) #8 (Feb - 21) $0 $2,000 $4,000 $6,000 $8,000 $10,000 Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Legend: # Broker / Dealer (Onboard Date) Jan - 22 2H2021 Deposit Trends Onset of COVID - 19 Stability Stickiness of Client Relationships Quality deposit base growing in all environments before, during, and after onset of COVID - 19 Growth to - date primarily from only 6 broker / dealers, with 2 more expected to ramp growth in 2022 Remarkable deposit stability on a daily basis benefiting from ~420,000 retail brokerage accounts interLINK provides low - cost administration and white glove service High value proposition for broker / dealer and clearing firms resulting in loyalty (deposit stickiness for Veritex ) Typical sweep administration contract of 3 - 5 years; several contracts renewed since advent of COVID - 19 pandemic
16 1 Takes into account single bank pass - through FDIC insurance coverage to underlying broker/dealer customers. Post - closing, interLINK platform to operate within Veritex Community Bank. Expect that deposits allocated by interLINK platform to Veritex Community Bank will not be treated as brokered deposits under FDIC regulations based on self - placement exception and eligibility of certain network broker/dealers for one or more designated exceptions. Deposits not allocated to Veritex Community Bank swept to unaffiliated banks in network Fortifies Funding Profile in Support of Sustainable Long - Term Growth Dramatically Enhances Veritex’s Liquidity Profile with Flexible Access to Core Deposits Total Deposits ($B) Loans - to - Deposits (%) Deposits per Branch ($M) ▪ Enhances funding flexibility: ability to utilize up to $ 5.7B deposits 1 ▪ Creates capacity to reliably fund significant multi - year loan growth ▪ Ability to diversify and optimize funding over time (ex. Mortgage Warehouse and PPP loans) $ 7.4 Current (4Q21) Illustrative 92 % Current (4Q21) Illustrative
17 interLINK Transaction Summary Positioned to Continue Peer Leading Growth with Excess Capital and Liquidity M&A Only M&A + Equity Raise 2 EPS Impact 2023E 6% Neutral 2024E 14% 8% Run - rate +20% +14% TBVPS Impact (7%) 1% TBVPS Earnback 3 Years Accretive IRR +25% +25% CET1 Ratio 8.5% 9.9% Financial Pro Forma Impact 1 StoneCastle has agreed that 50% of the Veritex shares issued as consideration will be subject to a restriction on sale and transfer by StoneCastle until the earlier of 6 months after the closing and December 1, 2022. 2 Reflects base deal size, does not adjust for 15% overallotment option . Transaction Value $91 million Pricing ~ 1 % Premium on total administered deposits Consideration 2.1 million shares of VBTX common stock (fixed) 1 $3 million cash 97 % Stock / 3% Cash Expected Balance Sheet Actions & Synergies Deposit draw of up to $ 1.5 billion by 2022YE ($5.7 billion available) $ 1.5 billion deployment of funds into incremental strategic loan portfolios and securities Forecast balance sheet growth / utilization of $1 billion each subsequent year Limited cost synergies Intangibles Estimated goodwill of $87 million inclusive of accelerated royalty payment Non - goodwill intangibles of $ 27 million amortized over 10 years using straight line methodology Equity Issuance 2 Primary common stock issuance of $150 million, launched concurrently with announcement of interLINK acquisition to support growth Approvals and Timing FDIC and Texas Department of Banking approval required for interLINK acquisition transaction Expected close in 3Q 2022 One - time Items $19 million of merger charges inclusive of $17 million from acceleration of royalty payments related to a portfolio of +60 patents supporting cash management which is captured in intangibles
18 1 PTPP stands for Pre - Tax Pre - Provision; 2 Annualized and excludes Mortgage Warehouse and PPP loans; 3 Projected 2022 - 2027 Averages Note: Financial data as of the most recent quarter ended December 31, 2021, Financial metrics are operating based; Source : S&P Global Market Intelligence Criteria for Building a High - Performing Banking Franchise Our Standard for Excellence is Thoughtful and Meticulous 20.0% $9.8B 1.97% 47.6 % 9.1% 5.3% U.S Community Banks by Assets of $5 - $ 15 Billion 77 Banks ROATCE > 18% 9 Banks PTPP ROAA 1 > 1.5% 8 Banks Efficiency Ratio < 52% 3 Banks Gross Loan HFI Growth > 5% 2 2 Banks MSA Population Growth > 5% 3 1 Bank U.S. Community Banks ROATCE PTPP ROAA 1 Efficiency Ratio Projected Population Growth Gross Loan HFI Growth Key Criteria High - Performing Bank Screen VBTX Metrics Top Performer
19 1 Forward loan growth reflects consensus estimates for 2022E; 2 Texas Bank Peers include CBTX, CFR, FFIN, HTH, IBTX, PB, SBSI, and TCBI Note: Market data as of March 2 , 2022; Source : S&P Global Market Intelligence Veritex is a Compelling Investment Standout growth story with positive momentum At scale Texas franchise operating in the best banking markets in the US Unique, tech - enabled deposit platform powering growth Investing in innovative and distinctive technology Veritex offers significant upside with an attractive valuation and industry - leading growth profile Texas Comparables Price / 2023 EPS 5% 1 13% 1 Forward Loan Growth 1 13.9 x 11.6 x Texas Bank Peers²
20 Veritex Key Investment Highlights Veteran management team with over 35 years of average banking experience A proven growth franchise delivering exceptional shareholder returns Scarcity value in attractive Texas metropolitan markets Highly profitable business model with catalysts for growth Diversification of revenue streams supports consistent earnings growth Leveraging fintech acquisitions and partnerships to complement traditional commercial bank model Strong track record of successfully integrating acquisitions and strategic partnerships Compelling growth - oriented investment with an attractive valuation
T HANK Y OU
A PPENDIX
23 How Deposits Are Sourced Total Addressable Market 1 Takes into account single bank pass - through FDIC insurance coverage to underlying broker/dealer customers. Post - closing, interLINK platform to operate within Veritex Community Bank. Expect that deposits allocated by interLINK platform to Veritex Community Bank will not be treated as brokered deposits under FDIC regulations based on self - placement exception and eligibility of certain network broker/dealers for one or more designated exceptions. Deposits not allocated to Veritex Community Bank swept to unaffiliated banks in network Note: Total addressable market per Moody’s estimations using market participants as proxy; Source: Company management, and Mo ody ’s Insured Sweep Industry at a Glance Large market with significant room to increase share and benefit from organic growth • Countercyclical industry which typically sees increased cash balances during market downturns / flight to safety Insured sweep program allows broker / dealers to offer their brokerage customers enhanced FDIC deposit insurance with potentially more attractive yields than money market funds • Broker / dealers typically pay administration fees on deposits with 3 - 5 year contractual terms • Interest rates paid by banks are typically in - line with brokered deposits and indexed to Fed Funds • After passing along interest income to brokerage accounts , broker / dealers retain excess spread The competitive landscape for insured sweep administration is concentrated across four specialized companies • interLINK is the only administrator designed to be bank - owned with business model predicated on generating low - cost funding to support spread income • Competitors are capital - light, EBIT - driven businesses focused on maximizing fee revenue / assets under administration • interLINK is differentiated as a lower cost alternative with superior white glove service and credibility as a reliable operator interLINK deposits Sweep processing deposit market >$400 Billion ~$8 Billion Market Participants 3 rd Party IDIs ~420K Retail Brokerage Accounts Broker / Dealer Clients Specialized Administrator Banks Receiving Deposits 1 2 3 4 Broker / Dealer #1 Broker / Dealer #1 Broker / Dealer #1 Cash Cash Cash $ $ $ Core Deposits 1 Brokered Deposits
24 1 Please refer to the “Reconciliation of Non - GAAP Financial Measures” at the end of this presentation for a description and recon ciliation of these non - GAAP financial measures Key Financial Highlights Diluted EPS ($) Tangible Book Value per Common Share ($) 1 ROAA (%) NPAs / Total Assets (%) Return on Average Tangible Common Equity (%) 1 Efficiency Ratio (%) 12.84% 17.17% 15.18% 17.72% 20.06% 16.44% 17.39% 15.42% 16.92% 20.48% 4Q20 1Q21 2Q21 3Q21 4Q21 ROATCE Operating ROATCE $0.46 $0.64 $0.59 $0.73 $0.82 $0.60 $0.64 $0.60 $0.70 $0.84 4Q20 1Q21 2Q21 3Q21 4Q21 Diluted EPS Diluted Operating EPS $15.70 $16.34 $17.16 $17.53 $17.49 4Q20 1Q21 2Q21 3Q21 4Q21 $87.6 $85.0 $79.9 $74.0 $50.1 0.99% 0.92% 0.85% 0.77% 0.51% 4Q20 1Q21 2Q21 3Q21 4Q21 NPAs NPAs/Total Assets 1.04% 1.44% 1.27% 1.56% 1.68% 1.35% 1.46% 1.29% 1.48% 1.72% 1.75% 1.82% 1.66% 1.85% 1.97% 4Q20 1Q21 2Q21 3Q21 4Q21 Reported Operating ROAA PTPP Operating 62.52% 49.62% 52.42% 47.55% 48.53% 49.49% 49.62% 51.63% 48.51% 47.64% 4Q20 1Q21 2Q21 3Q21 4Q21 Reported Operating ($ in millions) (43%) 1 1 1 1 1 1
25 1 Rate sensitive loans reflects loans re - pricing in the next 12 months, Total loans excludes $26.1 million of Loans Held for Sale, $565.6 million Mortgage Warehouse loans and $53.4 million of PPP loans; Note: Financial data as of December 31, 2021 Positioned to Benefit from Higher Rates Rate Sensitive Loans as a Percent of Total Loans (%) 1 Estimated Sensitivity of Net Interest Income (%) Fixed Rate 24% Floating Rate 76% VBTX Net Interest Margin Average Fed Funds Rate (3.9)% 6.6% 13.1% 20.3% 27.5% -100 bps +100 bps +200 bps +300 bps +400 bps 3.72% 3.77% 4.10% 3.97% 3.39% 3.24% 0.51% 1.10% 1.90% 2.29% 0.53% 0.25% 2016 2017 2018 2019 2020 2021 Other 24% Rate sensitive 76%
26 1 As of February 2022 Our 2021 Transactions Bolstering Our Lending Capabilities Thrive Mortgage Investment and North Avenue Capital Acquisition Highlights Thrive Mortgage, LLC North Avenue Capital, LLC Income ($ M ) and GOS (%) Total Volume ($M) Full Loan Pipeline ($M) 1 Net Income ($M) Completed 49% Investment on July 19, 2021 Company Background: 25 year - old company operating out of Georgetown, TX Originates, underwrites, and sells mortgages of all types First company in Texas to close a fully electronic note with a remote notary Markets include TX, OH, CO, KY, NC, KS, VA, FL, MD and IN Investment Summary and Strategic Rationale: Acquired 49% stake in Thrive Mortgage, LLC for $53.9 million in cash VBTX obtained one board seat Deploys excess liquidity and capital, while preserving bandwidth for other core growth opportunities Accounted for as an equity method investment Completed Acquisition on November 1, 2021 Company Background: Founded in 2015, North Avenue Capital (“NAC”) is a regulated, non - depository government guaranteed lender Originates and services loans primarily through the USDA Business & Industry (B&I) guaranteed loan program Headquartered in Ponte Vedra , FL with regional offices in GA, NV and TX Investment Summary and Strategic Rationale: Meaningful strategic expansion into the fragmented USDA lending space Has led to a diversification of Veritex’s revenue streams Enhanced profitability outlook Strong cultural fit $812M $38.8 $33.6 $28.6 $36.7 $22.8 4.98% 4.89% 3.62% 3.80% 3.60% 4Q20 1Q21 2Q21 3Q21 4Q21 $822.4 $715.5 $786.2 $797.9 $667.0 4Q20 1Q21 2Q21 3Q21 4Q21 Approved $29 Underwriting $146 Term Sheet Issued $84 Prospects $553
27 0.00% 0.05% 0.10% 0.15% 0.20% 0.25% 0.30% 0.35% 4Q20 1Q21 2Q21 3Q21 4Q21 30-59 Past Due 60-89 Past Due 90+ Past Due 1 Past due loans exclude purchased credit deteriorated loans that are accounted for on a pooled basis and non - accrual loans; 2 Total loans excludes Loans Held for Sale, Mortgage Warehouse and PPP loans Asset Quality and ACL Past Due 1 Trends % of Total Loans 2 ACL / Total Loans 2 ($M) Net Charge - Offs ($000s) Quarterly Criticized Loans (Excluding PCD Loans) ($M) Totals ($000s): $18,691 $22,637 $10,017 $16,508 $9,997 $105.1 $104.9 $99.5 $93.8 $77.8 1.80% 1.76% 1.59% 1.42% 1.15% 4Q20 1Q21 2Q21 3Q21 4Q21 ACL ACL / Total Loans $16,462 $130 $4,124 $5,652 $9,747 $45 $18 $1,269 $120 $2,921 4Q20 1Q21 2Q21 3Q21 4Q21 Acquired Originated $449.0 $418.1 $388.5 $373.4 $347.7 4Q20 1Q21 2Q21 3Q21 4Q21
28 Non - GAAP Financial Measures Disclaimer Veritex reports its results in accordance with United States generally accepted accounting principles (“GAAP”). However, management b el ieves that certain supplemental non - GAAP financial measures used in managing its business provide meaningful information to investors about underlying trends in its business. M ana gement uses these non - GAAP measures to assess Veritex’s operating performance and believes that these non - GAAP measures provide information that is important to investors and that is u seful 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 (“TBVPS”); - Tangible common equity to tangible assets; - Return on average tangible common equity (“ROATCE”); - Operating earnings; - Pre - tax , pre - provision (“PTPP”) operating earnings; - Diluted operating earnings per share (“EPS”); - Operating return on average assets (“ROAA”); - PTPP operating ROAA; - Operating ROATCE; - Operating efficiency ratio; - Operating noninterest income ; and - Operating noninterest expense.
29 Reconciliation of Non - GAAP Financial Measures (Dollars in Thousands, Except per Share Data) 31-Dec-2021 30-Sep-2021 30-Jun-2021 31-Mar-2021 31-Dec-2020 Tangible Common Equity Total Stockholders' Equity $1,315,079 $1,284,160 $1,272,907 $1,233,808 $1,203,376 Adjustments Goodwill $(403,771) $(370,840) $(370,840) $(370,840) $(370,840) Core Deposit Intangibles (47,998) (50,436) (52,873) (55,311) (57,758) Tangible Common Equity $863,310 $862,884 $849,194 $807,657 $774,778 Common Shares Outstanding 49,372 49,229 49,498 49,433 49,340 Book Value per Common Share 26.64 26.09 25.72 24.96 24.39 Tangible Book Value per Common Share 17.49 17.53 17.16 16.34 15.70 (Dollars in Thousands) 31-Dec-2021 30-Sep-2021 30-Jun-2021 31-Mar-2021 31-Dec-2020 Tangible Common Equity Total Stockholders' Equity $1,315,079 $1,284,160 $1,272,907 $1,233,808 $1,203,376 Adjustments Goodwill $(403,771) $(370,840) $(370,840) $(370,840) $(370,840) Core Deposit Intangibles (47,998) (50,436) (52,873) (55,311) (57,758) Tangible Common Equity $863,310 $862,884 $849,194 $807,657 $774,778 Tangible Assets Total Assets $9,757,249 $9,572,300 $9,349,525 $9,237,510 $8,820,871 Adjustments Goodwill $(403,771) $(370,840) $(370,840) $(370,840) $(370,840) Core Deposit Intangibles (47,998) (50,436) (52,873) (55,311) (57,758) Tangible Assets $9,305,480 $9,151,024 $8,925,812 $8,811,359 $8,392,273 Tangible Common Equity to Tangible Assets 9.28% 9.43% 9.51% 9.17% 9.23% As of As of
30 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 During the third quarter of 2021, Thrive's PPP loan with another bank was 100% forgiven by the SBA. As a result of our 49% investment in Thrive, the $1.9 million represents our portion of the PPP loan forgiveness. PPP fee income is not taxable and as such has no tax impact; 4 Annualized ratio for quarterly metrics Reconciliation of Non - GAAP Financial Measures (Dollars in thousands) 31-Dec-2021 30-Sep-2021 30-Jun-2021 31-Mar-2021 31-Dec-2020 31-Dec-2021 31-Dec-2020 Pre-Tax, Pre-Provision Operating Earnings Net Income $41,506 $36,835 $29,456 $31,787 $22,801 $139,584 $73,883 Plus: Provision for Income Taxes 10,697 9,195 7,837 8,993 4,702 36,722 14,203 Plus: (Benefit) Provision for Credit Losses and Unfunded Commitments (4,389) (448) 577 (570) 902 (4,830) 65,669 Plus: Severance Payments¹ – – 627 – – 627 – Plus: Loss (Gain) on Sale of Securities, Net – 188 – – 256 188 (2,615) Plus: Debt Extinguishment Costs² – – – – 9,746 1,912 – Less: Thrive PPP Loan Forgiveness³ – 1,912 – – – – 11,307 Plus: Merger and Acquisition Expenses 826 – – – – 826 – Net Pre-tax, Pre-provision Operating Earnings $48,640 $43,858 $38,497 $40,210 $38,407 $171,205 $162,447 Average Total Assets $9,788,671 $9,385,470 $9,321,279 $8,941,271 $8,750,141 $9,361,578 $8,525,275 Pre-tax, Pre-provision Operating Return on Average Assets ⁴ 1.97% 1.85% 1.66% 1.82% 1.75% 1.83% 1.91% Average Total Assets $9,788,671 $9,385,470 $9,321,279 $8,941,271 $8,750,141 $9,361,578 $8,525,275 Return on Average Assets⁴ 1.68% 1.56% 1.27% 1.44% 1.04% 1.49% 0.87% Operating Return on Average Assets⁴ 1.72% 1.48% 1.29% 1.46% 1.35% 1.49% 0.91% Operating Earnings Adjusted for Amortization of Core Deposit Intangibles Operating Earnings $42,410 $35,072 $29,952 $32,213 $29,730 $139,647 $77,980 Adjustments: Plus: Amortization of Core Deposit Intangibles 2,438 2,438 2,438 2,447 2,451 9,761 9,804 Less: Tax Benefit at the Statutory Rate 512 512 512 514 515 2,050 2,060 Operating Earnings Adjusted for Amortization of Core Deposit Intangibles $44,336 $36,998 $31,878 $34,146 $31,666 $147,358 $85,724 For the Quarter Ended For the Year Ended l39
31 1 Annualized ratio for quarterly metrics; 2 During the third quarter of 2021, Thrive’s PPP loan with another bank was 100% forgiven by the SBA. As a result of our 49% investment in Thrive, the $1.9 million repres en ts our portion of the PPP loan forgiveness. PPP fee income is not taxable and as such has no tax impact; 3 Severance payments relate to branch restructurings made during the three months ended June 30, 2021; 4 Debt extinguishment costs relate to prepayments penalties paid in connection with the early payoff of FHLB structured advance s Reconciliation of Non - GAAP Financial Measures (Dollars in Thousands) 31-Dec-2021 30-Sep-2021 30-Jun-2021 31-Mar-2021 31-Dec-2020 31-Dec-2021 31-Dec-2020 Average Tangible Common Equity Total Average Stockholders' Equity $1,301,676 $1,290,528 $125,431 $1,224,294 $1,196,274 $1,267,992 $1,164,973 Adjustments Average Goodwill $(393,220) $(370,840) $(370,840) $(370,840) $(370,840) $(376,480) $(370,840) Average Core Deposit Intangibles 49,596 (52,043) (54,471) (56,913) (59,010) (53,233) (62,803) Average Tangible Common Equity $858,860 $867,645 $829,060 $796,541 $766,424 $838,279 $731,330 Operating Return on Average Tangible Common Equity¹ 20.48% 16.92% 15.42% 17.39% 16.44% 17.58% 11.72% Efficiency Ratio 48.53% 47.55% 52.42% 49.62% 62.52% 49.45% 50.90% Net Interest Income $76,741 $71,276 $67,131 $65,635 $66,766 $280,783 $265,798 Noninterest Income 16,510 15,627 12,456 14,172 9,012 58,405 47,344 Plus: Loss (Gain) on Sale of Securities Available for Sale, Net – 188 – – 256 188 (2,615) Less: Thrive PPP Loan Forgiveness Income² – 1,912 – – – 1,912 – Operating Noninterest Income 16,150 13,903 12,456 14,172 9,268 56,681 49,959 Noninterset Expense 45,077 41,321 41,717 39,597 47,373 167,712 159,387 Less: Severance Payments³ – – 627 – – 627 – Less: Debt Extinguishment Costs⁴ – – – – 9,746 – 11,307 Plus: Merger and Acquistion Expenses 826 – – – – 826 – Operating Noninterest Expense $44,251 $41,321 $41,090 $39,597 $37,627 $166,259 $150,695 Operating Efficiency Ratio 47.64% 48.51% 51.63% 49.62% 49.49% 49.27% 47.69% For the Quarter Ended For the Year Ended
32 1 During the third quarter of 2021, Thrive’s PPP loan with another bank was 100% forgiven by the SBA. As a result of our 49% investment in Thrive, the $1.9 million repres en ts our portion of the PPP loan forgiveness. PPP fee income is not taxable and as such has no tax impact; 2 Severance payments relate to branch restructurings made during the three months ended June 30, 2021 Reconciliation of Non - GAAP Financial Measures (Dollars in Thousands) 31-Dec-2021 30-Sep-2021 30-Jun-2021 31-Mar-2021 31-Dec-2020 31-Dec-2021 31-Dec-2020 Operating Noninterest Income Noninterest Income $16,150 $15,627 $12,456 $14,172 $9,012 $58,405 $47,344 Plus: Loss (Gain) on Sale of Securities Available for Sale, Net – 188 – – 256 188 (2,615) Less: Thrive PPP Loan Forgiveness Income ¹ – 1,912 – – – 1,912 – Operating Noninterest Income $16,150 $13,903 $12,456 $14,172 $9,268 $56,681 $44,729 Operating Noninterest Expense Noninterest Expense $45,077 $41,321 $41,717 $39,597 $47,373 $167,712 $159,387 Less: Severance Payments² – – 627 – – 627 – Less: FHLB Prepayment Fees – – – – 9,746 – 11,307 Less: Merger and Acquisition Expenses 826 – – – – 826 – Operating Noninterest Expense $44,251 $41,321 $41,090 $39,597 $37,627 $166,259 $148,080 Adjusted Net Interest Margin Net Interest Income $76,741 $71,276 $67,131 $65,635 $66,766 Less: Loan Accretion 1,841 1,904 1,536 1,911 2,652 Less: Deposit Premium Amortization – 15 34 76 89 Adjusted Net Interest Income $74,900 $69,357 $65,561 $63,648 $64,025 Total Interest-earning Assets $9,045,186 $8,684,376 $8,659,059 $8,257,048 $8,065,652 Adjusted Net Interest Margin 3.31% 3.16% 3.03% 3.12% 3.15% For the Quarter Ended For the Year Ended