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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


			FORM			10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number: 001-36682


			VERITEX HOLDINGS, INC.
			(Exact name of registrant as specified in its charter)


Texas		27-0973566
(State or other jurisdiction of		(I.R.S. employer
incorporation or organization)		identification no.)

8214 Westchester Drive, Suite 800
Dallas,	Texas	75225
(Address of principal executive offices)		(Zip code)


			(972)			349-6200
			(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, par value $0.01

VBTX

Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 5, 2022, there were 53,976,636 outstanding shares of the registrant’s common stock, par value $0.01 per share.

VERITEX HOLDINGS, INC. AND SUBSIDIARIES



		Page
PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements – (Unaudited)	3
	Consolidated Balance Sheets as of June 3 0 , 2022 and December 31, 2021	4
	Consolidated Statements of Income for the Three and Six Months Ended June 3 0 , 2022 and 2021	5
	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30 , 2022 and 2021	6
	Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended June 3 0 , 2022 and 2021	7
	Consolidated Statements of Cash Flows for the Six Months Ended June 3 0 , 2022 and 2021	9
	Notes to Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	46
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	73
Item 4.	Controls and Procedures	75

PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	76
Item 1A.	Risk Factors	76
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	76
Item 3.	Defaults Upon Senior Securities	76
Item 4.	Mine Safety Disclosures	76
Item 5.	Other Information	76
Item 6.	Exhibits	77
SIGNATURES		78

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

VERITEX HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

as of June 30, 2022 and December 31, 2021

(Dollars in thousands, except par value and share information)


	June 30,		December 31,
	2022		2021
	(Unaudited)
ASSETS
Cash and due from banks	$	58,539	$	44,023
Interest bearing deposits in other banks	352,177		335,761
Total cash and cash equivalents	410,716		379,784
Debt securities available-for-sale (“AFS”), at fair value	1,170,004		993,058
Debt securities held-to-maturity (“HTM”) (fair value of $162,297 and $61,446, at June 30, 2022 and December 31, 2021, respectively)	184,399		59,436
Equity securities	15,590		15,393
Securities purchased under agreements to resell	98,961		102,288
Investment in unconsolidated subsidiaries	1,018		1,018
Federal Home Loan Bank of Dallas (“FHLB”) Stock and Federal Reserve Bank (“FRB”) Stock	87,116		71,892
Total investments	1,557,088		1,243,085
Loans held for sale	14,210		26,007
Loans held for investment (“LHI”), Paycheck Protection Program (“PPP”) loans, carried at fair value	7,339		53,369
LHI, mortgage warehouse (“MW”)	629,291		565,645
LHI, excluding MW and PPP	7,915,792		6,766,009
Less: Allowance for credit losses (“ACL”)	(80,576)		(77,754)
Total LHI, net	8,471,846		7,307,269
Bank-owned life insurance (“BOLI”)	84,097		83,194
Bank premises, furniture and equipment, net	108,769		109,271
Other real estate owned (“OREO”)	1,032		—
Intangible assets, net of accumulated amortization	59,011		66,017
Goodwill	404,452		403,771
Other assets	193,590		138,851
Total assets	$	11,304,811	$	9,757,249
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Noninterest-bearing deposits	$	2,947,830	$	2,510,723
Interest-bearing transaction and savings deposits	4,007,250		3,276,312
Certificates and other time deposits	1,562,626		1,576,580
Total deposits	8,517,706		7,363,615
Accounts payable and other liabilities	126,116		69,160
Advances from FHLB	1,000,000		777,562
Subordinated debentures and subordinated notes	228,272		227,764
Securities sold under agreements to repurchase	3,275		4,069
Total liabilities	9,875,369		8,442,170
Commitments and contingencies (Notes 8 and 11)
Stockholders’ equity:
Common stock, $0.01 par value; 75,000,000 shares authorized; 60,589,131 and 56,010,423 shares issued at June 30, 2022 and December 31, 2021, respectively; 53,951,037 and 49,372,329 shares outstanding at June 30, 2022 and December 31, 2021, respectively	606		560
Additional paid-in capital (“APIC”)	1,300,170		1,142,758
Retained earnings	317,664		275,273
Accumulated other comprehensive (loss) income (“AOCI”)	(21,416)		64,070
Treasury stock, 6,638,094 and 6,638,094 shares at cost at June 30, 2022 and December 31, 2021, respectively	(167,582)		(167,582)
Total stockholders’ equity	1,429,442		1,315,079
Total liabilities and stockholders’ equity	$	11,304,811	$	9,757,249

See accompanying Notes to Consolidated Financial Statements.

VERITEX HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Statements of Income (Unaudited)

For the Three and Six Months Ended June 30, 2022 and 2021

(Dollars in thousands, except per share amounts)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Interest and dividend income:
Loans, including fees	$	82,191	$	67,814	$	153,634	$	135,213
Debt securities	9,632		7,529		17,394		14,966
Deposits in financial institutions and Fed Funds sold	714		167		976		294
Equity securities and other investments	1,057		672		1,967		1,335
Total interest and dividend income	93,594		76,182		173,971		151,808
Interest expense:
Transaction and savings deposits	4,094		1,661		5,845		3,641
Certificates and other time deposits	1,465		2,423		2,845		5,484
Advances from FHLB	834		1,829		2,381		3,641
Subordinated debentures and subordinated notes	2,721		3,138		5,380		6,276
Total interest expense	9,114		9,051		16,451		19,042
Net interest income	84,480		67,131		157,520		132,766
Provision for credit losses	9,000		—		8,500		—
Provision for credit losses on unfunded commitments	—		577		493		7
Net interest income after provision for credit losses	75,480		66,554		148,527		132,759
Noninterest income:
Service charges and fees on deposit accounts	5,039		3,847		9,749		7,476
Loan fees	2,385		1,823		5,179		3,164

Gain on sale of mortgage loans held for sale	223		385		530		892
Government guaranteed loan income, net	789		3,448		5,680		9,996
Equity method investment income	966		—		1,333		—
Other	976		2,953		3,004		5,100
Total noninterest income	10,378		12,456		25,475		26,628
Noninterest expense:
Salaries and employee benefits	26,924		23,451		54,437		46,383
Occupancy and equipment	4,496		4,233		9,013		8,329
Professional and regulatory fees	2,865		3,086		6,023		6,527
Data processing and software expense	3,386		2,536		6,307		4,855
Marketing	2,306		1,841		3,493		2,750
Amortization of intangibles	2,495		2,517		4,990		5,054
Telephone and communications	352		337		737		674
Merger and acquisition (“M&A”) expense	295		—		995		—

Other	5,034		3,716		8,730		6,742
Total noninterest expense	48,153		41,717		94,725		81,314
Income before income tax expense	37,705		37,293		79,277		78,073
Income tax expense	8,079		7,837		16,181		16,830
Net income	$	29,626	$	29,456	$	63,096	$	61,243


Basic earnings per share (“EPS”)	$	0.55	$	0.60	$	1.21	$	1.24
Diluted EPS	$	0.54	$	0.59	$	1.19	$	1.22

See accompanying Notes to Consolidated Financial Statements.

VERITEX HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Unaudited)

For the Three and Six Months Ended June 30, 2022 and 2021

(Dollars in thousands)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net income	$	29,626	$	29,456	$	63,096	$	61,243
Other comprehensive income:
Net unrealized (losses) gains on debt securities AFS:
Change in net unrealized losses on debt securities AFS during the period, net	(39,374)		10,303		(88,450)		(9,134)
Amortization from transfer of debt securities from AFS to HTM	(151)		—		4,104		—

Net unrealized (losses) gains on debt securities AFS	(39,525)		10,303		(84,346)		(9,134)

Net unrealized (losses) gains on derivative instruments designated as cash flow hedges	(11,572)		8,401		(24,953)		35,672

Other comprehensive (losses) income, before tax	(51,097)		18,704		(109,299)		26,538
Income tax (benefit) expense	(10,699)		3,928		(23,813)		5,574
Other comprehensive (loss) income, net of tax	(40,398)		14,776		(85,486)		20,964
Comprehensive (loss) income	$	(10,772)	$	44,232	$	(22,390)	$	82,207

See accompanying Notes to Consolidated Financial Statements.

VERITEX HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

For the Three and Six Months Ended June 30, 2022 and 2021

(In thousands, except for shares)



Three Months Ended June 30, 2022
	Common Stock			Treasury Stock			APIC		Retained Earnings		AOCI		Total
	Shares	Amount		Shares	Amount
Balance at March 31, 2022	53,908,924	$	605	6,638,094	$	(167,582)	$	1,297,161	$	298,830	$	18,982	$	1,447,996
Restricted stock units (“RSU”) vested, net of 3,669 shares withheld to cover tax withholdings	12,885	—		—	—		(155)		—		—		(155)
Exercise of employee stock options	29,228	1		—	—		520		—		—		521

Stock based compensation		—		—	—		2,644		—				2,644

Net income	—	—		—	—		—		29,626		—		29,626
Dividends paid	—	—		—	—		—		(10,792)		—		(10,792)
Other comprehensive loss	—	—		—	—		—		—		(40,398)		(40,398)
Balance at June 30, 2022	53,951,037	$	606	6,638,094	$	(167,582)	$	1,300,170	$	317,664	$	(21,416)	$	1,429,442


Three Months Ended June 30, 2021
	Common Stock			Treasury Stock			APIC		Retained Earnings		AOCI
	Shares	Amount		Shares	Amount								Total
Balance at March 31, 2021	49,432,750	$	557	6,309,972	$	(156,147)	$	1,131,324	$	195,661	$	62,413		$	1,233,808
RSU vested, net of 2,402 shares withheld to cover tax withholdings	20,946	1		—	—		(83)		—		—			(82)
Exercise of employee stock options, net of 19,616 and 3,831 shares withheld to cover tax withholdings and exercise price, respectively	44,599	—		—	—		670		—		—			670


Stock based compensation	—	—		—	—		2,692		—		—			2,692

Net income	—	—		—	—		—		29,456		—			29,456
Dividends paid	—	—		—	—		—		(8,413)		—			(8,413)

Other comprehensive income	—	—		—	—		—		—		14,776			14,776
Balance at June 30, 2021	49,498,295	$	558	6,309,972	$	(156,147)	$	1,134,603	$	216,704	$	77,189		$	1,272,907

See accompanying Notes to Consolidated Financial Statements.

VERITEX HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

For the Three and Six Months Ended June 30, 2022 and 2021

(Dollars in thousands)


Six Months Ended June 30, 2022
	Common Stock			Treasury Stock			APIC		Retained Earnings		AOCI
	Shares	Amount		Shares	Amount								Total
Balance at December 31, 2021	49,372,329	$	560	6,638,094	$	(167,582)	$	1,142,758	$	275,273	$	64,070		$	1,315,079


RSU vested, net of 71,634 shares withheld to cover tax withholdings	200,686	2