DocumentUNITED 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): July 25, 2023
VERITEX HOLDINGS, INC.
(Exact name of Registrant as specified in its charter)
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Texas | | 001-36682 | | 27-0973566 |
(State or other jurisdiction of incorporation or organization) | | (Commission File Number) | | (I.R.S. Employer Identification Number) |
8214 Westchester Drive, Suite 800
Dallas, Texas 75225
(Address of principal executive offices)
(972) 349-6200
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class | | Trading Symbol | | Name of each exchange on which registered |
Common Stock, par value $0.01 per share | | VBTX | | Nasdaq Global Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 2.02 Results of Operations and Financial Condition
On July 25, 2023, Veritex Holdings, Inc. (the “Company”), the holding company for Veritex Community Bank, a Texas state chartered bank, issued a press release describing its results of operations for the quarter ended June 30, 2023. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
As provided in General Instruction B.2 to Form 8-K, the information furnished in this Item 2.02 (including Exhibit 99.1) of this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and such information shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 7.01 Regulation FD Disclosure
On Wednesday, July 26, 2023, at 8:30 a.m., Central Time, the Company will host an investor conference call and webcast to review its second quarter financial results. The webcast will include a slide presentation that consists of information regarding the Company’s operating and growth strategies and financial performance. The presentation materials will be posted on the Company’s website after the close of the market on Tuesday, July 25, 2023. The presentation materials are attached hereto as Exhibit 99.2 and are incorporated herein by reference.
As provided in General Instruction B.2 to Form 8-K, the information furnished in this Item 7.01 (including Exhibit 99.2) of this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, and such information shall not be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 8.01 Other Events
After the close of the market on Tuesday, July 25, 2023, the Company issued a press release announcing the declaration of a quarterly cash dividend of $0.20 per share on its outstanding common stock. The dividend will be paid on August 25, 2023 to shareholders of record as of the close of business on August 10, 2023. The press release is attached hereto as Exhibit 99.3 and is incorporated herein by reference.
Forward Looking Statement
This Current Report 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 the expected payment of Veritex Holdings, Inc.’s (“Veritex”) quarterly cash dividend; the impact of certain changes in Veritex’s accounting policies, standards and interpretations; the effects of the COVID-19 pandemic and actions taken in response thereto; a continuation of recent turmoil in the banking industry, responsive measures to mitigate and manage it and related supervisory and regulatory actions and costs 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, 2022 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 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.
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Exhibit Number | | Description |
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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.
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Veritex Holdings, Inc. | | |
| | |
By: | | /s/ C. Malcolm Holland, III |
| | C. Malcolm Holland, III |
| | Chairman and Chief Executive Officer |
Date: | | July 25, 2023 |
DocumentVERITEX HOLDINGS, INC. REPORTS SECOND QUARTER OPERATING RESULTS
Dallas, TX — July 25, 2023 —Veritex Holdings, Inc. (“Veritex”, the “Company”, “we” or “our”) (Nasdaq: VBTX), the holding company for Veritex Community Bank, today announced the results for the quarter ended June 30, 2023.
“I am incredibly pleased with our second quarter and year to date results,” said C. Malcolm Holland, III. “We increased our deposits by $200 million with only 1% in brokered, grew capital by $32 million, expanded our CET1 ratio by 44 basis points and decreased our commercial real estate exposure. We continue to see positive results in all these areas as we progress through the start of the third quarter.”
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| | Quarter to Date | | Year to Date |
Financial Highlights | | Q2 2023 | | Q1 2023 | | Q2 2023 | | Q2 2022 |
| | (Dollars in thousands, except per share data) (unaudited) |
GAAP | | | | | | | | |
Net income | | $ | 33,730 | | | $ | 38,411 | | | $ | 72,141 | | | $ | 63,096 | |
Diluted EPS | | 0.62 | | | 0.70 | | | 1.32 | | | 1.19 | |
Book value per common share | | 27.48 | | | 27.54 | | | 27.48 | | | 26.50 | |
Return on average assets2 | | 1.10 | % | | 1.28 | % | | 1.18 | % | | 1.23 | % |
Efficiency ratio | | 49.94 | | | 48.42 | | | 49.17 | | | 51.76 | |
Return on average equity2 | | 8.96 | | | 10.55 | | | 9.74 | | | 9.07 | |
Non-GAAP1 | | | | | | | | |
Operating earnings | | $ | 34,673 | | | $ | 43,274 | | | $ | 77,947 | | | $ | 63,869 | |
Diluted operating EPS | | 0.64 | | | 0.79 | | | 1.43 | | | 1.20 | |
Tangible book value per common share | | 19.41 | | | 19.43 | | | 19.41 | | | 18.20 | |
Pre-tax, pre-provision operating earnings | | 58,520 | | | 66,461 | | | 124,981 | | | 89,265 | |
Pre-tax, pre-provision operating return on average assets2 | | 1.90 | % | | 2.21 | % | | 2.05 | % | | 1.74 | % |
Pre-tax, pre-provision operating return on average loans 2 | | 2.43 | | | 2.84 | | | 2.63 | | | 2.34 | |
Operating return on average assets2 | | 1.13 | | | 1.44 | | | 1.28 | | | 1.24 | |
Operating efficiency ratio | | 48.90 | | | 45.63 | | | 47.21 | | | 51.22 | |
Return on average tangible common equity2 | | 13.35 | | | 15.81 | | | 14.55 | | | 14.17 | |
Operating return on average tangible common equity2 | | 13.70 | | | 17.72 | | | 15.66 | | | 14.34 | |
1 Refer to the section titled “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of these non-generally accepted accounting principles (“GAAP”) financial measures to their most directly comparable GAAP measures.
2 Annualized ratio.
Other Second Quarter Results
•Total deposits increased by $199.2 million, or 8.8% annualized;
•Loan to deposit ratio has decreased 3% from March 31, 2023;
•Uninsured and uncollateralized deposits decreased to 33.3% as of June 30, 2023 compared to 36.5% as of March 31, 2023;
•Common Equity Tier 1 increased 44 basis points to 9.76% driven by a decrease in risk-weighted assets;
•Acquisition, development, and construction (“ADC”) loans decreased 9.3% from March 31, 2023 and as a percentage of risk-based capital (“RBC”) decreased from 129.2% to 115.1%;
•Total ADC/CRE loans decreased 0.2% from March 31, 2023 and as a percentage of RBC decreased from 333.7% to 327.2%;
•ACL to total loans increased to 1.05%;
•Non-performing assets (“NPAs”) to total assets increased to 0.55%, or 20 bps, from March 31, 2023;
•Annualized net charge-offs to average loans outstanding were 48 bps for the second quarter of 2023 compared to 4 bps for the three months ended March 31, 2023; and
•Declared quarterly cash dividend of $0.20 per share of outstanding common stock payable on August 25, 2023.
Results of Operations for the Three Months Ended June 30, 2023
Net Interest Income
For the three months ended June 30, 2023, net interest income before provision for credit losses was $100.8 million and net interest margin was 3.51% compared to $103.4 million and 3.69%, respectively, for the three months ended March 31, 2023. The $2.6 million decrease in net interest income before provision for credit losses was primarily due to a $7.1 million increase in interest expense on certificates and other time deposits, a $5.2 million increase in advances from the Federal Home Loan Bank (“FHLB”), a $3.1 million increase in transaction and savings deposits driven by an increase in funding costs on deposits, and an $822 thousand decrease in interest income on debt securities. The decrease was partially offset by a $12.0 million increase in interest income on loans driven by an increase in loan yields and average balances and a $2.0 million increase in interest income on deposits in financial institutions and fed funds sold during the three months ended June 30, 2023. Net interest margin decreased 18 basis points compared to the three months ended March 31, 2023, primarily due to the increase in funding costs on deposits and FHLB borrowing costs during three months ended June 30, 2023, partially offset by an increase in loan yields and average balances.
Compared to the three months ended June 30, 2022, net interest income before provision for credit losses for the three months ended June 30, 2023 increased by $16.4 million, or 19.4%. The increase was primarily due to a $81.5 million increase in interest income on loans driven by an increase in average balances and loan yields and a $6.8 million increase in deposits in financial institutions and fed funds sold, partially offset by a $28.9 million increase in transaction and savings deposits, a $26.6 million increase in certificates and other time deposits and a $16.4 million increase in advances from FHLB driven by an increase in funding costs. Net interest margin increased 9 basis points to 3.51% for the three months ended June 30, 2023 from 3.42% for the three months ended June 30, 2022. The increase was primarily due to the increase in average balances and loan yields during the three months ended June 30, 2023, partially offset by an increase in funding costs.
Noninterest Income
Noninterest income for the three months ended June 30, 2023 was $13.7 million, an increase of $161 thousand, or 1.2%, compared to the three months ended March 31, 2023. The increase was primarily due to a $2.0 million increase in equity method investment income and a loss on sales of investment securities in the first quarter of 2023 of $5.3 million. The increase was partially offset by a $5.5 million decrease in government guaranteed loan income primarily driven by a decrease in USDA loans sold.
Compared to the three months ended June 30, 2022, noninterest income for the three months ended June 30, 2023 increased by $3.3 million, or 31.9%. The increase was primarily due to a $3.4 million increase in government guaranteed loan income, primarily driven by an increase in USDA loans sold through NAC and a $1.6 million increase in other noninterest income. The increase was partially offset by a $865 thousand decrease in loan fees driven by a $562 thousand decrease in syndication fees, a $481 thousand decrease in equity method investment income, and a decrease of $360 thousand in customer swap income.
Noninterest Expense
Noninterest expense was $57.2 million for the three months ended June 30, 2023, compared to $56.6 million for the three months ended March 31, 2023, an increase of $582 thousand, or 1.0%. The increase was primarily due to a $2.5 million increase in professional and regulatory fees driven by FDIC assessment fees that increased when the Company crossed $10 billion in total assets, an increase of $848 thousand in marketing expense, and a $777 thousand increase in other noninterest expense. The increase is partially offset by a $3.2 million decrease in salaries and employee benefits.
Compared to the three months ended June 30, 2022, noninterest expense for the three months ended June 30, 2023 increased by $9.0 million, or 18.8%. The increase was primarily driven by a $4.0 million increase in professional and regulatory fees driven by FDIC assessment fees that increased when the Company crossed $10 billion in total assets, a $1.7 million increase in salaries and employee benefits, a $1.7 million increase in other noninterest expenses, a $1.3 million increase in data processing and software expenses and a $331 thousand increase in occupancy and equipment expenses.
Financial Condition
Total LHI was $9.71 billion at June 30, 2023, an increase of $16.0 million, or 0.7% annualized, compared to March 31, 2023. The increase was the result of the continued execution, and success of our loan growth strategy, including our continued investment in talent.
Total deposits were $9.23 billion at June 30, 2023, an increase of $199.2 million, or 8.8% annualized, compared to March 31, 2023. The increase was primarily the result of an increase of $98.2 million in interest-bearing deposits, an increase of $32.1 million in certificates and other time deposits, an increase of $21.7 million in non-interest bearing deposits, and an increase of $47.1 million in correspondent money market account balances. As of June 30, 2023, uninsured deposits were 33.26% of total deposits compared to 38.92% as of March 31, 2023.
Credit Quality
Nonperforming assets totaled $68.3 million, or 0.55% of total assets, at June 30, 2023, compared to $44.5 million, or 0.35% of total assets, at March 31, 2023. The Company had net charge-offs of $11.5 million for the quarter.
The Company recorded a provision for credit losses of $15.0 million for the three months ended June 30, 2023, a $9.4 million provision for credit losses for the three months ended March 31, 2023 and a $9.0 million provision for credit losses for the three months ended June 30, 2022. The recorded provision for credit losses for the three months ended June 30, 2023, compared to the three months ended March 31, 2023, was primarily attributable to an increase in general reserves as a result of changes in economic factors and loan growth. The Company recorded a benefit for unfunded commitments of $1.1 million for the three months ended June 30, 2023, a $1.5 million provision for unfunded commitments for the three months ended March 31, 2023, and no provision for unfunded commitments for the three months ended June 30, 2022. The recorded benefit for unfunded commitments for the three months ended June 30, 2023, compared to the three months ended March 31, 2023, was attributable to a decrease in unfunded commitment balances partially offset by changes in economic factors. Allowance for credit loss (“ACL”) as a percentage of LHI was 1.05%, 1.02% and 0.94% at June 30, 2023, March 31, 2023 and June 30, 2022, respectively.
Dividend Information
After the close of the market on Tuesday, July 25, 2023, Veritex’s Board of Directors declared a quarterly cash dividend of $0.20 per share on its outstanding shares of common stock. The dividend will be paid on or after August 25, 2023 to stockholders of record as of the close of business on August 10, 2023.
Non-GAAP Financial Measures
Veritex’s management uses certain non-GAAP (U.S. generally accepted accounting principles) financial measures to evaluate its operating performance and provide information that is important to investors. However, non-GAAP financial measures are supplemental and should be viewed in addition to, and not as an alternative for, Veritex’s reported results prepared in accordance with GAAP. Specifically, Veritex reviews and reports tangible book value per common share, operating earnings, tangible common equity to tangible assets, return on average tangible common equity, pre-tax, pre-provision operating earnings, pre-tax, pre-provision operating return on average assets, pre-tax, pre-provision operating return on average loans, pre-tax, pre-provision operating return on average loans, diluted operating earnings per share, operating return on average assets, operating return on average tangible common equity and operating efficiency ratio. Veritex has included in this earnings release information related to these non-GAAP financial measures for the applicable periods presented. Please refer to “Reconciliation of Non-GAAP Financial Measures” after the financial highlights at the end of this earnings release for a reconciliation of these non-GAAP financial measures.
Conference Call
The Company will host an investor conference call and webcast to review the results on Wednesday, July 26, 2023, at 8:30 a.m. Central Time. Participants may pre-register for the call by visiting https://edge.media-server.com/mmc/p/xu9w726g and will receive a unique PIN, which can be used when dialing in for the call.
Participants may also register via teleconference at: https://register.vevent.com/register/BI4c4f56cfcc834a4f9ccbaba9c815983a. Once registration is completed, participants will be provided with a dial-in number containing a personalized conference code to access the call. All participants are instructed to dial-in 15 minutes prior to the start time.
A replay will be available within approximately two hours after the completion of the call, and made accessible for one week thereafter. You may access the replay via webcast through the investor relations section of Veritex’s website.
About Veritex Holdings, Inc.
Headquartered in Dallas, Texas, Veritex is a bank holding company that conducts banking activities through its wholly owned subsidiary, Veritex Community Bank, with locations throughout the Dallas-Fort Worth metroplex and in the Houston metropolitan area. Veritex Community Bank is a Texas state chartered bank regulated by the Texas Department of Banking and the Board of Governors of the Federal Reserve System. For more information, visit www.veritexbank.com.
Media and Investor Relations:
investorrelations@veritexbank.com
Forward-Looking Statements
This earnings release 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 the expected payment of Veritex Holdings, Inc.’s (“Veritex”) quarterly cash dividend; the impact of certain changes in Veritex’s accounting policies, standards and interpretations; a continuation of recent turmoil in the banking industry, responsive measures to mitigate and manage it and related supervisory and regulatory actions and costs 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, 2022 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 earnings release are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that Veritex or persons acting on Veritex’s behalf may issue.
VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(Unaudited)
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| | For the Quarter Ended | | For the Six Months Ended | | |
| | Jun 30, 2023 | | Mar 31, 2023 | | Dec 31, 2022 | | Sep 30, 2022 | | Jun 30, 2022 | | Jun 30, 2023 | | Jun 30, 2022 | | | | |
| | (Dollars and shares in thousands, except per share data) | | | | |
Per Share Data (Common Stock): | | | | | | | | | | | | | | | | | | |
Basic EPS | | $ | 0.62 | | | $ | 0.71 | | | $ | 0.74 | | | $ | 0.80 | | | $ | 0.55 | | | $ | 1.33 | | | $ | 1.21 | | | | | |
Diluted EPS | | 0.62 | | | 0.70 | | | 0.73 | | | 0.79 | | | 0.54 | | | 1.32 | | | 1.19 | | | | | |
Book value per common share | | 27.48 | | | 27.54 | | | 26.83 | | | 26.15 | | | 26.50 | | | 27.48 | | | 26.50 | | | | | |
Tangible book value per common share1 | | 19.41 | | | 19.43 | | | 18.64 | | | 17.91 | | | 18.20 | | | 19.41 | | | 18.20 | | | | | |
Dividends paid per common share outstanding2 | | 0.20 | | | 0.20 | | | 0.20 | | | 0.20 | | | 0.20 | | | 0.40 | | | 0.40 | | | | | |
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Common Stock Data: | | | | | | | | | | | | | | | | | | |
Shares outstanding at period end | | 54,261 | | | 54,229 | | | 54,030 | | | 53,988 | | | 53,951 | | | 54,261 | | | 53,951 | | | | | |
Weighted average basic shares outstanding for the period | | 54,247 | | | 54,149 | | | 54,011 | | | 53,979 | | | 53,949 | | | 54,199 | | | 52,331 | | | | | |
Weighted average diluted shares outstanding for the period | | 54,486 | | | 54,606 | | | 54,780 | | | 54,633 | | | 54,646 | | | 54,546 | | | 53,121 | | | | | |
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Summary of Credit Ratios: | | | | | | | | | | | | | | | | | | |
ACL to total LHI | | 1.05 | % | | 1.02 | % | | 0.96 | % | | 0.94 | % | | 0.94 | % | | 1.05 | % | | 0.94 | % | | | | |
NPAs to total assets | | 0.55 | | | 0.35 | | | 0.36 | | | 0.26 | | | 0.40 | | | 0.55 | | | 0.40 | | | | | |
NPAs, excluding nonaccrual purchase credit deteriorated (“PCD”) loans, to total assets3 | | 0.44 | | | 0.25 | | | 0.25 | | | 0.26 | | | 0.40 | | | 0.44 | | | 0.40 | | | | | |
Net charge-offs to average loans outstanding4 | | 0.48 | | | 0.04 | | | 0.24 | | | 0.12 | | | 0.04 | | | 0.26 | | | 0.14 | | | | | |
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Summary Performance Ratios: | | | | | | | | | | | | | | | | | | |
Return on average assets4 | | 1.10 | % | | 1.28 | % | | 1.35 | % | | 1.50 | % | | 1.11 | % | | 1.18 | % | | 1.23 | % | | | | |
Return on average equity4 | | 8.96 | | | 10.55 | | | 11.03 | | | 11.82 | | | 8.21 | | | 9.74 | | | 9.07 | | | | | |
Return on average tangible common equity1, 4 | | 13.35 | | | 15.81 | | | 16.75 | | | 17.82 | | | 12.68 | | | 14.55 | | | 14.17 | | | | | |
Efficiency ratio | | 49.94 | | | 48.42 | | | 47.63 | | | 44.71 | | | 50.76 | | | 49.17 | | | 51.76 | | | | | |
Net interest margin | | 3.51 | | | 3.69 | | | 3.87 | | | 3.77 | | | 3.42 | | | 3.60 | | | 3.32 | | | | | |
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Selected Performance Metrics - Operating: | | | | | | | | | | | | | | | | | | |
Diluted operating EPS1 | | $ | 0.64 | | | $ | 0.79 | | | $ | 0.74 | | | $ | 0.80 | | | $ | 0.55 | | | $ | 1.43 | | | $ | 1.20 | | | | | |
Pre-tax, pre-provision operating return on average assets1, 4 | | 1.90 | % | | 2.21 | % | | 2.15 | % | | 2.20 | % | | 1.76 | % | | 2.05 | % | | 1.74 | % | | | | |
Pre-tax, pre-provision operating return on average loans1, 4 | | 2.43 | | | 2.84 | | | 2.78 | | | 2.88 | | | 2.35 | | | 2.63 | | | 2.34 | | | | | |
Operating return on average assets1,4 | | 1.13 | | | 1.44 | | | 1.36 | | | 1.51 | | | 1.12 | | | 1.28 | | | 1.24 | | | | | |
Operating return on average tangible common equity1,4 | | 13.70 | | | 17.72 | | | 16.95 | | | 17.94 | | | 12.77 | | | 15.66 | | | 14.34 | | | | | |
Operating efficiency ratio1 | | 48.90 | | | 45.63 | | | 47.11 | | | 44.37 | | | 50.45 | | | 47.21 | | | 51.22 | | | | | |
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Veritex Holdings, Inc. Capital Ratios: | | | | | | | | | | | | | | | | | | |
Average stockholders' equity to average total assets | | 12.23 | % | | 12.09 | % | | 12.20 | % | | 12.69 | % | | 13.51 | % | | 12.16 | % | | 13.54 | % | | | | |
Tangible common equity to tangible assets1 | | 8.76 | | | 8.66 | | | 8.60 | | | 8.58 | | | 9.04 | | | 8.76 | | | 9.04 | | | | | |
Tier 1 capital to average assets (leverage) | | 9.80 | | | 9.67 | | | 9.82 | | | 9.79 | | | 10.14 | | | 9.80 | | | 10.14 | | | | | |
Common equity tier 1 capital | | 9.76 | | | 9.32 | | | 9.09 | | | 9.09 | | | 9.25 | | | 9.76 | | | 9.25 | | | | | |
Tier 1 capital to risk-weighted assets | | 10.01 | | | 9.56 | | | 9.34 | | | 9.35 | | | 9.52 | | | 10.01 | | | 9.52 | | | | | |
Total capital to risk-weighted assets | | 12.51 | | | 11.99 | | | 11.63 | | | 11.68 | | | 11.95 | | | 12.51 | | | 11.95 | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
1Refer to the section titled “Reconciliation of Non-GAAP Financial Measures” after the financial highlights for a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures.
2Dividend amount represents dividend paid per common share subsequent to each respective quarter end.
3Nonaccrual PCD loans consist of PCD loans that transitioned upon adoption of ASC 326 Financial Instruments - Credit Losses and were accounted for on a pooled basis that have subsequently been placed on nonaccrual status.
4Annualized ratio for quarterly metrics.
VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(In thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Jun 30, 2023 | | Mar 31, 2023 | | Dec 31, 2022 | | Sep 30, 2022 | | Jun 30, 2022 |
| | (unaudited) | | (unaudited) | | | | (unaudited) | | (unaudited) |
ASSETS | | | | | | | | | | |
Cash and cash equivalents | | $ | 663,921 | | | $ | 808,395 | | | $ | 436,077 | | | $ | 433,897 | | | $ | 410,716 | |
Debt securities, net | | 1,144,020 | | 1,150,959 | | 1,282,460 | | 1,303,004 | | 1,354,403 |
Other investments | | 138,894 | | | 137,621 | | | 122,450 | | | 115,551 | | | 202,685 | |
| | | | | | | | | | |
Loans held for sale | | 29,876 | | | 42,816 | | | 20,641 | | | 17,644 | | | 14,210 | |
| | | | | | | | | | |
LHI, MW | | 436,255 | | | 437,501 | | | 446,227 | | | 523,805 | | | 629,291 | |
LHI, excluding MW | | 9,257,183 | | | 9,237,159 | | | 9,036,424 | | | 8,513,254 | | | 7,923,131 | |
Total loans | | 9,723,314 | | | 9,717,476 | | | 9,503,292 | | | 9,054,703 | | | 8,566,632 | |
ACL, loans | | (102,150) | | | (98,694) | | | (91,052) | | | (85,037) | | | (80,576) | |
Bank-owned life insurance | | 84,375 | | | 84,962 | | | 84,496 | | | 84,030 | | | 84,097 | |
Bank premises, furniture and equipment, net | | 105,986 | | | 107,540 | | | 108,824 | | | 108,720 | | | 108,769 | |
Other real estate owned (“OREO”) | | — | | | — | | | — | | | — | | | 1,032 | |
Intangible assets, net of accumulated amortization | | 48,293 | | | 51,086 | | | 53,213 | | | 56,238 | | | 59,011 | |
Goodwill | | 404,452 | | | 404,452 | | | 404,452 | | | 404,452 | | | 404,452 | |
Other assets | | 259,263 | | | 245,690 | | | 250,149 | | | 238,896 | | | 193,590 | |
Total assets | | $ | 12,470,368 | | | $ | 12,609,487 | | | $ | 12,154,361 | | | $ | 11,714,454 | | | $ | 11,304,811 | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | | |
Deposits: | | | | | | | | | | |
Noninterest-bearing deposits | | $ | 2,234,109 | | | $ | 2,212,389 | | | $ | 2,640,617 | | | $ | 2,811,412 | | | $ | 2,947,830 | |
Interest-bearing transaction and savings deposits | | 3,590,253 | | | 3,492,011 | | | 3,514,729 | | | 3,437,898 | | | 3,233,803 | |
Certificates and other time deposits | | 2,928,949 | | | 2,896,870 | | | 2,086,642 | | | 1,667,364 | | | 1,562,626 | |
Correspondent money market deposits | | 480,598 | | | 433,468 | | | 881,246 | | | 831,770 | | | 773,447 | |
Total deposits | | 9,233,909 | | | 9,034,738 | | | 9,123,234 | | | 8,748,444 | | | 8,517,706 | |
Accounts payable and other liabilities | | 190,900 | | | 171,985 | | | 177,579 | | | 173,198 | | | 126,116 | |
Advances from FHLB | | 1,325,000 | | | 1,680,000 | | | 1,175,000 | | | 1,150,000 | | | 1,000,000 | |
Subordinated debentures and subordinated notes | | 229,279 | | | 229,027 | | | 228,775 | | | 228,524 | | | 228,272 | |
Securities sold under agreements to repurchase | | — | | | — | | | — | | | 2,389 | | | 3,275 | |
Total liabilities | | 10,979,088 | | | 11,115,750 | | | 10,704,588 | | | 10,302,555 | | | 9,875,369 | |
Commitments and contingencies | | | | | | | | | | |
Stockholders’ equity: | | | | | | | | | | |
Common stock | | 609 | | | 609 | | | 607 | | | 606 | | | 606 | |
Additional paid-in capital | | 1,311,687 | | | 1,308,345 | | | 1,306,852 | | | 1,303,171 | | | 1,300,170 | |
Retained earnings | | 429,753 | | | 406,873 | | | 379,299 | | | 350,195 | | | 317,664 | |
| | | | | | | | | | |
Accumulated other comprehensive loss | | (83,187) | | | (54,508) | | | (69,403) | | | (74,491) | | | (21,416) | |
Treasury stock | | (167,582) | | | (167,582) | | | (167,582) | | | (167,582) | | | (167,582) | |
Total stockholders’ equity | | 1,491,280 | | | 1,493,737 | | | 1,449,773 | | | 1,411,899 | | | 1,429,442 | |
Total liabilities and stockholders’ equity | | $ | 12,470,368 | | | $ | 12,609,487 | | | $ | 12,154,361 | | | $ | 11,714,454 | | | $ | 11,304,811 | |
VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(In thousands, except per share data) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarter Ended | | For the Six Months Ended | | |
| | Jun 30, 2023 | | Mar 31, 2023 | | Dec 31, 2022 | | Sep 30, 2022 | | Jun 30, 2022 | | Jun 30, 2023 | | Jun 30, 2022 | | | | |
| | (unaudited) | | (unaudited) | | (unaudited) | | (unaudited) | | (unaudited) | | (unaudited) | | (unaudited) | | | | |
Interest income: | | | | | | | | | | | | | | | | | | |
Loans, including fees | | $ | 163,727 | | | $ | 151,707 | | | $ | 136,846 | | | $ | 109,199 | | | $ | 82,191 | | | $ | 315,434 | | | $ | 153,634 | | | | | |
Debt securities | | 10,166 | | | 10,988 | | | 10,880 | | | 10,462 | | | 9,632 | | | 21,154 | | | 17,394 | | | | | |
Deposits in financial institutions and Fed Funds sold | | 7,507 | | | 5,534 | | | 3,401 | | | 1,898 | | | 714 | | | 13,041 | | | 976 | | | | | |
Equity securities and other investments | | 1,118 | | | 1,408 | | | 1,087 | | | 1,666 | | | 1,057 | | | 2,526 | | | 1,967 | | | | | |
Total interest income | | 182,518 | | | 169,637 | | | 152,214 | | | 123,225 | | | 93,594 | | | 352,155 | | | 173,971 | | | | | |
Interest expense: | | | | | | | | | | | | | | | | | | |
Transaction and savings deposits | | 32,957 | | | 29,857 | | | 24,043 | | | 12,897 | | | 4,094 | | | 62,814 | | | 5,845 | | | | | |
Certificates and other time deposits | | 28,100 | | | 20,967 | | | 8,543 | | | 3,919 | | | 1,465 | | | 49,067 | | | 2,845 | | | | | |
Advances from FHLB | | 17,562 | | | 12,358 | | | 10,577 | | | 2,543 | | | 834 | | | 29,920 | | | 2,381 | | | | | |
Subordinated debentures and subordinated notes | | 3,068 | | | 3,066 | | | 2,954 | | | 2,826 | | | 2,721 | | | 6,134 | | | 5,380 | | | | | |
Total interest expense | | 81,687 | | | 66,248 | | | 46,117 | | | 22,185 | | | 9,114 | | | 147,935 | | | 16,451 | | | | | |
Net interest income | | 100,831 | | | 103,389 | | | 106,097 | | | 101,040 | | | 84,480 | | | 204,220 | | | 157,520 | | | | | |
Provision for credit losses1 | | 15,000 | | | 9,385 | | | 11,800 | | | 6,650 | | | 9,000 | | | 24,385 | | | 8,500 | | | | | |
(Benefit) provision for unfunded commitments | | (1,129) | | | 1,497 | | | (523) | | | 850 | | | — | | | 368 | | | 493 | | | | | |
Net interest income after provisions | | 86,960 | | | 92,507 | | | 94,820 | | | 93,540 | | | 75,480 | | | 179,467 | | | 148,527 | | | | | |
Noninterest income: | | | | | | | | | | | | | | | | | | |
Service charges and fees on deposit accounts | | 5,272 | | | 5,017 | | | 5,173 | | | 5,217 | | | 5,039 | | | 10,289 | | | 9,749 | | | | | |
Loan fees | | 1,520 | | | 2,064 | | | 2,477 | | | 2,786 | | | 2,385 | | | 3,584 | | | 5,179 | | | | | |
Loss on sales of investment securities | | — | | | (5,321) | | | — | | | — | | | — | | | (5,321) | | | — | | | | | |
Gain on sales of mortgage loans held for sale | | 40 | | | 6 | | | 4 | | | 16 | | | 223 | | | 46 | | | 530 | | | | | |
Government guaranteed loan income, net | | 4,144 | | | 9,688 | | | 7,808 | | | 572 | | | 789 | | | 13,832 | | | 5,680 | | | | | |
Equity method investment income (loss) | | 485 | | | (1,521) | | | (5,416) | | | (1,058) | | | 966 | | | (1,036) | | | 1,333 | | | | | |
Customer swap income | | 961 | | | 217 | | | 2,273 | | | 3,358 | | | 1,321 | | | 1,178 | | | 2,267 | | | | | |
Other income (loss) | | 1,270 | | | 3,381 | | | 2,007 | | | 2,130 | | | (345) | | | 4,651 | | | 737 | | | | | |
Total noninterest income | | 13,692 | | | 13,531 | | | 14,326 | | | 13,021 | | | 10,378 | | | 27,223 | | | 25,475 | | | | | |
Noninterest expense: | | | | | | | | | | | | | | | | | | |
Salaries and employee benefits | | 28,650 | | | 31,865 | | | 33,690 | | | 29,714 | | | 26,924 | | | 60,515 | | | 54,437 | | | | | |
Occupancy and equipment | | 4,827 | | | 4,973 | | | 5,116 | | | 4,615 | | | 4,496 | | | 9,800 | | | 9,013 | | | | | |
Professional and regulatory fees | | 6,868 | | | 4,389 | | | 4,401 | | | 3,718 | | | 2,865 | | | 11,257 | | | 6,023 | | | | | |
Data processing and software expense | | 4,709 | | | 4,720 | | | 4,197 | | | 3,509 | | | 3,386 | | | 9,429 | | | 6,307 | | | | | |
Marketing | | 2,627 | | | 1,779 | | | 1,841 | | | 1,845 | | | 2,306 | | | 4,406 | | | 3,493 | | | | | |
Amortization of intangibles | | 2,468 | | | 2,495 | | | 2,495 | | | 2,494 | | | 2,495 | | | 4,963 | | | 4,990 | | | | | |
Telephone and communications | | 355 | | | 478 | | | 358 | | | 389 | | | 352 | | | 833 | | | 737 | | | | | |
Merger and acquisition (“M&A”) expense | | — | | | — | | | — | | | 384 | | | 295 | | | — | | | 995 | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
Other | | 6,693 | | | 5,916 | | | 5,261 | | | 4,323 | | | 5,034 | | | 12,609 | | | 8,730 | | | | | |
Total noninterest expense | | 57,197 | | | 56,615 | | | 57,359 | | | 50,991 | | | 48,153 | | | 113,812 | | | 94,725 | | | | | |
Income before income tax expense | | 43,455 | | | 49,423 | | | 51,787 | | | 55,570 | | | 37,705 | | | 92,878 | | | 79,277 | | | | | |
Income tax expense | | 9,725 | | | 11,012 | | | 11,890 | | | 12,248 | | | 8,079 | | | 20,737 | | | 16,181 | | | | | |
Net income | | $ | 33,730 | | | $ | 38,411 | | | $ | 39,897 | | | $ | 43,322 | | | $ | 29,626 | | | $ | 72,141 | | | $ | 63,096 | | | | | |
| | | | | | | | | | | | | | | | | | |
Net income available to common stockholders | | $ | 33,730 | | | $ | 38,411 | | | $ | 39,897 | | | $ | 43,322 | | | $ | 29,626 | | | $ | 72,141 | | | $ | 63,096 | | | | | |
| | | | | | | | | | | | | | | | | | |
Basic EPS | | $ | 0.62 | | | $ | 0.71 | | | $ | 0.74 | | | $ | 0.80 | | | $ | 0.55 | | | $ | 1.33 | | | $ | 1.21 | | | | | |
Diluted EPS | | $ | 0.62 | | | $ | 0.70 | | | $ | 0.73 | | | $ | 0.79 | | | $ | 0.54 | | | $ | 1.32 | | | $ | 1.19 | | | | | |
Weighted average basic shares outstanding | | 54,247 | | | 54,149 | | | 54,011 | | | 53,979 | | | 53,949 | | | 54,199 | | | 52,331 | | | | | |
Weighted average diluted shares outstanding | | 54,486 | | | 54,606 | | | 54,780 | | | 54,633 | | | 54,646 | | | 54,546 | | | 53,121 | | | | | |
1 Includes provision for credit losses on loans of $23.5 million and available for sale (“AFS”) securities of $885 thousand for the six months ended June 30, 2023.
VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarter Ended |
| | June 30, 2023 | | March 31, 2023 | | June 30, 2022 |
| | Average Outstanding Balance | | Interest Earned/ Interest Paid | | Average Yield/ Rate | | Average Outstanding Balance | | Interest Earned/ Interest Paid | | Average Yield/ Rate | | Average Outstanding Balance | | Interest Earned/ Interest Paid | | Average Yield/ Rate |
| | (In thousands, except percentages) |
Assets | | | | | | | | | | | | | | | | | | |
Interest-earning assets: | | | | | | | | | | | | | | | | | | |
Loans1 | | $ | 9,285,550 | | | $ | 158,685 | | | 6.85 | % | | $ | 9,141,137 | | | $ | 146,801 | | | 6.51 | % | | $ | 7,558,966 | | | $ | 78,262 | | | 4.15 | % |
LHI, MW | | 371,763 | | | 5,042 | | | 5.44 | | | 360,172 | | | 4,906 | | | 5.52 | | | 479,187 | | | 3,929 | | | 3.29 | |
| | | | | | | | | | | | | | | | | | |
Debt securities | | 1,133,845 | | | 10,166 | | | 3.60 | | | 1,252,457 | | | 10,988 | | | 3.56 | | | 1,318,502 | | | 9,632 | | | 2.93 | |
Interest-bearing deposits in other banks | | 583,818 | | | 7,507 | | | 5.16 | | | 478,345 | | | 5,534 | | | 4.69 | | | 369,847 | | | 714 | | | 0.77 | |
Equity securities and other investments | | 137,868 | | | 1,118 | | | 3.25 | | | 124,985 | | | 1,408 | | | 4.57 | | | 167,327 | | | 1,057 | | | 2.53 | |
Total interest-earning assets | | 11,512,844 | | | 182,518 | | | 6.36 | | | 11,357,096 | | | 169,637 | | | 6.06 | | | 9,893,829 | | | 93,594 | | | 3.79 | |
ACL, loans | | (102,559) | | | | | | | (92,664) | | | | | | | (74,268) | | | | | |
Noninterest-earning assets | | 939,938 | | | | | | | 949,881 | | | | | | | 892,102 | | | | | |
Total assets | | $ | 12,350,223 | | | | | | | $ | 12,214,313 | | | | | | | $ | 10,711,663 | | | | | |
| | | | | | | | | | | | | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | | | | | | | | | | | | | |
Interest-bearing liabilities: | | | | | | | | | | | | | | | | | | |
Interest-bearing demand and savings deposits | | $ | 3,919,745 | | | $ | 32,957 | | | 3.37 | % | | $ | 4,150,995 | | | $ | 29,857 | | | 2.92 | % | | $ | 3,770,098 | | | $ | 4,094 | | | 0.44 | % |
Certificates and other time deposits | | 2,873,548 | | | 28,100 | | | 3.92 | | | 2,588,728 | | | 20,967 | | | 3.28 | | | 1,459,690 | | | 1,465 | | | 0.40 | |
Advances from FHLB and Other | | 1,472,912 | | | 17,562 | | | 4.78 | | | 1,122,683 | | | 12,358 | | | 4.46 | | | 828,769 | | | 834 | | | 0.40 | |
Subordinated debentures and subordinated notes | | 229,151 | | | 3,068 | | | 5.37 | | | 231,251 | | | 3,066 | | | 5.38 | | | 232,043 | | | 2,721 | | | 4.70 | |
Total interest-bearing liabilities | | 8,495,356 | | | 81,687 | | | 3.86 | | | 8,093,657 | | | 66,248 | | | 3.32 | | | 6,290,600 | | | 9,114 | | | 0.58 | |
| | | | | | | | | | | | | | | | | | |
Noninterest-bearing liabilities: | | | | | | | | | | | | | | | | | | |
Noninterest-bearing deposits | | 2,175,002 | | | | | | | 2,470,700 | | | | | | | 2,870,692 | | | | | |
Other liabilities | | 169,240 | | | | | | | 173,380 | | | | | | | 102,994 | | | | | |
Total liabilities | | 10,839,598 | | | | | | | 10,737,737 | | | | | | | 9,264,286 | | | | | |
Stockholders’ equity | | 1,510,625 | | | | | | | 1,476,576 | | | | | | | 1,447,377 | | | | | |
Total liabilities and stockholders’ equity | | $ | 12,350,223 | | | | | | | $ | 12,214,313 | | | | | | | $ | 10,711,663 | | | | | |
| | | | | | | | | | | | | | | | | | |
Net interest rate spread2 | | | | | | 2.50 | % | | | | | | 2.74 | % | | | | | | 3.21 | % |
Net interest income and margin3 | | | | $ | 100,831 | | | 3.51 | % | | | | $ | 103,389 | | | 3.69 | % | | | | $ | 84,480 | | | 3.42 | % |
1 Includes average outstanding balances of loans held for sale of $23,374, $19,679 and $12,112 for the quarters ended June 30, 2023, March 31, 2023, and June 30, 2022, respectively, and average balances of LHI, excluding MW.
2 Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
3 Net interest margin is equal to net interest income divided by average interest-earning assets.
VERITEX HOLDINGS, INC. AND SUBSIDIARY
Financial Highlights
(In thousands except percentages)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Six Months Ended | |
| | June 30, 2023 | | June 30, 2022 | |
| | Average Outstanding Balance | | Interest Earned/ Interest Paid | | Average Yield/ Rate | | Average Outstanding Balance | | Interest Earned/ Interest Paid | | Average Yield/ Rate | |
Assets | | | | | | | | | | | | | |
Interest-earning assets: | | | | | | | | | | | | | |
Loans1 | | $ | 9,213,742 | | | $ | 305,486 | | | 6.69 | % | | $ | 7,233,431 | | | $ | 146,636 | | | 4.09 | % | |
LHI, WH | | 366,000 | | 9,948 | | 5.48 | | | 450,592 | | 6,998 | | 3.13 | | |
| | | | | | | | | | | | | |
Debt securities | | 1,192,823 | | 21,154 | | 3.58 | | | 1,230,159 | | 17,394 | | 2.85 | | |
Interest-bearing deposits in other banks | | 531,373 | | 13,041 | | 4.95 | | | 461,844 | | 976 | | 0.43 | | |
Equity securities and other investments | | 131,462 | | 2,526 | | 3.87 | | | 178,602 | | 1,967 | | 2.22 | | |
Total interest-earning assets | | 11,435,400 | | 352,155 | | 6.21 | | | 9,554,628 | | 173,971 | | 3.67 | | |
ACL | | (97,639) | | | | | | (76,046) | | | | | |
Noninterest-earning assets | | 944,883 | | | | | | 878,679 | | | | | |
Total assets | | $ | 12,282,644 | | | | | | | $ | 10,357,261 | | | | | | |
| | | | | | | | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | | | | | | | | |
Interest-bearing liabilities: | | | | | | | | | | | | | |
Interest-bearing demand and savings deposits | | $ | 4,033,975 | | | $ | 62,814 | | | 3.14 | % | | $ | 3,621,697 | | | $ | 5,845 | | | 0.33 | % | |
Certificates and other time deposits | | 2,731,925 | | 49,067 | | | 3.62 | | | 1,480,654 | | 2,845 | | 0.39 | | |
Advances from FHLB and Other | | 1,298,765 | | 29,920 | | | 4.65 | | | 803,295 | | 2,381 | | 0.60 | | |
Subordinated debentures and subordinated notes | | 230,195 | | 6,134 | | | 5.37 | | | 231,959 | | 5,380 | | 4.68 | | |
Total interest-bearing liabilities | | 8,294,860 | | 147,935 | | 3.60 | | | 6,137,605 | | 16,451 | | 0.54 | | |
| | | | | | | | | | | | | |
Noninterest-bearing liabilities: | | | | | | | | | | | | | |
Noninterest-bearing deposits | | 2,322,790 | | | | | | 2,731,869 | | | | | |
Other liabilities | | 171,299 | | | | | | 85,126 | | | | | |
Total liabilities | | 10,788,949 | | | | | | 8,954,600 | | | | | |
Stockholders’ equity | | 1,493,695 | | | | | | 1,402,661 | | | | | |
Total liabilities and stockholders’ equity | | $ | 12,282,644 | | | | | | | $ | 10,357,261 | | | | | | |
| | | | | | | | | | | | | |
Net interest rate spread2 | | | | | | 2.61 | % | | | | | | 3.13 | % | |
Net interest income and margin3 | | | | $ | 204,220 | | | 3.60 | % | | | | $ | 157,520 | | | 3.32 | % | |
1 Includes average outstanding balances of loans held for sale of $21,537 and $12,440 for the six months ended June 30, 2023 and 2022, respectively, and average balances of LHI, excluding MW.
2 Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
3 Net interest margin is equal to net interest income divided by average interest-earning assets.
VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(Unaudited)
Yield Trend | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarter Ended |
| | Jun 30, 2023 | | Mar 31, 2023 | | Dec 31, 2022 | | Sep 30, 2022 | | Jun 30, 2022 |
Average yield on interest-earning assets: | | | | | | | | | | |
Loans1 | | 6.85 | % | | 6.51 | % | | 5.98 | % | | 5.01 | % | | 4.15 | % |
LHI, MW | | 5.44 | | | 5.52 | | | 5.20 | | | 4.11 | | | 3.29 | |
| | | | | | | | | | |
Debt securities | | 3.60 | | | 3.56 | | | 3.36 | | | 3.05 | | | 2.93 | |
Interest-bearing deposits in other banks | | 5.16 | | | 4.69 | | | 3.81 | | | 2.17 | | | 0.77 | |
Equity securities and other investments | | 3.25 | | | 4.57 | | | 3.62 | | | 3.25 | | | 2.53 | |
Total interest-earning assets | | 6.36 | % | | 6.06 | % | | 5.55 | % | | 4.59 | % | | 3.79 | % |
| | | | | | | | | | |
Average rate on interest-bearing liabilities: | | | | | | | | | | |
Interest-bearing demand and savings deposits | | 3.37 | % | | 2.92 | % | | 2.21 | % | | 1.23 | % | | 0.44 | % |
Certificates and other time deposits | | 3.92 | | | 3.28 | | | 1.90 | | | 0.94 | | | 0.40 | |
Advances from FHLB | | 4.78 | | | 4.46 | | | 3.91 | | | 1.12 | | | 0.40 | |
Subordinated debentures and subordinated notes | | 5.37 | | | 5.38 | | | 5.12 | | | 4.85 | | | 4.70 | |
Total interest-bearing liabilities | | 3.86 | % | | 3.32 | % | | 2.47 | % | | 1.27 | % | | 0.58 | % |
| | | | | | | | | | |
Net interest rate spread2 | | 2.50 | % | | 2.74 | % | | 3.08 | % | | 3.32 | % | | 3.21 | % |
Net interest margin3 | | 3.51 | % | | 3.69 | % | | 3.87 | % | | 3.77 | % | | 3.42 | % |
1Includes average outstanding balances of loans held for sale of $23,374, $19,679, $15,296, $14,023 and $12,112 for the three months ended June 30, 2023, March 31, 2023, December 31, 2022, September 30, 2022 and June 30, 2022, respectively, and average balances of LHI, excluding MW.
2 Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
3 Net interest margin is equal to net interest income divided by average interest-earning assets.
Supplemental Yield Trend | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarter Ended |
| | Jun 30, 2023 | | Mar 31, 2023 | | Dec 31, 2022 | | Sep 30, 2022 | | Jun 30, 2022 |
Average cost of interest-bearing deposits | | 3.61 | % | | 3.06 | % | | 2.12 | % | | 1.15 | % | | 0.43 | % |
Average costs of total deposits, including noninterest-bearing | | 2.73 | | | 2.24 | | | 1.46 | | | 0.76 | | | 0.28 | |
VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(Unaudited)
LHI and Deposit Portfolio Composition | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Jun 30, 2023 | | Mar 31, 2023 | | Dec 31, 2022 | | Sep 30, 2022 | | Jun 30, 2022 |
| | (In thousands, except percentages) |
LHI1 | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Commercial and Industrial (“C&I”) | | $ | 2,850,084 | | 30.7 | % | | $ | 2,895,957 | | 31.3 | % | | $ | 2,942,348 | | 32.4 | % | | $ | 2,743,769 | | 32.2 | % | | $ | 2,457,742 | | 31.0 | % |
| | | | | | | | | | | | | | | | | | | | |
Real Estate: | | | | | | | | | | | | | | | | | | | | |
Owner occupied commercial (“OOCRE”) | | 671,602 | | 7.2 | | | 631,563 | | 6.8 | | | 715,829 | | 7.9 | | | 677,705 | | 7.9 | | | 646,723 | | 8.1 | |
Non-owner occupied commercial (“NOOCRE”) | | 2,509,731 | | 27.1 | | | 2,505,344 | | 27.1 | | | 2,341,379 | | 25.9 | | | 2,273,305 | | 26.6 | | | 2,203,970 | | 27.8 | |
Construction and land | | 1,659,700 | | 17.9 | | | 1,831,349 | | 19.8 | | | 1,787,400 | | 19.7 | | | 1,673,997 | | 19.6 | | | 1,532,997 | | 19.3 | |
Farmland | | 51,663 | | 0.6 | | | 51,680 | | 0.6 | | | 43,500 | | 0.5 | | | 43,569 | | 0.5 | | | 47,319 | | 0.6 | |
1-4 family residential | | 923,442 | | 10.0 | | | 896,252 | | 9.7 | | | 894,456 | | 9.9 | | | 858,693 | | 10.1 | | | 765,260 | | 9.6 | |
Multi-family residential | | 592,473 | | 6.4 | | | 432,209 | | 4.6 | | | 322,679 | | 3.6 | | | 252,244 | | 3.0 | | | 276,632 | | 3.5 | |
Consumer | | 11,189 | | 0.1 | | | 8,316 | | 0.1 | | | 7,806 | | 0.1 | | | 7,465 | | 0.1 | | | 7,520 | | 0.1 | |
Total LHI | | $ | 9,269,884 | | 100 | % | | $ | 9,252,670 | | 100 | % | | $ | 9,055,397 | | 100 | % | | $ | 8,530,747 | | 100 | % | | $ | 7,938,163 | | 100 | % |
| | | | | | | | | | | | | | | | | | | | |
MW | | 436,255 | | | | 437,501 | | | | 446,227 | | | | 523,805 | | | | 629,291 | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Total LHI1 | | $ | 9,706,139 | | | | $ | 9,690,171 | | | | $ | 9,501,624 | | | | $ | 9,054,552 | | | | $ | 8,567,454 | | |
| | | | | | | | | | | | | | | | | | | | |
Deposits | | | | | | | | | | | | | | | | | | | | |
Noninterest-bearing | | $ | 2,234,109 | | 24.2 | % | | $ | 2,212,389 | | 24.5 | % | | $ | 2,640,617 | | 28.9 | % | | $ | 2,811,412 | | 32.1 | % | | $ | 2,947,830 | | 34.6 | % |
Interest-bearing transaction | | 676,653 | | 7.3 | | | 866,609 | | 9.6 | | | 622,814 | | 6.8 | | | 603,729 | | 6.9 | | | 660,557 | | 7.8 | |
Money market | | 2,816,769 | | 30.5 | | | 2,518,922 | | 27.9 | | | 2,773,622 | | 30.4 | | | 2,701,762 | | 30.9 | | | 2,443,748 | | 28.7 | |
Savings | | 96,831 | | 1.0 | | | 106,480 | | 1.2 | | | 118,293 | | 1.3 | | | 132,407 | | 1.5 | | | 129,498 | | 1.5 | |
Certificates and other time deposits | | 2,928,949 | | 31.7 | | | 2,896,870 | | 32.0 | | | 2,086,642 | | 22.9 | | | 1,667,364 | | 19.1 | | | 1,562,626 | | 18.3 | |
Correspondent money market accounts | | 480,598 | | 5.2 | | | 433,468 | | 4.8 | | | 881,246 | | 9.7 | | | 831,770 | | 9.5 | | | 773,447 | | 9.1 | |
Total deposits | | $ | 9,233,909 | | 100 | % | | $ | 9,034,738 | | 100 | % | | $ | 9,123,234 | | 100 | % | | $ | 8,748,444 | | 100 | % | | $ | 8,517,706 | | 100 | % |
| | | | | | | | | | | | | | | | | | | | |
Loan to Deposit Ratio | | 105.1 | % | | | | 107.3 | % | | | | 104.1 | % | | | | 103.5 | % | | | | 100.6 | % | | |
| | | | | | | | | | | | | | | | | | | | |
Loan to Deposit Ratio, excluding MW | | 100.4 | % | | | | 102.4 | % | | | | 99.3 | % | | | | 97.5 | % | | | | 93.2 | % | | |
1 Total LHI does not include deferred fees of $12.7 million, $15.5 million, $19.0 million, $17.5 million and $15.0 million at June 30, 2023, March 31, 2023, December 31, 2022, September 30, 2022 and June 30, 2022, respectively.
VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(Unaudited)
Asset Quality | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Quarter Ended | | Six Months Ended | | |
| Jun 30, 2023 | | Mar 31, 2023 | | Dec 31, 2022 | | Sep 30, 2022 | | Jun 30, 2022 | | June 30, 2023 | | Jun 30, 2022 | | | | |
| (In thousands, except percentages) | | | | | | | | |
NPAs: | | | | | | | | | | | | | | | | | |
Nonaccrual loans | $ | 54,055 | | $ | 31,452 | | $ | 30,364 | | $ | 30,592 | | $ | 42,242 | | $ | 54,055 | | $ | 42,242 | | | | |
Nonaccrual PCD loans1 | 13,721 | | 12,784 | | 13,178 | | — | | — | | 13,721 | | — | | | | |
Accruing loans 90 or more days past due2 | 528 | | 296 | | 125 | | — | | 1,753 | | 528 | | 1,753 | | | | |
Total nonperforming loans held for investment (“NPLs”) | 68,304 | | 44,532 | | 43,667 | | 30,592 | | 43,995 | | 68,304 | | 43,995 | | | | |
OREO | — | | — | | — | | — | | 1,032 | | — | | 1,032 | | | | |
Total NPAs | $ | 68,304 | | $ | 44,532 | | $ | 43,667 | | $ | 30,592 | | $ | 45,027 | | $ | 68,304 | | $ | 45,027 | | | | |
| | | | | | | | | | | | | | | | | |
Charge-offs: | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
OOCRE | $ | — | | $ | (116) | | $ | — | | $ | (1,061) | | $ | (244) | | $ | (116) | | $ | (1,585) | | | | |
NOOCRE | (8,215) | | — | | (1,019) | | (838) | | — | | (8,215) | | (553) | | | | |
C&I | (3,540) | | (1,051) | | (5,449) | | (460) | | (528) | | (4,591) | | (3,822) | | | | |
Consumer | (92) | | (62) | | (41) | | (19) | | (1,091) | | (154) | | (1,225) | | | | |
Total charge-offs | (11,847) | | (1,229) | | (6,509) | | (2,378) | | (1,863) | | (13,076) | | (7,185) | | | | |
| | | | | | | | | | | | | | | | | |
Recoveries: | | | | | | | | | | | | | | | | | |
1-4 family residential | 1 | | 1 | | 24 | | 4 | | 3 | | 2 | | 3 | | | | |
OOCRE | — | | — | | 26 | | — | | 245 | | — | | 245 | | | | |
NOOCRE | 150 | | — | | 229 | | 3 | | 93 | | 150 | | 493 | | | | |
C&I | 106 | | 364 | | 415 | | 177 | | 572 | | 470 | | 716 | | | | |
Consumer | 46 | | 6 | | 30 | | 5 | | 41 | | 52 | | 50 | | | | |
Total recoveries | 303 | | 371 | | 724 | | 189 | | 954 | | 674 | | 1,507 | | | | |
| | | | | | | | | | | | | | | | | |
Net charge-offs | $ | (11,544) | | $ | (858) | | $ | (5,785) | | $ | (2,189) | | $ | (909) | | $ | (12,402) | | $ | (5,678) | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
ACL | $ | 102,150 | | $ | 98,694 | | $ | 91,052 | | $ | 85,037 | | $ | 80,576 | | $ | 102,150 | | $ | 80,576 | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Asset Quality Ratios: | | | | | | | | | | | | | | | | | |
NPAs to total assets | 0.55 | % | | 0.35 | % | | 0.36 | % | | 0.26 | % | | 0.40 | % | | 0.55 | % | | 0.40 | % | | | | |
NPAs, excluding nonaccrual PCD loans, to total assets | 0.44 | | | 0.25 | | | 0.25 | | | 0.26 | | | 0.40 | | | 0.44 | | | 0.40 | | | | | |
NPLs to total LHI | 0.71 | | | 0.47 | | | 0.48 | | | 0.35 | | | 0.55 | | | 0.71 | | | 0.55 | | | | | |
NPLs, excluding nonaccrual PCD loans, to total LHI | 0.56 | | | 0.33 | | | 0.32 | | | 0.34 | | | 0.51 | | | 0.56 | | | 0.51 | | | | | |
ACL to total LHI | 1.05 | | | 1.02 | | | 0.96 | | | 0.94 | | | 0.94 | | | 1.05 | | | 0.94 | | | | | |
Net charge-offs to average loans outstanding3 | 0.48 | | | 0.04 | | | 0.24 | | | 0.12 | | | 0.04 | | | 0.26 | | | 0.14 | | | | | |
1 Nonaccrual PCD loans consist of PCD loans that transitioned upon adoption of ASC 326 Financial Instruments - Credit Losses and were accounted for on a pooled basis that have subsequently been placed on nonaccrual status.
2 Accruing loans greater than 90 days past due exclude purchase credit deteriorated loans greater than 90 days past due that are accounted for on a pooled basis.
3Annualized ratio for quarterly metrics.
VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
We identify certain financial measures discussed in this earnings release as being “non-GAAP financial measures.” In accordance with SEC rules, we classify a financial measure as being a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles as in effect from time to time in the United States (“GAAP”), in our statements of income, balance sheets or statements of cash flows. Non-GAAP financial measures do not include operating and other statistical measures or ratios calculated using exclusively either one or both of (i) financial measures calculated in accordance with GAAP and (ii) operating measures or other measures that are not non-GAAP financial measures.
The non-GAAP financial measures that we present in this earnings release should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which we calculate the non-GAAP financial measures that we present in this earnings release may differ from that of other companies reporting measures with similar names. You should understand how such other financial institutions calculate their financial measures that appear to be similar or have similar names to the non-GAAP financial measures we have discussed in this earnings release when comparing such non-GAAP financial measures.
Tangible Book Value Per Common Share. Tangible book value is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) tangible common equity as total stockholders’ equity less goodwill and core deposit intangibles, net of accumulated amortization; and (b) tangible book value per common share as tangible common equity (as described in clause (a)) divided by number of common shares outstanding. For tangible book value per common share, the most directly comparable financial measure calculated in accordance with GAAP is book value per common share.
We believe that this measure is important to many investors in the marketplace who are interested in changes from period to period in book value per common share exclusive of changes in core deposit intangibles. Goodwill and other intangible assets have the effect of increasing total book value while not increasing our tangible book value.
The following table reconciles, as of the dates set forth below, total stockholders’ equity to tangible common equity and presents our tangible book value per common share compared with our book value per common share:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | As of |
| | Jun 30, 2023 | | Mar 31, 2023 | | Dec 31, 2022 | | Sep 30, 2022 | | Jun 30, 2022 |
| | (Dollars in thousands, except per share data) |
Tangible Common Equity | | | | | | | | | | |
Total stockholders' equity | | $ | 1,491,280 | | | $ | 1,493,737 | | | $ | 1,449,773 | | | $ | 1,411,899 | | | $ | 1,429,442 | |
Adjustments: | | | | | | | | | | |
Goodwill | | (404,452) | | | (404,452) | | | (404,452) | | | (404,452) | | | (404,452) | |
Core deposit intangibles | | (33,371) | | | (35,808) | | | (38,247) | | | (40,684) | | | (43,122) | |
Tangible common equity | | $ | 1,053,457 | | | $ | 1,053,477 | | | $ | 1,007,074 | | | $ | 966,763 | | | $ | 981,868 | |
Common shares outstanding | | 54,261 | | | 54,229 | | | 54,030 | | | 53,988 | | | 53,951 | |
| | | | | | | | | | |
Book value per common share | | $ | 27.48 | | | $ | 27.54 | | | $ | 26.83 | | | $ | 26.15 | | | $ | 26.50 | |
Tangible book value per common share | | $ | 19.41 | | | $ | 19.43 | | | $ | 18.64 | | | $ | 17.91 | | | $ | 18.20 | |
VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
Tangible Common Equity to Tangible Assets. Tangible common equity to tangible assets is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) tangible common equity as total stockholders’ equity, less goodwill and core deposit intangibles, net of accumulated amortization; (b) tangible assets as total assets less goodwill and core deposit intangibles, net of accumulated amortization; and (c) tangible common equity to tangible assets as tangible common equity (as described in clause (a)) divided by tangible assets (as described in clause (b)). For tangible common equity to tangible assets, the most directly comparable financial measure calculated in accordance with GAAP is total stockholders’ equity to total assets.
We believe that this measure is important to many investors in the marketplace who are interested in the relative changes from period to period in common equity and total assets, in each case, exclusive of changes in core deposit intangibles. Goodwill and other intangible assets have the effect of increasing both total stockholders’ equity and assets while not increasing our tangible common equity or tangible assets.
The following table reconciles, as of the dates set forth below, total stockholders’ equity to tangible common equity and total assets to tangible assets and presents our tangible common equity to tangible assets:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | As of |
| | Jun 30, 2023 | | Mar 31, 2023 | | Dec 31, 2022 | | Sep 30, 2022 | | Jun 30, 2022 |
| | (Dollars in thousands) |
Tangible Common Equity | | | | | | | | | | |
Total stockholders' equity | | $ | 1,491,280 | | | $ | 1,493,737 | | | $ | 1,449,773 | | | $ | 1,411,899 | | | $ | 1,429,442 | |
Adjustments: | | | | | | | | | | |
Goodwill | | (404,452) | | | (404,452) | | | (404,452) | | | (404,452) | | | (404,452) | |
Core deposit intangibles | | (33,371) | | | (35,808) | | | (38,247) | | | (40,684) | | | (43,122) | |
Tangible common equity | | $ | 1,053,457 | | | $ | 1,053,477 | | | $ | 1,007,074 | | | $ | 966,763 | | | $ | 981,868 | |
Tangible Assets | | | | | | | | | | |
Total assets | | $ | 12,470,368 | | | $ | 12,609,487 | | | $ | 12,154,361 | | | $ | 11,714,454 | | | $ | 11,304,811 | |
Adjustments: | | | | | | | | | | |
Goodwill | | (404,452) | | | (404,452) | | | (404,452) | | | (404,452) | | | (404,452) | |
Core deposit intangibles | | (33,371) | | | (35,808) | | | (38,247) | | | (40,684) | | | (43,122) | |
Tangible Assets | | $ | 12,032,545 | | | $ | 12,169,227 | | | $ | 11,711,662 | | | $ | 11,269,318 | | | $ | 10,857,237 | |
Tangible Common Equity to Tangible Assets | | 8.76 | % | | 8.66 | % | | 8.60 | % | | 8.58 | % | | 9.04 | % |
VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
Return on Average Tangible Common Equity. Return on average tangible common equity is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) net income available for common stockholders adjusted for amortization of core deposit intangibles (which we refer to as “return”) as net income, plus amortization of core deposit intangibles, less tax benefit at the statutory rate; (b) average tangible common equity as total average stockholders’ equity less average goodwill and average core deposit intangibles, net of accumulated amortization; and (c) return (as described in clause (a)) divided by average tangible common equity (as described in clause (b)). For return on average tangible common equity, the most directly comparable financial measure calculated in accordance with GAAP is return on average equity.
We believe that this measure is important to many investors in the marketplace who are interested in the return on common equity, exclusive of the impact of core deposit intangibles. Goodwill and core deposit intangibles have the effect of increasing total stockholders’ equity while not increasing our tangible common equity. This measure is particularly relevant to acquisitive institutions that may have higher balances in goodwill and core deposit intangibles than non-acquisitive institutions.
The following table reconciles, as of the dates set forth below, average tangible common equity to average common equity and net income available for common stockholders adjusted for amortization of core deposit intangibles, net of taxes to net income and presents our return on average tangible common equity:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarter Ended | | Six Months Ended | | |
| | Jun 30, 2023 | | Mar 31, 2023 | | Dec 31, 2022 | | Sep 30, 2022 | | Jun 30, 2022 | | June 30, 2023 | | Jun 30, 2022 | | | | |
| | (Dollars in thousands) | | | | | | | | |
Net income available for common stockholders adjusted for amortization of core deposit intangibles | | | | | | | | | | | | | | | | | | |
Net income | | $ | 33,730 | | | $ | 38,411 | | | $ | 39,897 | | | $ | 43,322 | | | $ | 29,626 | | | $ | 72,141 | | | $ | 63,096 | | | | | |
Adjustments: | | | | | | | | | | | | | | | | | | |
Plus: Amortization of core deposit intangibles | | 2,438 | | | 2,438 | | | 2,438 | | | 2,438 | | | 2,438 | | | 4,876 | | | 4,876 | | | | | |
Less: Tax benefit at the statutory rate | | 512 | | | 512 | | | 512 | | | 512 | | | 512 | | | 1,024 | | | 1,024 | | | | | |
Net income available for common stockholders adjusted for amortization of core deposit intangibles | | $ | 35,656 | | | $ | 40,337 | | | $ | 41,823 | | | $ | 45,248 | | | $ | 31,552 | | | $ | 75,993 | | | $ | 66,948 | | | | | |
| | | | | | | | | | | | | | | | | | |
Average Tangible Common Equity | | | | | | | | | | | | | | | | | | |
Total average stockholders' equity | | $ | 1,510,625 | | | $ | 1,476,576 | | | $ | 1,434,818 | | | $ | 1,453,816 | | | $ | 1,447,377 | | | $ | 1,493,695 | | | $ | 1,402,661 | | | | | |
Adjustments: | | | | | | | | | | | | | | | | | | |
Average goodwill | | (404,452) | | | (404,452) | | | (404,452) | | | (404,452) | | | (404,452) | | | (404,452) | | | (404,234) | | | | | |
Average core deposit intangibles | | (34,969) | | | (37,361) | | | (39,792) | | | (42,230) | | | (44,720) | | | (36,159) | | | (45,932) | | | | | |
Average tangible common equity | | $ | 1,071,204 | | | $ | 1,034,763 | | | $ | 990,574 | | | $ | 1,007,134 | | | $ | 998,205 | | | $ | 1,053,084 | | | $ | 952,495 | | | | | |
Return on Average Tangible Common Equity (Annualized) | | 13.35 | % | | 15.81 | % | | 16.75 | % | | 17.82 | % | | 12.68 | % | | 14.55 | % | | 14.17 | % | | | | |
VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
Operating Earnings, Pre-tax, Pre-provision Operating Earnings and performance metrics calculated using Operating Earnings and Pre-tax, Pre-provision Operating Earnings, including Diluted Operating Earnings per Share, Operating Return on Average Assets, Pre-tax, Pre-Provision Operating Return on Average Assets, Pre-tax, Pre-Provision Operating Return on Average Loans, Operating Return on Average Tangible Common Equity and Operating Efficiency Ratio. Operating earnings, pre-tax, pre-provision operating earnings and the performance metrics calculated using these metrics, listed below, are non-GAAP measures used by management to evaluate the Company’s financial performance. We calculate (a) operating earnings as net income plus severance payments, plus loss on sale of debt securities AFS, net, less tax impact of adjustments, plus nonrecurring tax adjustments. We calculate (b) diluted operating earnings per share as operating earnings as described in clause (a) divided by weighted average diluted shares outstanding. We calculate (c) pre-tax, pre-provision operating earnings as operating earnings as described in clause (a) plus provision for income taxes, plus provision (benefit) for credit losses and unfunded commitments. We calculate (d) pre-tax, pre-provision operating return on average assets as pre-tax, pre-provision operating earnings as described in clause (a) divided by total average assets. We calculate (e) operating return on average assets as operating earnings as described in clause (a) divided by total average assets. We calculate (f) operating return on average tangible common equity as operating earnings as described in clause (a), adjusted for the amortization of intangibles and tax benefit at the statutory rate, divided by total average tangible common equity (average stockholders’ equity less average goodwill and average core deposit intangibles, net of accumulated amortization). We calculate (g) operating efficiency ratio as noninterest expense plus adjustments to operating noninterest expense divided by noninterest income plus adjustments to operating noninterest income, plus net interest income.
We believe that these measures and the operating metrics calculated utilizing these measures are important to management and many investors in the marketplace who are interested in understanding the ongoing operating performance of the Company and provide meaningful comparisons to its peers.
The following tables reconcile, as of the dates set forth below, operating net income and pre-tax, pre-provision operating earnings and related metrics:
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| | For the Quarter Ended | | Six Months Ended | | |
| | Jun 30, 2023 | | Mar 31, 2023 | | Dec 31, 2022 | | Sep 30, 2022 | | Jun 30, 2022 | | June 30, 2023 | | Jun 30, 2022 | | | | |
| | (Dollars in thousands, except per share data) |
Operating Earnings | | | | | | | | | | | | | | | | | | |
Net income | | $ | 33,730 | | | $ | 38,411 | | | $ | 39,897 | | | $ | 43,322 | | | $ | 29,626 | | | $ | 72,141 | | | $ | 63,096 | | | | | |
| | | | | | | | | | | | | | | | | | |
Plus: Severance payments1 | | 1,194 | | | 835 | | | 630 | | | — | | | — | | | 2,029 | | | — | | | | | |
Plus: Loss on sale of debt securities AFS, net | | — | | | 5,321 | | | — | | | — | | | — | | | 5,321 | | | — | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
Plus: M&A expenses | | — | | | — | | | — | | | 384 | | | 295 | | | — | | | 995 | | | | | |
Operating pre-tax income | | 34,924 | | | 44,567 | | | 40,527 | | | 43,706 | | | 29,921 | | | 79,491 | | | 64,091 | | | | | |
Less: Tax impact of adjustments | | 251 | | | 1,293 | | | 132 | | | 81 | | | 66 | | | 1,544 | | | 222 | | | | | |
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| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
Operating earnings | | $ | 34,673 | | | $ | 43,274 | | | $ | 40,395 | | | $ | 43,625 | | | $ | 29,855 | | | $ | 77,947 | | | $ | 63,869 | | | | | |
| | | | | | | | | | | | | | | | | | |
Weighted average diluted shares outstanding | | 54,486 | | | 54,606 | | | 54,780 | | | 54,633 | | | 54,646 | | | 54,546 | | | 53,121 | | | | | |
Diluted EPS | | $ | 0.62 | | | $ | 0.70 | | | $ | 0.73 | | | $ | 0.79 | | | $ | 0.54 | | | $ | 1.32 | | | $ | 1.19 | | | | | |
Diluted operating EPS | | $ | 0.64 | | | $ | 0.79 | | | $ | 0.74 | | | $ | 0.80 | | | $ | 0.55 | | | $ | 1.43 | | | $ | 1.20 | | | | | |
1 Severance payments relate to certain restructurings made during the periods disclosed.
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| | For the Quarter Ended | | Six Months Ended | | |
| | Jun 30, 2023 | | Mar 31, 2023 | | Dec 31, 2022 | | Sep 30, 2022 | | Jun 30, 2022 | | June 30, 2023 | | Jun 30, 2022 | | | | |
| | (Dollars in thousands) |
Pre-Tax, Pre-Provision Operating Earnings | | | | | | | | | | | | | | | | | | |
Net income | | $ | 33,730 | | | $ | 38,411 | | | $ | 39,897 | | | $ | 43,322 | | | $ | 29,626 | | | $ | 72,141 | | | $ | 63,096 | | | | | |
Plus: Provision for income taxes | | 9,725 | | | 11,012 | | | 11,890 | | | 12,248 | | | 8,079 | | | 20,737 | | | 16,181 | | | | | |
Plus: Provision for credit losses and unfunded commitments | | 13,871 | | | 10,882 | | | 11,277 | | | 7,500 | | | 9,000 | | | 24,753 | | | 8,993 | | | | | |
Plus: Severance payments | | 1,194 | | | 835 | | | 630 | | | — | | | — | | | 2,029 | | | — | | | | | |
| | | | | | | | | | | | | | | | | | |
Plus: Loss on sale of debt securities AFS, net | | — | | | 5,321 | | | — | | | — | | | — | | | 5,321 | | | — | | | | | |
| | | | | | | | | | | | | | | | | | |
Plus: M&A expenses | | — | | | — | | | — | | | 384 | | | 295 | | | — | | | 995 | | | | | |
Pre-tax, pre-provision operating earnings | | $ | 58,520 | | | $ | 66,461 | | | $ | 63,694 | | | $ | 63,454 | | | $ | 47,000 | | | $ | 124,981 | | | $ | 89,265 | | | | | |
| | | | | | | | | | | | | | | | | | |
Average total assets | | $ | 12,350,223 | | | $ | 12,214,313 | | | $ | 11,761,044 | | | $ | 11,460,857 | | | $ | 10,711,663 | | | $ | 12,282,644 | | | $ | 10,357,261 | | | | | |
Pre-tax, pre-provision operating return on average assets1 | | 1.90 | % | | 2.21 | % | | 2.15 | % | | 2.20 | % | | 1.76 | % | | 2.05 | % | | 1.74 | % | | | | |
| | | | | | | | | | | | | | | | | | |
Average loans | | $ | 9,657,313 | | | $ | 9,501,309 | | | $ | 9,103,552 | | | $ | 8,729,093 | | | $ | 8,038,153 | | | $ | 9,579,742 | | | $ | 7,684,023 | | | | | |
Pre-tax, pre-provision operating return on average loans1 | | 2.43 | % | | 2.84 | % | | 2.78 | % | | 2.88 | % | | 2.35 | % | | 2.63 | % | | 2.34 | % | | | | |
| | | | | | | | | | | | | | | | | | |
Average total assets | | $ | 12,350,223 | | | $ | 12,214,313 | | | $ | 11,761,044 | | | $ | 11,460,857 | | | $ | 10,711,663 | | | $ | 12,282,644 | | | $ | 10,357,261 | | | | | |
Return on average assets1 | | 1.10 | % | | 1.28 | % | | 1.35 | % | | 1.50 | % | | 1.11 | % | | 1.18 | % | | 1.23 | % | | | | |
Operating return on average assets1 | | 1.13 | | | 1.44 | | | 1.36 | | | 1.51 | | | 1.12 | | | 1.28 | | | 1.24 | | | | | |
| | | | | | | | | | | | | | | | | | |
Operating earnings adjusted for amortization of core deposit intangibles | | | | | | | | | | | | | | | | | | |
Operating earnings | | $ | 34,673 | | | $ | 43,274 | | | $ | 40,395 | | | $ | 43,625 | | | $ | 29,855 | | | $ | 77,947 | | | $ | 63,869 | | | | | |
Adjustments: | | | | | | | | | | | | | | | | | | |
Plus: Amortization of core deposit intangibles | | 2,438 | | | 2,438 | | | 2,438 | | | 2,438 | | | 2,438 | | | 4,876 | | | 4,876 | | | | | |
Less: Tax benefit at the statutory rate | | 512 | | | 512 | | | 512 | | | 512 | | | 512 | | | 1,024 | | | 1,024 | | | | | |
Operating earnings adjusted for amortization of core deposit intangibles | | $ | 36,599 | | | $ | 45,200 | | | $ | 42,321 | | | $ | 45,551 | | | $ | 31,781 | | | $ | 81,799 | | | $ | 67,721 | | | | | |
| | | | | | | | | | | | | | | | | | |
Average Tangible Common Equity | | | | | | | | | | | | | | | | | | |
Total average stockholders' equity | | $ | 1,510,625 | | | $ | 1,476,576 | | | $ | 1,434,818 | | | $ | 1,453,816 | | | $ | 1,447,377 | | | $ | 1,493,695 | | | $ | 1,402,661 | | | | | |
Adjustments: | | | | | | | | | | | | | | | | | | |
Less: Average goodwill | | (404,452) | | | (404,452) | | | (404,452) | | | (404,452) | | | (404,452) | | | (404,452) | | | (404,234) | | | | | |
Less: Average core deposit intangibles | | (34,969) | | | (37,361) | | | (39,792) | | | (42,230) | | | (44,720) | | | (36,159) | | | (45,932) | | | | | |
Average tangible common equity | | $ | 1,071,204 | | | $ | 1,034,763 | | | $ | 990,574 | | | $ | 1,007,134 | | | $ | 998,205 | | | $ | 1,053,084 | | | $ | 952,495 | | | | | |
Operating return on average tangible common equity1 | | 13.70 | % | | 17.72 | % | | 16.95 | % | | 17.94 | % | | 12.77 | % | | 15.66 | % | | 14.34 | % | | | | |
| | | | | | | | | | | | | | | | | | |
Efficiency ratio | | 49.94 | % | | 48.42 | % | | 47.63 | % | | 44.71 | % | | 50.76 | % | | 49.17 | % | | 51.76 | % | | | | |
| | | | | | | | | | | | | | | | | | |
Net interest income | | $ | 100,831 | | | $ | 103,389 | | | $ | 106,097 | | | $ | 101,040 | | | $ | 84,480 | | | $ | 204,220 | | | $ | 157,520 | | | | | |
Noninterest income | | 13,692 | | | 13,531 | | | 14,326 | | | 13,021 | | | 10,378 | | | 27,223 | | | 25,475 | | | | | |
Plus: Loss on sale of AFS securities, net | | — | | | 5,321 | | | — | | | — | | | — | | | 5,321 | | | — | | | | | |
| | | | | | | | | | | | | | | | | | |
Operating noninterest income | | 13,692 | | | 18,852 | | | 14,326 | | | 13,021 | | | 10,378 | | | 32,544 | | | 25,475 | | | | | |
Noninterest expense | | 57,197 | | | 56,615 | | | 57,359 | | | 50,991 | | | 48,153 | | | 113,812 | | | 94,725 | | | | | |
Less: Severance payments | | 1,194 | | | 835 | | | 630 | | | — | | | — | | | 2,029 | | | — | | | | | |
Less: M&A expenses | | — | | | — | | | — | | | 384 | | | 295 | | | — | | | 995 | | | | | |
Operating noninterest expense | | $ | 56,003 | | | $ | 55,780 | | | $ | 56,729 | | | $ | 50,607 | | | $ | 47,858 | | | $ | 111,783 | | | $ | 93,730 | | | | | |
Operating efficiency ratio | | 48.90 | % | | 45.63 | % | | 47.11 | % | | 44.37 | % | | 50.45 | % | | 47.21 | % | | 51.22 | % | | | | |
1 Annualized ratio for quarterly metrics.
a2q23investorpresentatio
TRUTH | INTEGRITY | TRANSPARENCY Second Quarter 2023 Results Earnings Release July 25, 2023
2 Forward-Looking Statements This presentation 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 the expected payment of Veritex Holdings, Inc.’s (“Veritex”) quarterly cash dividend; the impact of certain changes in Veritex’s accounting policies, standards and interpretations; the effects of the COVID-19 pandemic and actions taken in response thereto; a continuation of recent turmoil in the banking industry, responsive measures to mitigate and manage it and related supervisory and regulatory actions and costs 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, 2022 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 presentation are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that Veritex or persons acting on Veritex’s behalf may issue. This presentation also includes industry and trade association data, forecasts and information that Veritex has prepared based, in part, upon data, forecasts and information obtained from independent trade associations, industry publications and surveys, government agencies and other information publicly available to Veritex, which information may be specific to particular markets or geographic locations. Some data is also based on Veritex's good faith estimates, which are derived from Veritex management's knowledge of the industry, markets and independent sources. Industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable. Although Veritex believes these sources are reliable, Veritex has not independently verified the information contained therein. While Veritex is not aware of any misstatements regarding the industry data, forecasts and information included in this presentation, such data forecasts, and information and Veritex's estimates based thereon involve risks, assumptions and uncertainties and are subject to change based on various factors. Veritex does not undertake any obligation, and specifically declines any obligation, to supplement, update or revise such data forecasts, and information and Veritex's estimates based thereon, whether as a result of new information, future developments or otherwise, except as required by law. This presentation contains certain non-GAAP (generally accepted accounting principles) financial measures, including 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 shares (“EPS”), operating return on average assets (“ROAA”), PTPP operating ROAA, Operating ROATCE, operating efficiency ratio, operating noninterest income, operating noninterest expense and adjusted net interest margin (“NIM”). Veritex’s management uses these non-GAAP financial measures to evaluate its operating performance and provide information that is important to investors. The non-GAAP financial measures that Veritex discusses in this presentation should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Please see “Reconciliation of Non-GAAP Financial Measures” at the end of this presentation for reconciliations of non-GAAP measures to the most directly comparable financial measures calculated in accordance with GAAP. Use of Non-GAAP Financial Measures
3 Second Quarter 2023 Highlights Key Highlights • Pre-tax Pre-provision - $58.5 Million • 1.90% PTPP ROAA • Total Deposits increased 8.8% annualized • Loan to Deposit Ratio decreased to 105.1% from 107.3% in 1Q23 • Uninsured and uncollateralized deposits decreased to 34.8% from 36.5% in 1Q23 • Wholesale funding decreased to 29.3% from 32.2% in 1Q23 • CET1 grew 44 bps to 9.76% and decreased risk-weighted assets by $252 million Operating1ReportedKey Performance Metrics $34.7$33.7Net Income2 $0.64$0.62Diluted Earnings Per Share 1.13%1.10%Return on Average Assets 13.70%13.35%Return on Average Tangible Common Equity 48.9%49.9%Efficiency Ratio TotalBalance Sheet3 $9.7Total Loans $9.2Total Deposits 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 2 Net income $ in millions 3 Total loans and deposits $ in billions
4 2023 YTD Highlights Key Highlights • Pre-tax Pre-provision - $125.0 Million, up 40.5% • 2.05% PTPP ROAA, up 31 bps • Deposits up 8.2% year over year • Loans up 12.8% year over year • CET1 grew 51 bps to 9.76% while growing loans $1.1 Billion 20222023YTD Operating1ReportedOperating1ReportedKey Performance Metrics $63.9$63.1$77.9$72.1Net Income2 $1.20$1.19$1.43$1.32Diluted Earnings Per Share $89.0n/a$125.0n/aPTPP income 1.74%n/a2.05%n/aPTPP ROAA 1.24%1.23%1.28%1.18%Return on Average Assets 51.2%51.8%47.2%49.2%Efficiency Ratio 14.34%14.17%15.66%14.55% Return on Average Tangible Common Equity 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 2 Net income $ in millions 3 Total loans and deposits $ in billions 20222023YTD Balance Sheet3 9.25%9.76%CET1 $8.6$9.7Total Loans $8.5$9.2Total Deposits
5 Second Quarter Financial Metrics Summary • PTPP Return on Average Assets - 1.90%1 • TBVPS - $19.411 • Efficiency ratio below 50% • Diluted EPS - $0.641 PTPP Return on Average Assets1 $47.0 $63.5 $63.7 $66.5 $58.5 1.76% 2.20% 2.15% 2.21% 1.90% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 2Q22 3Q22 4Q22 1Q23 2Q23 PTPP Operating Earnings PTPP Operating ROAA $18.20 $17.91 $18.64 $19.43 $19.41 2Q22 3Q22 4Q22 1Q23 2Q23 50.8% 44.7% 47.6% 48.4% 49.9%50.5% 44.4% 47.1% 45.6% 48.9% 2Q22 3Q22 4Q22 1Q23 2Q23 Reported Operating $0.54 $0.79 $0.73 $0.70 $0.62 $0.55 $0.80 $0.74 $0.79 $0.64 2Q22 3Q22 4Q22 1Q23 2Q23 Diluted EPS Diluted Operating EPS 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 TBVPS1 Efficiency Ratio1 Diluted Earnings Per Share1
6 Liquidity and Funding Summary • Annualized deposits up 15% using ending balances on July 19, 2023 compared to 1Q23 • Loan / deposit ratio down 3% from quarter end • Reliance on wholesale down 6% from 2Q23 quarter end $9,533 $9,035 $9,234 $9,385 3/8/2023 3/31/2023 6/30/2023 7/19/2023 Total Deposits ($ in Millions) +4% 100.3% 107.5% 105.3% 102.5% 3/8/2023 3/31/2023 6/30/2023 7/19/2023 Loan / Deposits 24.0% 32.1% 29.2% 27.5% 20.0% 22.0% 24.0% 26.0% 28.0% 30.0% 32.0% 34.0% 3/8/2023 3/31/2023 6/30/2023 7/19/2023 Reliance on Wholesale (14%)
7 YOY Change in Deposits Deposits Summary • Total deposits increased $199.2 million, 8.8% annualized • Opened 1.4x deposit accounts compared to accounts closed during 2Q23 • 3.77% average rate on new accounts1 • Uninsured and uncollateralized deposits = 34.8%2 1 Excludes wholesale 2 As of June 30, 2023 QOQ Change in Deposits 42% 52% 63% 68% 27% 36% 46% 52% Interest Bearing Deposits Total Deposits Cumulative change in deposit costs over cumulative change in average Fed Funds effective Rate Hike Beta Trends Int. Bearing Rate Total Deposit Rate Average Fed Funds Effective Rates and Average Fed Funds Effective 5.07% 3.61% 2.73% 0.76% 0.43% 0.28% Spot rate for total deposits as of June 30th was 3.00% Up 54bps ($190.0) $32.1 $47.1 $1.4 $16.1 $373.0 Noninterest-bearing Interest-bearing transaction Money market Savings Certificates and other time deposits Correspondent money market accounts ($32.7) ($292.8) ($713.7) $21.7 $297.8 $1,366.3 ($9.7) ($ in Millions) ($ in Millions)
8 Loans Summary • 10.2% decrease in unfunded commitments • $398.1 million in loan payoffs in 2Q23, or $633.6 million YTD • Loan / deposit ratio improved by 205 bps quarter over quarter $ 1.7 $ 1.7 $ 1.1 $ 0.3 $ 0.1 $ 0.4 $ 0.5 $ 0.4 $ 0.3 $ 0.4 2Q22 3Q22 4Q22 1Q23 2Q23 Loan Production ($B) Loan Payoffs ($B) Loan Production and Loan Payoff Levels CRE ADC Construction Current Unfunded (Non-Revolving) 2Q22 3Q22 4Q22 1Q23 2Q23 Quarterly Average Balances ($ in Thousands) QOQ Change in the Loan Portfolio $(17) $(1,246) $40,039 $4,387 $160,264 Commercial and Industrial (“C&I”) Owner occupied commercial (“OOCRE”) Non-owner occupied commercial (“NOOCRE”) Construction and land Farmland 1-4 family residential Multi-family residential MW Consumer $2.873 $27,190 $171,649 $45,873
9 Net Interest Income Summary • NIM - 3.51% • Average Loan Yield – 6.80% • Average Cost of Interest-bearing Deposits – 3.61% • 16% YOY increase in average earnings assets $101.0 $106.1 $103.4 $100.8 3.42% 3.77% 3.87% 3.69% 3.51% 2Q22 3Q22 4Q22 1Q23 2Q23 Net Interest Income ("NII") NIM $73.0 ($ in Millions) NII / NIM Trend 1Q23 v 2Q23 $103,389Beginning Net Interest Income 9,223Impact of loan rate changes 1,108Change due to day count (8,772)Impact of deposit rate changes (1,995)Impact of net growth (908)Impact of nonaccrual interest reversal (807)Impact of borrowing rate changes (407)Change in earning asset mix and other $100,831Ending Net Interest Income ($ in thousand) Net Interest Income Rollforward Interest Rate Sensitivity1 2Q23 1Q23 2Q23 1Q23 Interest Rate Scenario Percentage Change From Base Percentage Change From Base EVE Shock Scenerio Percentage Change From Base Percentage Change From Base Up 200 bps 7.13% 7.81% Up 200 bps 1.45% 1.49% Up 100 bps 3.61% 3.93% Up 100 bps 0.84% 0.95% BASE CASE 0.00% 0.00% BASE CASE 0.00% 0.00% Down 100 bps -3.63% -4.42% Down 100 bps -1.29% -1.53% Down 200 bps -8.14% -9.26% Down 200 bps -3.24% -3.69% 1 Interest rate sensitivity is calculated using a static rate shock.
10 Interest Rates Summary • Average 2Q23 loan and deposit new production spread = 351 bps • Average investment yield at 3.60% Variable and Hybrid Loans by Index 4.15% 5.01% 5.98% 6.51% 6.85% 0.28% 0.76% 1.46% 2.24% 2.73%2.93% 3.05% 3.36% 3.56% 3.60% 2Q22 3Q22 4Q22 1Q23 2Q23 Average Loan Yield Average Cost of Total Deposits Average Investment Yield Production Rates Trend 0. 93 % 4. 36 % 2. 27 % 5. 69 % 3. 24 % 7. 33 % 3. 96 % 7. 56 % 4. 14 % 7. 65 % Deposit Rate Loan Rate Q2-22 Q3-22 Q4-22 Q1-23 2Q23 5 Quarter Trend (Loans, Investments and Deposits) Variable and Hybrid Loans by Rate Index Amount (in millions) % of Variable and Hybrid Loans 1-Month SOFR 5,055.5$ 68.6% Overnight SOFR 245.4$ 3.3% Prime Rate 1,444.0$ 19.6% Other 628.4$ 8.5% Total Variable and Hybrid Loans 7,373.3$ 100.0%
11 Investment Portfolio Summary • Represents 9% of total assets • 84.0% is AFS securities • Effective duration = 4.38 Years • 2Q23 portfolio yield = 3.60% • Current mark to market represents less than 12.8% of tangible common equity Debt Investments as % of Total Assets 90.8% 9.2% Other Assets Investment Portfolio Total Assets: $12.5 Billion AFS: $1.1 Billion HTM: $138.9 Million Total Mark to Market: $134.8 Million1 ACL Credit Mark: $885 Thousand2 1 Total mark to market is comprised of $110.6 million in AFS securities already included in tangible common equity and $24.2 in HTM securities. 2 Solely made up of credit marks on our corporate bond portfolio.
12 Noninterest Income $627 $604 $414 $426 $552 3.41% 2.81% 1.89% 2.95% 3.00% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00% 0 100 200 300 400 500 600 700 2Q22 3Q22 4Q22 1Q23 2Q23 Total Volume Gain on sale ($ in millions) Thrive Volume and Gain on Sale Number of originations up 27% QOQ Summary • Noninterest income increased to $13.7MM • Thrive Mortgage • Loan units up 27% from 1Q23 • Production $ up 29.6% from 1Q23 • Continued reduction in G&A expenses across the organization • Rate locks up 40.5% from 1Q23 $(5,797) $255 $34 Service charges and fees on deposit accounts Loan fees Gain on sales of MLHFS SBA Gain on Sale USDA Gain on Sale Thrive income Customer swap income Other income $(544) $2,006 QOQ Change in Operating Noninterest Income Thrive Income Rollforward ($1,521)Equity Method 49% Interest Q1 Loss 1,942Improved gain on sale 526Higher production income 461Impact of lower G&A expenses (891)Higher production cost (32)Other 485Equity Method 49% Interest Q2 Profit $253 $2,006 $744 $(2,111)
13 SBA and USDA Loans 1 No USDA revenue was recognized in 3Q22. USDA Pipeline $84.2 $21.2 $7,514 $9,366 $3,552 3Q22 4Q22 1Q23 2Q23 $499.6 $392.2 $274.3 $20.4 MM $105.4 MM $21.2 ($ millions) SBA Pipeline ($ millions) Trailing 4 Quarters USDA Revenue ($ thousands) $1.17B 1 $182 $356 $465 $697 3Q22 4Q22 1Q23 2Q23 $1.7 MM Trailing 4 Quarters SBA Revenue ($ thousands)
14 Capital Summary • CET1 increased primarily driven by decreased unfunded commitments • CET1, including the impact to AOCI, increased to 9.02% • TBV remained stable at $19.41 • Total Capital increased 12% YOY1 CET1 up 44 bps QOQ to 9.76% 1 Total Capital increased 12% annualized at both the Holding Company and Bank level. Capital Levels, including and excluding AOCI, compared to minimum requirement TBVPS Rollforward $0.62 $0.06 $0.04 $19.43 $(0.21) $19.41 $(0.20) $(0.33) 2Q23, as report2Q23, including AOCI Minimum with Conservative BufferCapital Ratio 9.76%9.02%7.00%CET1 Capital 10.01%9.27%8.50%Tier 1 Capital 12.51%11.77%10.50%Total Capital
15 Allowance For Credit Losses Summary • ACL to Total Loans : 1.05%, up by 3% • General reserve reflects current economic outlook on economy and recessionary risk • 40% Baseline / 60% Scenario 2 of Moody’s forecast utilized • Q-Factors represent 33bps of the general reserve 1.05% $10.12 $2.14 $3.69 ($11.5) ($1.1) ($1.0) $110.3 $112.7 ACL, including unfunded loan commitments Total Loan Balances up 2.4% from December 31, 2022 ACL to Total Loans up 9.3% from December 31, 2022 $10.5MM$11.6MM $102.2MM$98.7MM
16 Credit Quality Summary • NPA/Total Assets = 0.55% and annual NCO’s = 0.48% primarily driven by the following: • 25-year relationship CRE Office loan originated in 2015 placed on the market in 2Q23 after losing significant occupancy over the last 9 months. Property is under contract and resulted in a $8.5MM charge-off • C&I Lender Finance transaction originated in 2016 to finance the purchase of auto notes. Note was restructured resulting in a charge-off of $2.9MM • 60-89 past dues = $25.2MM primarily driven by a SNC relationship in which the lead bank is in the process of closing a restructure with a paydown expected to close early 3Q23. Excluding this credit, past dues remained flat. 2Q22 3Q22 4Q22 1Q23 2Q23 0.00% 0.10% 0.20% 0.30% 30-59 Past Due 60-89 Past Due 90+ Past Due 0.04% 0.12% 0.24% 0.04% 0.48% 2Q22 3Q22 4Q22 1Q23 2Q23 $25,188$15,287$21,468$5,352$7,373Totals: Past Due Trend1 % of Total Loans2 Annualized Net Charge-offs ($ in millions) ($ in millions) $45.0 $30.6 $43.6 $44.5 $68.3 0.40% 0.26% 0.36% 0.35% 0.55% 0.0% 0.1% 0.2% 0.3% 0.4% 0.5% 0.6% 0.7% 2Q22 3Q22 4Q22 1Q23 2Q23 NPAs NPAs/Total Assets NPAs / Total Assets NPAs include $13.7 million of PCD loans at 2Q23 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.
17 Credit Quality Summary • Criticized loans = $512.1 MM • 8.3% increase in criticized loans compared to December 31, 2022 • 32% of criticized are CRE Office1 • 10% of criticized are C&I OOCRE1 ($ in millions, excludes PCD loans) Quarterly Criticized Loans $130.0 $121.1 $175.3 $227.2 $225.0 $200.1 $190.9 $297.7 $204.8 $287.1 2Q22 3Q22 4Q22 1Q23 2Q23 $- $100 $200 $300 $400 $500 Substandard Special Mention 81% 6% 13% NOOCRE OOCRE C&I Special Mention Risk Rating Breakdown $287.1 Million 59% 16% 24% 1% NOOCRE OOCRE C&I Other Substandard Risk Rating Breakdown $225.0 Million 25% CRE Office 15% CRE Other 12% CRE Hotel 5% CRE Retail 38% CRE Office 10% CRE Hotel 9% CRE Industrial 9% CRE Multifamily 7.5% CRE Retail 6% CRE Other 1 As of June 30, 2023 (cont.)
TRUTH | INTEGRITY | TRANSPARENCY Second Quarter 2023 Results Supplemental Information
19 Reconciliation of Non-GAAP Financial Measures
20 Reconciliation of Non-GAAP Financial Measures
21 Reconciliation of Non-GAAP Financial Measures
22 Reconciliation of Non-GAAP Financial Measures
23 Reconciliation of Non-GAAP Financial Measures
TRUTH | INTEGRITY | TRANSPARENCY Second Quarter 2023 Results Earnings Release July 25, 2023
DocumentPRESS RELEASE
FOR IMMEDIATE RELEASE
Veritex Holdings, Inc. Declares Cash Dividend on Common Stock
Dallas, TX – July 25, 2023 – Veritex Holdings, Inc. (Nasdaq: VBTX) (“Veritex” or the “Company”), the parent holding company for Veritex Community Bank, today announced the declaration of a quarterly cash dividend of $0.20 per share on its outstanding common stock. The dividend will be paid on or after August 25, 2023 to shareholders of record as of August 10, 2023.
About Veritex Holdings, Inc.
Headquartered in Dallas, Texas, Veritex is a bank holding company that conducts banking activities through its wholly-owned subsidiary, Veritex Community Bank, with locations throughout the Dallas-Fort Worth metroplex and in the Houston metropolitan area. Veritex Community Bank is a Texas state chartered bank regulated by the Texas Department of Banking and the Board of Governors of the Federal Reserve System. For more information, visit www.veritexbank.com.
Forward Looking Statement
This press release includes “forward-looking statements,” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements include statements regarding Veritex’s projected plans and objectives, including the expected payment date of its common stock dividend. Forward-looking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “target,” “estimate,” “seek,” “plan,” “outlook,” “continue,” “positions,” “prospects” or “potential,” by future conditional verbs such as “will,” “would,” “should,” “could” or “may”, or by variations of such words or by similar expressions. These forward-looking statements are subject to numerous assumptions, risks and uncertainties which change over time and are beyond Veritex’s control. Forward-looking statements speak only as of the date they are made and Veritex assumes no duty to supplement, update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.
Source: Veritex Holdings, Inc.
Investor Relations:
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