Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 8-K
 

 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 
Date of Report (date of earliest event reported): January 28, 2019


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

 
Texas
 
001-36682
 
27-0973566
(State or other jurisdiction of
incorporation or organization)
 
(Commission File Number)
 
(I.R.S. Employer
Identification Number)
 
8214 Westchester Drive, Suite 800
Dallas, Texas 75225
(Address of principal executive offices)
 
(972) 349-6200
(Registrant’s telephone number, including area code)
 

 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
 

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
Item 7.01    Regulation FD Disclosure
 
On January 28, 2019, 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 fourth quarter and year ended December 31, 2018. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
On Tuesday, January 29, 2019 at 8:30 a.m. Central Time, the Company will host an investor conference call and webcast to review their fourth quarter and year-end 2018 financial results. The webcast will include a slide presentation that consists of information regarding the Company’s operating and growth strategies and financial performance. The presentation materials will be posted on the Company’s website on January 29, 2019.
As provided in General Instruction B.2 to Form 8-K, the information furnished in Item 2.02, Item 7.01 and 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, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 8.01    Other Events
On January 22, 2019, the Board of Directors of the Company declared the initiation of a regular quarterly cash dividend of $0.125 per share on its outstanding common stock. The dividend will be paid on or after February 21, 2019 to shareholders of record as of February 7, 2019. A press release announcing the dividend declaration is attached hereto as Exhibit 99.2 and is incorporated herein by reference.
Item 9.01    Financial Statements and Exhibits
 
(d) Exhibits.
 
Exhibit Number
 
Description
 
 
 






SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
Veritex Holdings, Inc.
 
 
 
 
 
By:
 
/s/ C. Malcolm Holland, III
 
 
C. Malcolm Holland, III
 
 
Chairman and Chief Executive Officer
Date:
 
January 28, 2019
 



Exhibit
Exhibit 99.1
https://cdn.kscope.io/34b89c01cd4bdc4f3b04cbf4cae3d6c4-veritexseclogo.jpg

PRESS RELEASE
FOR IMMEDIATE RELEASE

Veritex Holdings, Inc. Reports Fourth Quarter and Record Year-End 2018 Results, Initiates Dividend and Announces Stock Buyback Program

Dallas, TX — January 28, 2019 —Veritex Holdings, Inc. (“Veritex” or the “Company”) (Nasdaq: VBTX), the holding company for Veritex Community Bank, today announced the results for the fourth quarter and full year of 2018. Net income available to common stockholders was $9.8 million, or $0.40 diluted earnings per share (“EPS”), compared to $8.9 million, or $0.36 diluted EPS, for the quarter ended September 30, 2018 and $3.3 million, or $0.14 diluted EPS, for the quarter ended December 31, 2017. The fourth quarter and full year of 2018 results do not include the financial results of Green Bancorp, Inc. ("Green"), which was merged with and into the Company on January 1, 2019. Green's results as a separate company for the fourth quarter and full year of 2018 are presented separately in this release.
Fourth Quarter 2018 Financial Highlights:
Diluted EPS was $0.40 and diluted operating EPS was $0.47 for the fourth quarter of 2018
Total loans increased $110.8 million, or 18.12% annualized during the fourth quarter of 2018
NIM expanded to 3.82%1 for the fourth quarter 2018 compared to 3.73%1 for the third quarter of 2018 excluding cash collections in excess of expected cash flows on purchased credit impaired ("PCI") loans
Announced initiation of a regular quarterly cash dividend of $0.125
Announced stock buyback program to purchase up to $50.0 million during 2019 of our outstanding common stock
 
 
Veritex
 
Green
 
 
Q4 2018
 
Q3 2018
 
Q4 2018
 
Q3 2018
 
 
(Dollars in thousands)
GAAP
 
 
 
 
 
 

 
 

Net income available to common stockholders
 
$
9,825

 
$
8,935

 
$
15,327

 
$
15,597

Diluted EPS
 
0.40

 
0.36

 
0.41

 
0.41

Return on average assets2
 
1.20
%
 
1.10
%
 
1.37
%
 
1.42
%
Efficiency ratio
 
54.27

 
57.58

 
50.52

 
53.64

Net loan growth2, 4
 
18.12

 
4.40

 
4.06

 
17.83

Book value per common share
 
$
21.88

 
$
21.38

 
$
13.66

 
$
13.12

Non-GAAP3
 
 
 
 
 
 
 
 
Operating net income available to common stockholders
 
$
11,457

 
$
10,401

 
$
16,559

 
$
18,552

Diluted operating EPS
 
0.47

 
0.42

 
0.44

 
0.49

Operating return on average assets2
 
1.40
%
 
1.28
%
 
1.49
%
 
1.69
%
Operating efficiency ratio
 
50.65

 
49.09

 
47.77

 
47.07

Return on average tangible common equity2
 
12.12

 
11.41

 
15.20

 
16.01

Operating return on average tangible common equity2
 
13.99

 
13.14

 
16.40

 
19.00

Tangible book value per common share
 
$
14.57

 
$
14.02

 
$
11.18

 
$
10.63

1 Excludes $354 thousand and $2.0 million of cash collections in excess of expected cash flows on PCI loans for the quarters ended December 31, 2018 and September 30, 2018, respectively. Including the cash collections in excess of expected cash flows NIM was 3.87% and 4.00% for the quarters ended December 31, 2018 and September 30, 2018, respectively.
2 Annualized ratio.
3 Refer to "Reconciliation of Non-GAAP Financial Measures" after the financial highlights of Veritex and Green, respectively, for a reconciliation of this non-GAAP financial measure to their most directly comparable GAAP measure.
4 Loan growth for Green includes $83.8 million of branch assets (loans) held for sale as of December 31, 2018



1








"2018 has been another transformational year for the Company and with the consummation of the merger with Green on January 1, 2019, Veritex became one of the 10 largest banks headquartered in Texas," said C. Malcolm Holland, Chairman and Chief Executive Officer of Veritex. "This strategic merger provides Veritex with the growth opportunities, scale and footprint to continue to deliver excellent customer service and generate top-tier financial performance for our stockholders." Holland continued, "Our integration planning is right on track including organizational design, system selection, product mapping and training. We are encouraged by the way employees of both companies have come together to work on the consolidation and the creation of a premier Texas community banking franchise. We continue to anticipate meaningful earnings accretion and efficiency as we realize the benefits of the merger."
Discussion of Veritex Q4 Results

Result of Operations for the Three Months Ended December 31, 2018
 
Net Interest Income

For the three months ended December 31, 2018, net interest income before provision for loan losses was $28.3 million and net interest margin was 3.87% compared to $29.2 million and 4.00%, respectively, for the three months ended September 30, 2018. The $889 thousand decrease in net interest income and 13 basis point decrease in net interest margin was primarily due to an increase in the average rate paid on interest-bearing liabilities during the three months ended December 31, 2018 compared to the three months ended September 30, 2018. Average interest-bearing deposits grew to $2.0 billion for the three months ended December 31, 2018 from $1.9 billion for the three months ended September 30, 2018, primarily due to increases in average outstanding correspondent money market and brokered deposit account balances which have interest rates above the average rate paid on our other interest-bearing deposits. As a result, the average cost of interest-bearing deposits increased to 1.75% for the three months ended December 31, 2018 from 1.59% for the three months ended September 30, 2018.
Net interest income before provision for loan losses increased by $2.5 million from $25.8 million to $28.3 million and net interest margin decreased 37 basis points from 4.24% to 3.87% for the three months ended December 31, 2018 as compared to the same period in 2017. The increase in net interest income before provision for loan losses was primarily driven by loan growth of $110.8 million during the three months ended December 31, 2018. For the three months ended December 31, 2018, average loan balances increased by $471.5 million compared to the three months ended December 31, 2017, which resulted in a $6.8 million increase in interest income. This was partially offset by an increase in the average rate paid on interest-bearing liabilities discussed above, which resulted in a $5.1 million increase in interest expense on deposit accounts. Net interest margin decreased 37 basis points compared to the three months ended December 31, 2017 primarily due to an increase in the average rate paid on interest-bearing liabilities during the three months ended December 31, 2018. Average interest-bearing deposit accounts grew to $2.0 billion for the three months ended December 31, 2018 compared to $1.6 billion for the three months ended December 31, 2017, primarily due to increases in average outstanding correspondent money market and brokered deposit account balances which have interest rates above the average rate paid on our other interest-bearing deposits. As a result, the average cost of interest-bearing deposits increased to 1.75% for the three months ended December 31, 2018 from 0.93% for the three months ended December 31, 2017.
Noninterest Income
Noninterest income for the three months ended December 31, 2018 was $4.0 million, an increase of $1.5 million or 60.4% compared to the three months ended September 30, 2018. The increase was primarily due to a $1.6 million increase in the gain on sale of Small Business Administration ("SBA") loans for the three months ended December 31, 2018.
Compared to the three months ended December 31, 2017, noninterest income for the three months ended December 31, 2018 grew $1.7 million or 75.2%. The increase was primarily due to a $1.3 million increase in the gain on sale of SBA loans and a $171 thousand increase in rental income resulting from the purchase of our headquarter building on December 6, 2017.
Noninterest Expense
Noninterest expense was $17.5 million for the three months ended December 31, 2018, compared to $18.2 million for the three months ended September 30, 2018, a decrease of $708 thousand, or 3.9%. The decrease was primarily driven by a $1.5 million decrease in merger and acquisition expenses paid in connection with the merger with Green. The decrease was partially offset by a $884 thousand increase in salaries and employee benefits in the three months ended December 31, 2018 as compared to the three months ended September 30, 2018, primarily due to a $564 thousand decrease in amounts allocated or deferred as direct loan origination costs, which are required to be deferred in accordance with ASC 310-20 (formerly FAS91).

2








Compared to the three months ended December 31, 2017, noninterest expense for the three months ended December 31, 2018 increased $2.5 million, or 16.6%. The increase was primarily driven by a $1.1 million increase in professional and regulatory fees resulting from increased information technology professional support services and loan-related legal fees.The increase was also driven by a $921 thousand increase in salaries and employee benefit expenses compared to the three months ended December 31, 2017, primarily related to two additional months of salaries and employee benefit expenses for employees associated with Liberty Bancshares, Inc. ("Liberty"), which we acquired in a transaction that closed on December 1, 2017. Due to the acquisition of Liberty, one month of salaries and employee benefit expense related to Liberty employees were included for the three months ended December 31, 2017 compared to three months of expenses for the Liberty employees during the three months ended December 31, 2018.
Financial Condition
Total loans were $2.5 billion at December 31, 2018, an increase of $110.8 million, or 18.12% annualized, compared to September 30, 2018 and $322.4 million, or 14.4%, compared to December 31, 2017. The net increase was the result of the continued execution and success of our loan growth strategy.
Total deposits were $2.6 billion at December 31, 2018, a decrease of $33.8 million, or 1.3%, compared to September 30, 2018 and an increase of $343.8 million, or 15.1%, compared to December 31, 2017. The decrease from September 30, 2018 was primarily the result of a decrease of $35.5 million in non-interest bearing demand deposits, which was slightly offset by an increase of $2.6 million in interest bearing checking accounts. The increase from December 31, 2017 was primarily the result of an increase of $180.0 million and $204.2 million in correspondent money market accounts and brokered deposits, respectively.
Asset Quality
Allowance for loan losses as a percentage of loans was 0.75%, 0.73% and 0.57% of total loans held for investment at December 31, 2018, September 30, 2018 and December 31, 2017, respectively. The allowance for loan losses as a percentage of total loans for each of the three quarters ended was determined by an evaluation of the qualitative factors around the nature, volume and mix of the loan portfolio. The increase at December 31, 2018 in the allowance for loan losses as a percentage of loans from September 30, 2018 and December 31, 2017 was attributable to continued execution and success of our organic growth strategy, which was partially offset by payoffs of acquired loans and an increase in specific reserves on certain non-performing loans. We recorded a provision for loan losses of $1.4 million for the quarter ended December 31, 2018 compared to a provision of $3.1 million and $2.5 million for the quarter ended September 30, 2018 and December 31, 2017, respectively, which reflects adjustments to provision for loan losses as a result of our continued organic growth.
Nonperforming assets totaled $24.7 million, or 0.77%, of total assets at December 31, 2018 compared to $26.1 million, or 0.80%, of total assets at September 30, 2018 and $932 thousand, or 0.03%, of total assets at December 31, 2017. The decrease of $1.4 million compared to September 30, 2018 was primarily due to the renewal, during the fourth quarter of 2018, of a $3.8 million loan that was 90 days past due at September 30, 2018. The increase of $23.8 million in nonperforming assets compared to December 31, 2017 was primarily due to the placement of $17.2 million of PCI loans on non-accrual status as a result of information the Company obtained, that precluded the Company from reasonably estimating the timing and amount of future cash flows relating to these loans. Excluding these purchased credit impaired loans compared to December 31, 2017, the increase of $7.0 million in nonperforming assets was a result of an increase in nonperforming loans of $7.1 million, partially offset by a decrease in other real estate owned of $449 thousand.

3








Discussion of Green Q4 Results

Result of Operations for the Three Months Ended December 31, 2018
 
Net Interest Income

For the three months ended December 31, 2018, net interest income before provision for loan losses was $40.4 million and net interest margin was 3.82% compared to $39.5 million and 3.78%, respectively, for the three months ended September 30, 2018. The $927 thousand increase in net interest income and 4 basis point increase in net interest margin was primarily driven by continued total loan growth of $34.2 million during the three months ended December 31, 2018, which includes branch assets held for sale. For the three months ended December 31, 2018, average loan balances increased by $57.9 million compared to the three months ended September 30, 2018, which resulted in a $2.3 million increase in interest income. This was partially offset by an increase in the average rate paid on interest-bearing liabilities during the three months ended December 31, 2018. Average interest-bearing deposits grew $92.3 million for the three months ended December 31, 2018 to $2.7 billion from $2.6 billion for the three months ended September 30, 2018, primarily due to increases in average outstanding money market account balances and certificates of deposit. As a result, the average cost of interest-bearing deposits increased to 1.61% for the three months ended December 31, 2018 from 1.39% for the three months ended September 30, 2018.
Compared to the three months ended December 31, 2017, net interest income before provision for loan losses increased by $3.6 million from $36.8 million to $40.4 million and net interest margin increased 18 basis points from 3.64% to 3.82% for the three months ended December 31, 2018. The $3.6 million increase in net interest income and 18 basis point increase in net interest margin were primarily driven by continued loan growth as discussed above. For the three months ended December 31, 2018, average loan balances increased by $264.7 million compared to the three months ended December 31, 2017, which resulted in a $9.0 million increase in interest income. This was partially offset by an increase in the average rate paid on interest-bearing liabilities during the three months ended December 31, 2018. Average interest-bearing deposits decreased $4.1 million, and the average cost of interest-bearing deposits increased to 1.61%, for the three months ended December 31, 2018 compared to the three months ended December 31, 2017.
Noninterest Income
Noninterest income for the three months ended December 31, 2018 was $4.4 million, a decrease of $1.1 million, or 19.4%, compared to the three months ended September 30, 2018. The decrease was primarily due to a $624 thousand decrease in the gain on sale of guaranteed portion of loans and a $320 thousand decrease in loan fees.
Noninterest income for the three months ended December 31, 2018 was $4.4 million, an increase of $485 thousand or 12.3% compared to the three months ended December 31, 2017. The increase was primarily due to a $582 thousand increase in customer service fees and a $1.1 million decrease in net loss on held for sale loans. This increase was slightly offset by a $1.6 million decrease in gain on sale of guaranteed portion of loans.
Noninterest Expense
Noninterest expense was $22.7 million for the three months ended December 31, 2018, compared to $24.1 million for the three months ended September 30, 2018, a decrease of $1.4 million, or 6.1%. The decrease was primarily driven by a $1.7 million decrease in merger and acquisition expenses.
Compared to the three months ended December 31, 2017, noninterest expense for the three months ended December 31, 2018 decreased $919 thousand, or 3.9%. The decrease was primarily driven by a $1.2 million decrease in professional and regulatory fees, a $781 thousand decrease in salaries and employee benefits and a $445 thousand decrease in loan related expenses. This increase was slightly offset by a $1.2 million increase in merger and acquisition expenses.
Financial Condition
Total loans were $3.3 billion at December 31, 2018, a decrease of $50.0 million, or 1.5%, compared to September 30, 2018 and increased $123.3 million, or 3.9%, compared to December 31, 2017. Including $83.8 million of loans that are included in branch assets held for sale as of December 31, 2018, total loans increased $34.2 million, or 1.0%, compared to September 30, 2018 and increased $207.5 million, or 6.5%, compared to December 31, 2017. The net increase was the result of the continued execution and success of Green's loan growth strategy.

4








Total deposits were $3.5 billion at December 31, 2018, an increase of $51.9 million, or 1.5%, compared to September 30, 2018 and an increase of $69.2 million, or 2.0%, compared to December 31, 2017. Including $52.3 million of deposits that are included in branch liabilities held for sale as of December 31, 2018, total deposits increased $104.1 million, or 3.0%, compared to September 30, 2018 and increased $121.5 million, or 3.6%, compared to December 31, 2017. The increase from September 30, 2018 was primarily the result of an increase of $102.9 million in interest-bearing transaction and savings deposits. The increase from December 31, 2017 was primarily the result of increases of $91.5 million and $37.0 million in time deposits and noninterest-bearing deposits, respectively.
Asset Quality
Allowance for loan losses as a percentage of loans was 0.98%, 1.05% and 0.98% of total loans held for investment at December 31, 2018, September 30, 2018 and December 31, 2017, respectively. The allowance for loan losses as a percentage of total loans for each of the three quarters ended was determined by loss migration analysis and a review of the qualitative factors and specific reserves for impaired loans. A provision for loan losses of $2.4 million was recorded for the quarter ended December 31, 2018 compared to provisions of $320 thousand and $4.4 million for the quarter ended September 30, 2018 and December 31, 2017, respectively, which is a result of the general provision required from continued organic growth. During the three months ended September 30, 2018, there was a $1.6 million reduction in the specific reserves for a syndicated health care credit, which offset the addition of general reserves due to loan growth. There was no corresponding reduction in specific reserves for the quarters ended December 31, 2018 and December 31, 2017.
Nonperforming assets totaled $61.0 million, or 1.38%, of total assets at December 31, 2018 compared to $72.5 million, or 1.64%, of total assets at September 30, 2018 and $71.6 million, or 1.68%, of total assets at December 31, 2017. The decrease was due to decreases in nonaccrual loans and real estate acquired through foreclosure.
Dividend Information
On January 28, 2019, Veritex's Board of Directors declared a quarterly cash dividend of $0.125 per share on its outstanding shares of common stock, payable on February 21, 2019, to stockholders of record as of February 7, 2019.
Non-GAAP Financial Measures
The Company’s management uses certain non-GAAP (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, the Company's reported results prepared in accordance with GAAP. Specifically, the Company reviews and reports tangible book value per common share, tangible common equity to tangible assets, return on average tangible common equity, operating earnings, pre-tax, pre-provision operating earnings, diluted operating earnings per share, operating return on average assets, operating return on average tangible common equity and operating efficiency ratio. The Company 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 for both Veritex and Green, respectively, at the end of this earnings release for a reconciliation of these non-GAAP financial measures.
Conference Call
The Company will host an investor conference call to review the results on Tuesday, January 29, 2019 at 8:30 a.m. Central Time. Participants may pre-register for the call by visiting https://edge.media-server.com/m6/p/r6d2ku78 and will receive a unique PIN number, which can be used when dialing in for the call. This will allow attendees to enter the call immediately. Alternatively, participants may call toll-free at (877) 703-9880.
The call and corresponding presentation slides will be webcast live on the home page of the Company's website, www.veritexbank.com. An audio replay will be available one hour after the conclusion of the call at (855) 859-2056, Conference #6808679. This replay, as well as the webcast, will be available until February 5, 2019.

5








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 Contact:
LaVonda Renfro
972-349-6200
lrenfro@veritexbank.com

Investor Relations:
Susan Caudle
972-349-6132
scaudle@veritexbank.com
Forward-Looking Statements
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. Forward-looking statements are based on various facts and derived utilizing assumptions and current expectations, estimates and projections and are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements include, without limitation, statements relating to the impact Veritex expects its acquisition of Green to have on Veritex’s operations, financial condition, and financial results, and Veritex’s expectations about its ability to successfully integrate the combined businesses and the amount of cost savings and overall operational efficiencies Veritex expects to realize as a result of the acquisition. Forward-looking statements may also include statements about 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 economic trends, and any such variations may be material. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing words. Further, certain factors that could affect future results and cause actual results to differ materially from those expressed in the forward-looking statements include, but are not limited to, the possibility that the businesses of Veritex and Green will not be integrated successfully, that the cost savings and any synergies from the acquisition may not be fully realized or may take longer to realize than expected, disruption from the acquisition making it more difficult to maintain relationships with employees, customers or other parties with whom Veritex has (or Green had) business relationships, diversion of management time on integration-related issues, the reaction to the transaction of the companies’ customers, employees and counterparties and other factors, many of which are beyond the control of Veritex. 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, 2017 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 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 forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made. Veritex does not undertake any obligation, and specifically declines any obligation, to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise. All forward-looking statements, expressed or implied, included in this earnings release are expressly qualified in their entirety by the cautionary statements contained or referred to herein.

6









VERITEX HOLDINGS, INC. AND SUBSIDIARY
Financial Highlights
(Unaudited)

 
 
For the Quarter Ended
 
For the Year Ended
 
 
Dec 31, 2018
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
 
Dec 31, 2018
 
Dec 31, 2017
 
 
(Dollars and shares in thousands)
Per Share Data (Common Stock):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic EPS
 
$
0.41

 
$
0.37

 
$
0.42

 
$
0.43

 
$
0.14

 
$
1.63

 
$
0.82

Diluted EPS
 
0.40

 
0.36

 
0.42

 
0.42

 
0.14

 
1.60

 
0.80

Book value per common share
 
21.88

 
21.38

 
21.03

 
20.60

 
20.28

 
21.88

 
20.28

Tangible book value per common share1
 
14.57

 
14.02

 
13.63

 
13.14

 
12.75

 
14.57

 
12.75

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common Stock Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares outstanding at period end
 
24,251

 
24,192

 
24,181

 
24,149

 
24,110

 
24,251

 
24,110

Weighted average basic shares outstanding for the period
 
24,224

 
24,176

 
24,148

 
24,120

 
23,124

 
24,169

 
18,404

Weighted average diluted shares outstanding for the period
 
24,532

 
24,613

 
24,546

 
24,539

 
23,524

 
24,590

 
18,810

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Summary Performance Ratios:
 
 
 
 
 
 

 
 

 
 

 
 
 
 
Return on average assets2
 
1.20
%
 
1.10
%
 
1.34
%
 
1.41
%
 
0.48
%
 
1.26
%
 
0.76
%
Pre-tax, pre-provision operating return on average assets1, 2
 
1.95

 
1.98

 
2.03

 
2.14

 
2.07

 
2.02

 
1.81

Return on average equity2
 
7.44

 
6.88

 
8.11

 
8.55

 
2.78

 
7.73

 
4.54

Return on average tangible common equity1, 2
 
12.12

 
11.41

 
13.53

 
14.70

 
4.93

 
12.89

 
6.27

Efficiency ratio
 
54.27

 
57.58

 
53.51

 
54.28

 
53.60

 
54.92

 
56.24

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selected Performance Metrics - Operating:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted operating EPS1
 
$
0.47

 
$
0.42

 
$
0.46

 
$
0.50

 
$
0.31

 
$
1.84

 
$
1.08

Operating return on average assets1, 2
 
1.40
%
 
1.28
%
 
1.47
%
 
1.65
%
 
1.09
%
 
1.45
%
 
1.03
%
Operating return on average tangible common equity1, 2
 
13.99

 
13.14

 
14.82

 
16.99

 
10.26

 
14.68

 
8.32

Operating efficiency ratio1
 
50.65

 
49.09

 
48.67

 
49.94

 
49.98

 
49.60

 
52.70

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Veritex Holdings, Inc. Capital Ratios:
 
 
 
 
 
 

 
 

 
 

 
 
 
 
Average stockholders' equity to average total assets
 
16.14
%
 
15.92
%
 
16.48
%
 
16.48
%
 
17.26
%
 
16.25
%
 
16.81
%
Tier 1 capital to average assets (leverage)
 
12.04

 
11.74

 
12.08

 
11.84

 
12.92

 
12.04

 
12.92

Common equity tier 1 capital
 
11.80

 
12.02

 
12.17

 
12.04

 
12.03

 
11.80

 
12.03

Tier 1 capital to risk-weighted assets
 
12.18

 
12.43

 
12.60

 
12.48

 
12.48

 
12.18

 
12.48

Total capital to risk-weighted assets
 
12.98

 
13.22

 
13.31

 
13.17

 
13.16

 
12.98

 
13.16

Tangible common equity to tangible assets1
 
11.66

 
10.95

 
11.15

 
11.01

 
11.12

 
11.66

 
11.12

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Veritex Bank Capital Ratios:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tier 1 capital to average assets (leverage)
 
10.87
%
 
10.53
%
 
10.70
%
 
10.39
%
 
11.28
%
 
10.87
%
 
11.28
%
Common equity tier 1 capital
 
11.01
%
 
11.13
%
 
11.16
%
 
10.94
%
 
10.88
%
 
11.01
%
 
10.88
%
Tier 1 capital to risk-weighted assets
 
11.01
%
 
11.13
%
 
11.16
%
 
10.94
%
 
10.88
%
 
11.01
%
 
10.88
%
Total capital to risk-weighted assets
 
11.64
%
 
11.75
%
 
11.70
%
 
11.45
%
 
11.37
%
 
11.64
%
 
11.37
%

1Refer to "Reconciliation of Non-GAAP Financial Measures" after the financial highlights of Veritex and Green, respectively, for a reconciliation of this non-GAAP financial measure to their most directly comparable GAAP measure.
2Annualized ratio.

7









VERITEX HOLDINGS, INC. AND SUBSIDIARY
Financial Highlights
 
 
December 31,
2018
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
 
December 31,
2017
 
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
 
 
 
(Dollars in thousands)
Period End Balance Sheet Data:
 
 
 
 

 
 

 
 

 
 

Cash and cash equivalents
 
$
84,449

 
$
261,790

 
$
146,740

 
$
195,194

 
$
149,044

Investment securities
 
262,695

 
256,237

 
252,187

 
243,164

 
228,117

 
 
 
 
 
 
 
 
 
 
 
Loans held for sale
 
1,258

 
1,425

 
453

 
893

 
841

Loans held for investment
 
2,555,494

 
2,444,499

 
2,418,886

 
2,316,065

 
2,233,490

Total Loans
 
2,556,752

 
2,445,924

 
2,419,339

 
2,316,958

 
2,234,331

Allowance for loan losses
 
(19,255
)
 
(17,909
)
 
(14,842
)
 
(13,401
)
 
(12,808
)
Accrued interest receivable
 
8,828

 
8,291

 
8,137

 
7,127

 
7,676

Bank-owned life insurance
 
22,064

 
21,915

 
21,767

 
21,620

 
21,476

Bank premises, furniture and equipment, net
 
78,409

 
77,346

 
76,348

 
76,045

 
75,251

Non-marketable equity securities
 
22,822

 
27,417

 
27,086

 
20,806

 
13,732

Investment in unconsolidated subsidiary
 
352

 
352

 
352

 
352

 
352

Other real estate owned
 

 

 

 
10

 
449

Intangible assets, net
 
15,896

 
16,603

 
17,482

 
18,372

 
20,441

Goodwill
 
161,447

 
161,447

 
161,447

 
161,685

 
159,452

Other assets
 
14,091

 
16,433

 
15,831

 
13,634

 
14,518

Branch assets held for sale
 

 

 
1,753

 
1,753

 
33,552

Total assets
 
$
3,208,550

 
$
3,275,846

 
$
3,133,627

 
$
3,063,319

 
$
2,945,583

 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing deposits
 
$
626,283

 
$
661,754

 
$
611,315

 
$
597,236

 
$
612,830

Interest-bearing transaction and savings deposits
 
1,313,161

 
1,346,264

 
1,252,774

 
1,354,757

 
1,200,487

Certificates and other time deposits
 
682,984

 
648,236

 
626,329

 
541,801

 
465,313

Total deposits
 
2,622,428

 
2,656,254

 
2,490,418

 
2,493,794

 
2,278,630

Accounts payable and accrued expenses
 
5,413

 
6,875

 
4,130

 
3,862

 
5,098

Accrued interest payable and other liabilities
 
5,361

 
5,759

 
5,856

 
3,412

 
5,446

Advances from Federal Home Loan Bank
 
28,019

 
73,055

 
108,092

 
48,128

 
71,164

Subordinated debentures and subordinated notes
 
16,691

 
16,691

 
16,690

 
16,690

 
16,689

Other borrowings
 

 

 

 

 
15,000

Branch liabilities held for sale
 

 

 

 

 
64,627

Total liabilities
 
2,677,912

 
2,758,634

 
2,625,186

 
2,565,886

 
2,456,654

Stockholders’ equity
 
530,638

 
517,212

 
508,441

 
497,433

 
488,929

Total liabilities and stockholders’ equity
 
$
3,208,550

 
$
3,275,846

 
$
3,133,627

 
$
3,063,319

 
$
2,945,583



8








VERITEX HOLDINGS, INC. AND SUBSIDIARY
Financial Highlights
(Unaudited)
 
 
For the Quarter Ended
 
For the Year Ended
 
 
Dec 31, 2018
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
 
Dec 31, 2018
 
Dec 31, 2017
 
 
(Dollars in thousands)
Interest income:
 
 
 
 

 
 

 
 

 
 

 
 
 
 
Loans, including fees
 
$
35,028

 
$
35,074

 
$
32,291

 
$
32,067

 
$
28,182

 
$
134,460

 
$
73,795

Investment securities
 
1,908

 
1,722

 
1,647

 
1,328

 
1,211

 
6,605

 
3,462

Deposits in other banks
 
833

 
1,016

 
613

 
687

 
500

 
3,149

 
2,287

Other investments
 
5

 
6

 
4

 
5

 
4

 
20

 
8

Total interest income
 
37,774

 
37,818

 
34,555

 
34,087

 
29,897

 
144,234

 
79,552

Interest expense:
 
 
 
 
 
 

 
 

 
 

 
 
 
 
Transaction and savings deposits
 
5,412

 
4,694

 
4,204

 
3,289

 
2,397

 
17,599

 
8,981

Certificates and other time deposits
 
3,394

 
3,068

 
2,248

 
1,004

 
1,280

 
9,714

 
897

Advances from FHLB
 
377

 
630

 
234

 
460

 
213

 
1,701

 
531

Subordinated debentures and subordinated notes
 
304

 
250

 
245

 
232

 
257

 
1,031

 
635

Total interest expense
 
9,487

 
8,642

 
6,931

 
4,985

 
4,147

 
30,045

 
11,044

Net interest income
 
28,287

 
29,176

 
27,624

 
29,102

 
25,750

 
114,189

 
68,508

Provision for loan losses
 
1,364

 
3,057

 
1,504

 
678

 
2,529

 
6,603

 
5,114

Net interest income after provision for loan losses
 
26,923

 
26,119

 
26,120

 
28,424

 
23,221

 
107,586

 
63,394

Noninterest income:
 
 
 
 
 
 

 
 

 
 

 
 
 
 
Service charges and fees on deposit accounts
 
832

 
809

 
846

 
933

 
769

 
3,420

 
2,502

Loan fees
 
387

 
410

 
261

 
274

 
206

 
1,332

 
657

(Loss) gain on sales of investment securities, net
 
(42
)
 
(34
)
 
4

 
8

 
17

 
(64
)
 
222

Gain on sales of loans and other assets owned
 
1,789

 
270

 
416

 
581

 
882

 
3,056

 
3,141

Rental income
 
310

 
414

 
452

 
478

 
139

 
1,654

 
139

Other
 
751

 
641

 
613

 
507

 
285

 
2,512

 
915

Total noninterest income
 
4,027

 
2,510

 
2,592

 
2,781

 
2,298

 
11,910

 
7,576

Noninterest expense:
 
 
 
 
 
 

 
 

 
 

 
 
 
 
Salaries and employee benefits
 
8,278

 
7,394

 
7,657

 
7,809

 
7,357

 
31,138

 
20,828

Occupancy and equipment
 
2,412

 
2,890

 
2,143

 
3,234

 
1,996

 
10,679

 
5,618

Professional and regulatory fees
 
1,889

 
1,893

 
1,528

 
1,972

 
811

 
7,282

 
4,158

Data processing and software expense
 
888

 
697

 
689

 
746

 
766

 
3,020

 
2,217

Marketing
 
570

 
306

 
446

 
461

 
388

 
1,783

 
1,293

Amortization of intangibles
 
835

 
798

 
856

 
978

 
551

 
3,467

 
964

Telephone and communications
 
223

 
236

 
414

 
426

 
282

 
1,299

 
720

Merger and acquisition expenses
 
1,150

 
2,692

 
1,043

 
335

 
1,018

 
5,220

 
2,691

Other
 
1,293

 
1,340

 
1,393

 
1,345

 
1,866

 
5,371

 
4,300

Total noninterest expense
 
17,538

 
18,246

 
16,169

 
17,306

 
15,035

 
69,259

 
42,789

Net income from operations
 
13,412

 
10,383

 
12,543

 
13,899

 
10,484

 
50,237

 
28,181

Income tax expense
 
3,587

 
1,448

 
2,350

 
3,511

 
7,227

 
10,896

 
13,029

Net income
 
9,825

 
8,935

 
10,193

 
10,388

 
3,257

 
39,341

 
15,152

Preferred stock dividends
 

 

 

 

 

 

 
42

Net income available to common stockholders
 
$
9,825

 
$
8,935

 
$
10,193

 
$
10,388

 
$
3,257

 
$
39,341

 
$
15,110


9









VERITEX HOLDINGS, INC. AND SUBSIDIARY
Financial Highlights
(Unaudited)
 
 
For the Quarter Ended
 
 
December 31, 2018
 
September 30, 2018
 
December 31, 2017
 
 
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
 
 
(Dollars in thousands)
Assets
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Interest-earning assets:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Loans1
 
$
2,502,084

 
$
35,028

 
5.55
%
 
$
2,432,095

 
$
35,074

 
5.72
%
 
$
2,030,587

 
$
28,182

 
5.51
%
Investment securities
 
263,182

 
1,908

 
2.88

 
254,242

 
1,722

 
2.69

 
233,244

 
1,211

 
2.06

Interest-earning deposits in financial institutions
 
136,879

 
833

 
2.41

 
203,750

 
1,016

 
1.98

 
145,099

 
500

 
1.37

Other investments
 
352

 
5

 
5.64

 
352

 
6

 
6.76

 
352

 
4

 
4.51

Total interest-earning assets
 
2,902,497

 
37,774

 
5.16

 
2,890,439

 
37,818

 
5.19

 
2,409,282

 
29,897

 
4.92

Allowance for loan losses
 
(18,338
)
 
 
 
 

 
(16,160
)
 
 

 
 

 
(10,658
)
 
 
 
 

Noninterest-earning assets
 
359,009

 
 
 
 

 
358,935

 
 

 
 

 
292,664

 
 
 
 

Total assets
 
$
3,243,168

 
 
 
 

 
$
3,233,214

 
 

 
 

 
$
2,691,288

 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Stockholders’ Equity
 
 
 
 
 
 

 
 

 
 

 
 

 
 
 
 
 
 

Interest-bearing liabilities:
 
 
 
 
 
 

 
 

 
 

 
 

 
 
 
 
 
 

Interest-bearing demand and savings deposits
 
$
1,337,901

 
5,412

 
1.60
%
 
$
1,278,798

 
$
4,694

 
1.46
%
 
$
1,091,711

 
2,397

 
0.87
%
Certificates and other time deposits
 
655,776

 
3,394

 
2.05

 
655,034

 
3,068

 
1.86

 
478,239

 
1,280

 
1.06

Advances from FHLB
 
52,436

 
377

 
2.85

 
120,114

 
630

 
2.08

 
74,589

 
213

 
1.13

Subordinated debentures and subordinated notes
 
16,691

 
304

 
7.23

 
16,690

 
250

 
5.94

 
25,398

 
257

 
4.01

Total interest-bearing liabilities
 
2,062,804

 
9,487

 
1.82

 
2,070,636

 
8,642

 
1.66

 
1,669,937

 
4,147

 
0.98

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing liabilities:
 
 
 
 
 
 

 
 

 
 

 
 

 
 
 
 
 
 

Noninterest-bearing deposits
 
643,958

 
 
 
 

 
635,952

 
 

 
 

 
542,918

 
 
 
 

Other liabilities
 
12,816

 
 
 
 

 
11,750

 
 

 
 

 
13,819

 
 
 
 

Total liabilities
 
2,719,578

 
 
 
 

 
2,718,338

 
 

 
 

 
2,226,674

 
 
 
 

Stockholders’ equity
 
523,590

 
 
 
 

 
514,876

 
 

 
 

 
464,614

 
 
 
 

Total liabilities and stockholders’ equity
 
$
3,243,168

 
 
 
 

 
$
3,233,214

 
 

 
 

 
$
2,691,288

 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest rate spread2
 
 
 
 
 
3.34
%
 
 

 
 

 
3.53
%
 
 
 
 
 
3.94
%
Net interest income and margin3
 
 
 
$
28,287

 
3.87
%
 
 

 
$
29,176

 
4.00
%
 
 
 
$
25,750

 
4.24
%

1 Includes average outstanding balances of loans held for sale of $1,019, $1,091, and $3,155 for the three months ended December 31, 2018, September 30, 2018 and December 31, 2017, respectively.
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.

10









VERITEX HOLDINGS, INC. AND SUBSIDIARY
Financial Highlights
(Unaudited)
 
 
For the Year Ended December 31,
 
 
2018
 
2017
 
 
Average
Outstanding
Balance
 
Interest
Earned/
Interest
Paid
 
Average
Yield/
Rate
 
Average
Outstanding
Balance
 
Interest
Earned/
Interest
Paid
 
Average
Yield/
Rate
 
 
(Dollars in thousands)
Assets
 
 

 
 

 
 

 
 

 
 

 
 

Interest-earning assets:
 
 

 
 

 
 

 
 

 
 

 
 

Loans1
 
$
2,382,946

 
$
134,460

 
5.64
%
 
$
1,441,295

 
$
73,795

 
5.12
%
Investment securities
 
247,163

 
6,605

 
2.67
%
 
170,253

 
3,462

 
2.03
%
Interest-earning deposits in financial institutions
 
160,402

 
3,149

 
1.96
%
 
202,314

 
2,287

 
1.13
%
Other investments
 
340

 
20

 
5.88
%
 
202

 
8

 
3.96
%
Total interest-earning assets
 
2,790,851

 
144,234

 
5.17
%
 
1,814,064

 
79,552

 
4.39
%
Allowance for loan losses
 
(15,324
)
 
 
 
 
 
(9,567
)
 
 
 
 
Noninterest-earning assets
 
356,901

 
 
 
 
 
176,471

 
 
 
 
Total assets
 
$
3,132,428

 
 
 
 
 
$
1,980,968

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Stockholders’ Equity
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand and savings deposits
 
$
1,277,186

 
17,599

 
1.38
%
 
$
871,212

 
8,981

 
1.03
%
Certificates and other time deposits
 
608,041

 
9,714

 
1.60
%
 
279,821

 
897

 
0.32
%
Advances from FHLB
 
87,366

 
1,701

 
1.95
%
 
51,196

 
531

 
1.04
%
Subordinated debentures and subordinated notes
 
16,748

 
1,031

 
6.16
%
 
13,878

 
635

 
4.58
%
Total interest-bearing liabilities
 
1,989,341

 
30,045

 
1.51
%
 
1,216,107

 
11,044

 
0.91
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing deposits
 
621,613

 
 
 
 
 
425,124

 
 
 
 
Other liabilities
 
12,456

 
 
 
 
 
6,802

 
 
 
 
Total liabilities
 
2,623,410

 
 
 
 
 
1,648,033

 
 
 
 
Stockholders’ equity
 
509,018

 
 
 
 
 
332,935

 
 
 
 
Total liabilities and stockholders’ equity
 
$
3,132,428

 
 
 
 
 
$
1,980,968

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest rate spread2
 
 
 
 
 
3.66
%
 
 
 
 
 
3.48
%
Net interest income and margin3
 
 
 
$
114,189

 
4.09
%
 
 
 
$
68,508

 
3.77
%

1Includes average outstanding balances of loans held for sale of $1,198 and $2,493 for the twelve months ended December 31, 2018 and 2017, respectively.
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.


11









VERITEX HOLDINGS, INC. AND SUBSIDIARY
Financial Highlights
(Unaudited)

Yield Trend
 
 
For the Quarter Ended
 
 
December 31,
2018
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
 
December 31,
2017
Average yield on interest-earning assets:
 
 
 
 
 
 

 
 

 
 

Total loans1
 
5.55
%
 
5.72
%
 
5.55
%
 
5.75
%
 
5.51
%
Securities available for sale
 
2.88

 
2.69

 
2.66

 
2.43

 
2.06

Interest-bearing deposits in other banks
 
2.41

 
1.98

 
1.80

 
1.70

 
1.37

Investment in unconsolidated subsidiary
 
5.64

 
6.76

 
4.91

 
6.20

 
4.51

Total interest-earning assets
 
5.16
%
 
5.19
%
 
5.10
%
 
5.22
%
 
4.92
%
 
 
 
 
 
 
 
 
 
 
 
Average rate on interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand and savings deposits
 
1.60
%
 
1.46
%
 
1.33
%
 
1.10
%
 
0.87
%
Certificates and other time deposits
 
2.05

 
1.86

 
1.52

 
0.77

 
1.06

Advances from FHLB
 
2.85

 
2.08

 
1.57

 
1.59

 
1.13

Subordinated debentures and subordinated notes
 
7.23

 
5.94

 
5.89

 
5.56

 
4.01

Total interest-bearing liabilities
 
1.82
%
 
1.66
%
 
1.43
%
 
1.08
%
 
0.98
%
 
 
 
 
 
 
 
 
 
 
 
Net interest rate spread2
 
3.34
%
 
3.53
%
 
3.67
%
 
4.14
%
 
3.94
%
Net interest margin3
 
3.87
%
 
4.00
%
 
4.07
%
 
4.46
%
 
4.24
%
 
1Includes average outstanding balances of loans held for sale of $1,019, $1,091, $1,349, $1,336 and $3,155 for the three months ended December 31, 2018, September 30, 2018, June 30, 2018, March 31, 2018 and December 31, 2017, respectively.
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
 
 
December 31,
2018
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
 
December 31,
2017
Average cost of interest-bearing deposits
 
1.75
%
 
1.59
%
 
1.39
%
 
1.00
%
 
0.93
%
Average costs of total deposits, including noninterest-bearing
 
1.32

 
1.20

 
1.05

 
0.74

 
0.69




12









VERITEX HOLDINGS, INC. AND SUBSIDIARY
Financial Highlights
(Unaudited)

Portfolio Composition
 
 
For the Quarter Ended
 
 
December 31,
2018
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
 
December 31,
2017
 
 
(Dollars in thousands)
Loans held for investment:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
 
$
760,772

 
29.8
%
 
$
723,140

 
29.6
%
 
$
691,718

 
28.6
%
 
$
672,820

 
29.0
%
 
$
684,551

 
30.6
%
Real Estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner occupied commercial
 
321,279

 
12.6

 
313,287

 
12.8

 
285,139

 
11.8

 
306,787

 
13.3

 
312,284

 
14.0

Commercial
 
781,753

 
30.6

 
755,801

 
30.9

 
730,324

 
30.2

 
648,754

 
28.0

 
597,008

 
26.7

Construction and land
 
324,863

 
12.7

 
294,143

 
12.0

 
300,262

 
12.4

 
301,023

 
13.0

 
277,825

 
12.4

Farmland
 
10,528

 
0.4

 
10,853

 
0.5

 
10,815

 
0.5

 
9,366

 
0.4

 
9,385

 
0.4

1-4 family residential
 
297,917

 
11.6

 
289,808

 
11.9

 
283,486

 
11.7

 
246,806

 
10.7

 
236,542

 
10.6

Multi-family residential
 
51,285

 
2.0

 
50,317

 
2.0

 
109,621

 
4.5

 
122,482

 
5.3

 
106,275

 
4.8

Consumer
 
7,112

 
0.3

 
7,166

 
0.3

 
7,543

 
0.3

 
8,051

 
0.3

 
9,648

 
0.5

Total loans held for investment1
 
$
2,555,509

 
100
%
 
$
2,444,515

 
100
%
 
$
2,418,908

 
100
%
 
$
2,316,089

 
100
%
 
$
2,233,518

 
100
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing
 
$
626,283

 
23.8
%
 
$
661,754

 
24.9
%
 
$
611,315

 
24.5
%
 
$
597,236

 
24.0
%
 
$
612,830

 
27.0
%
Interest-bearing transaction
 
146,969

 
5.6

 
144,328

 
5.4

 
143,561

 
5.8

 
156,174

 
6.3

 
187,516

 
8.2

Money market
 
1,133,045

 
43.2

 
1,168,262

 
44.0

 
1,074,048

 
42.5

 
1,165,773

 
46.1

 
960,149

 
42.1

Savings
 
33,147

 
1.3

 
33,674

 
1.3

 
35,165

 
1.4

 
32,810

 
1.3

 
52,822

 
2.3

Certificates and other time deposits
 
682,984

 
26.1

 
648,236

 
24.4

 
626,329

 
25.8

 
541,801

 
22.3

 
465,313

 
20.4

Total deposits
 
$
2,622,428

 
100
%
 
$
2,656,254

 
100
%
 
$
2,490,418

 
100
%
 
$
2,493,794

 
100
%
 
$
2,278,630

 
100
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loan to Deposit Ratio
 
97.4
%
 
 
 
92.0
%
 
 
 
97.1
%
 
 
 
92.9
%
 
 
 
98.0
%
 
 

1 Total loans held for investment does not includes deferred fees of $15 thousand at December 31, 2018, $16 thousand at September 30, 2018, $22 thousand at June 30, 2018, $24 thousand at March 31, 2018 and $28 thousand at December 31, 2018.

13









VERITEX HOLDINGS, INC. AND SUBSIDIARY
Financial Highlights
(Unaudited)

Asset Quality
 
For the Quarter Ended
 
For the Year Ended
 
Dec 31, 2018
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
 
Dec 31, 2018
 
Dec 31, 2017
 
(Dollars in thousands)
Nonperforming Assets:
 
 
 

 
 

 
 

 
 

 
 
 
 
Nonaccrual loans
$
24,745

 
$
21,822

 
$
4,252

 
$
3,438

 
$
465

 
$
24,745

 
$
465

Accruing loans 90 or more days past due

 
4,302

 
613

 
374

 
18

 

 
18

Total nonperforming loans held for investment
24,745

 
26,124

 
4,865

 
3,812

 
483

 
24,745

 
483

Other real estate owned

 

 

 
10

 
449

 

 
449

Total nonperforming assets
$
24,745

 
$
26,124

 
$
4,865

 
$
3,822

 
$
932

 
$
24,745

 
$
932

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Charge-offs:
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential
$

 
$

 
$

 
$

 
$

 
$

 
$
(11
)
Commercial
(26
)
 

 
(77
)
 
(72
)
 
(218
)
 
(175
)
 
(828
)
Consumer

 

 

 
(22
)
 

 
(22
)
 

Total charge-offs
(26
)
 

 
(77
)
 
(94
)
 
(218
)
 
(197
)
 
(839
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Recoveries:
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
7

 
10

 
15

 
9

 
4

 
41

 
9

Total recoveries
7

 
10

 
15

 
9

 
4

 
41

 
9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net charge-offs
$
(19
)
 
$
10

 
$
(62
)
 
$
(85
)
 
$
(214
)
 
$
(156
)
 
$
(830
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses at end of period
$
19,255

 
$
17,909

 
$
14,842

 
$
13,401

 
$
12,808

 
$
19,255

 
$
12,808

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset Quality Ratios:
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonperforming assets to total assets
0.77
%
 
0.80
%
 
0.16
%
 
0.12
%
 
0.03
%
 
0.77
%
 
0.03
%
Nonperforming loans to total loans held for investment
0.97

 
1.07

 
0.20

 
0.16

 
0.02

 
0.97

 
0.02

Allowance for loan losses to total loans held for investment
0.75

 
0.73

 
0.61

 
0.58

 
0.57

 
0.75

 
0.57

Net charge-offs to average loans outstanding

 

 

 

 
0.01

 
0.01

 
0.06


14









VERITEX HOLDINGS, INC. AND SUBSIDIARY
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 stockholders’ equity less goodwill and intangible assets, 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 our 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 intangible assets. 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:

 
 
For the Quarter Ended
 
 
Dec 31, 2018
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
 
 
(Dollars in thousands, except per share data)
Tangible Common Equity
 
 
 
 
 
 

 
 

 
 

Total stockholders' equity
 
$
530,638

 
$
517,212

 
$
508,441

 
$
497,433

 
$
488,929

Adjustments:
 
 
 
 
 
 
 
 
 
 
Goodwill
 
(161,447
)
 
(161,447
)
 
(161,447
)
 
(161,685
)
 
(159,452
)
Intangible assets1
 
(15,896
)
 
(16,603
)
 
(17,482
)
 
(18,372
)
 
(22,165
)
Tangible common equity
 
$
353,295

 
$
339,162

 
$
329,512

 
$
317,376

 
$
307,312

Common shares outstanding
 
24,251

 
24,192

 
24,181

 
24,149

 
24,110

 
 
 
 
 
 
 
 
 
 
 
Book value per common share
 
$
21.88

 
$
21.38

 
$
21.03

 
$
20.60

 
$
20.28

Tangible book value per common share
 
$
14.57

 
$
14.02

 
$
13.63

 
$
13.14

 
$
12.75


1 Intangible assets includes branch intangible assets held for sale of $1.7 million for the quarter ended December 31, 2017.

15










VERITEX HOLDINGS, INC. AND SUBSIDIARY
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 stockholders’ equity, less goodwill and intangible assets, net of accumulated amortization; (b) tangible assets as total assets less goodwill and intangible assets, 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 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 intangible assets. 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:
 
 
For the Quarter Ended
 
 
Dec 31, 2018
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
 
 
(Dollars in thousands)
Tangible Common Equity
 
 
 
 
 
 

 
 

 
 

Total stockholders' equity
 
$
530,638

 
$
517,212

 
$
508,441

 
$
497,433

 
$
488,929

Adjustments:
 
 
 
 
 
 
 
 
 
 
Goodwill
 
(161,447
)
 
(161,447
)
 
(161,447
)
 
(161,685
)
 
(159,452
)
Intangible assets1
 
(15,896
)
 
(16,603
)
 
(17,482
)
 
(18,372
)
 
(22,165
)
Tangible common equity
 
$
353,295

 
$
339,162

 
$
329,512

 
$
317,376

 
$
307,312

Tangible Assets
 
 
 
 
 
 
 
 
 
 
Total assets
 
$
3,208,550

 
$
3,275,846

 
$
3,133,627

 
$
3,063,319

 
$
2,945,583

Adjustments:
 
 
 
 
 
 
 
 
 
 
Goodwill
 
(161,447
)
 
(161,447
)
 
(161,447
)
 
(161,685
)
 
(159,452
)
Intangible assets1
 
(15,896
)
 
(16,603
)
 
(17,482
)
 
(18,372
)
 
(22,165
)
Tangible Assets
 
$
3,031,207

 
$
3,097,796

 
$
2,954,698

 
$
2,883,262

 
$
2,763,966

Tangible Common Equity to Tangible Assets
 
11.66
%
 
10.95
%
 
11.15
%
 
11.01
%
 
11.12
%

1 Intangible assets includes branch intangible assets held for sale of $1.7 million for the quarter ended December 31, 2017.


16









VERITEX HOLDINGS, INC. AND SUBSIDIARY
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) return as net income less the effect of intangible assets as net income, plus amortization of intangibles, net of taxes; (b) average tangible common equity as average stockholders’ equity less average goodwill and average intangible assets, 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 intangible assets. Goodwill and other intangible assets have the effect of increasing total stockholders’ equity while not increasing our tangible common equity. This measure is particularly relevant to acquisitive institutions who may have higher balances in goodwill and other intangible assets 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 excluding amortization of intangibles, net of tax to net income and presents our return on average tangible common equity:
 
 
For the Quarter Ended
 
For the Year Ended
 
 
Dec 31, 2018
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
 
Dec 31, 2018
 
Dec 31, 2017
 
 
(Dollars in thousands)
Net income available for common stockholders adjusted for amortization of core deposit intangibles
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
$
9,825

 
$
8,935

 
$
10,193

 
$
10,388

 
$
3,257

 
$
39,341

 
$
15,110

Adjustments:
 
 
 
 

 
 

 
 

 
 

 
 

 
 

Plus: Amortization of intangibles
 
945

 
935

 
975

 
1,205

 
685

 
4,060

 
1,270

Less: Tax benefit at the statutory rate
 
204

 
196

 
206

 
253

 
134

 
859

 
445

Net income available for common stockholders adjusted for amortization of intangibles
 
$
10,566

 
$
9,674

 
$
10,962

 
$
11,340

 
$
3,808

 
$
42,542

 
$
15,935

 
 
 
 
 

 
 

 
 

 
 

 
 

 
 

Average Tangible Common Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total average stockholders' equity
 
$
523,590

 
$
514,876

 
$
504,328

 
$
492,869

 
$
464,614

 
$
509,018

 
$
332,935

Adjustments:
 
 
 
 

 
 

 
 

 
 
 
 

 
 

Average goodwill
 
(161,447
)
 
(161,447
)
 
(161,433
)
 
(159,272
)
 
(144,042
)
 
(160,907
)
 
(73,656
)
Average intangible assets1
 
(16,254
)
 
(17,107
)
 
(17,984
)
 
(20,734
)
 
(14,240
)
 
(18,005
)
 
(5,311
)
Average tangible common equity
 
$
345,889

 
$
336,322

 
$
324,911

 
$
312,863

 
$
306,332

 
$
330,106

 
$
253,968

Return on Average Tangible Common Equity (Annualized)
 
12.12
%
 
11.41
%
 
13.53
%
 
14.70
%
 
4.93
%
 
12.89
%
 
6.27
%

1 Intangible assets includes branch intangible assets held for sale for the quarter ended December 31, 2017.


17









VERITEX HOLDINGS, INC. AND SUBSIDIARY
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, Operating Return on Average Tangible Common Equity and Operating Efficiency Ratio. Operating earnings and pre-tax, pre-provision operating earnings are non GAAP measures used by management to evaluate the Company’s financial performance. We calculate (a) operating earnings as net income available to common stockholders plus loss on sale of securities available-for-sale, net, less gain on sale of disposed branch assets, plus lease exit costs, net, plus branch closure expenses, plus one-time issuance of shares to all employees, plus merger and acquisition expenses, less tax impact of adjustments, plus re-measurement of deferred tax assets as a result of the reduction in the corporate income tax rate under the Tax Cuts and Jobs Act, plus other corporate development discrete tax items. We calculate (b) pre-tax, pre-provision operating earnings as operating earnings as described in clause (a) plus provision for income taxes, plus provision for loan losses. We calculate (c) diluted operating earnings per share as operating earnings as described in clause (a) divided by weight average diluted shares outstanding. We calculate (d) operating return on average tangible common equity as operating earnings as described in clause (a) divided by average tangible common equity. (average stockholders' equity less average goodwill and average intangible assets, net of accumulated amortization.) We calculate (e) operating efficiency ratio as non-interest expense plus adjustments to operating non-interest expense divided by (i) non-interest income plus adjustments to operating non-interest income plus (ii) net interest income.

We believe that these measures and the operating metrics calculated utilizing these measures are important to management and many investors in the marketplace who are interested in understanding the ongoing operating performance of the company and provide meaningful comparisons to its peers.

The following tables reconcile, as of the dates set forth below, operating earnings and pre-tax, pre-provision operating earnings and related metrics:








18








 
 
For the Quarter Ended
 
For the Year Ended
 
 
Dec 31, 2018
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
 
Dec 31, 2018
 
Dec 31, 2017
 
 
(Dollars in thousands)
Operating Earnings1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income available to common stockholders
 
$
9,825

 
$
8,935

 
$
10,193

 
$
10,388

 
$
3,257

 
$
39,341

 
$
15,110

Plus: Loss on sale of securities available for sale, net
 
42

 

 

 

 

 
42

 

Les: Gain on sale of disposed branch assets
 

 

 

 
(388
)
 

 
(388
)
 

Plus: Lease exit costs, net2
 

 

 

 
1,071

 

 
1,071

 

Plus: Branch closure expenses
 

 

 

 
172

 

 
172

 

Plus: One-time issuance of shares to all employees
 

 

 
421

 

 

 
421

 

Plus: Merger and acquisition expenses
 
1,150

 
2,692

 
1,043

 
335

 
1,018

 
5,220

 
2,691

Operating pre-tax income
 
11,017

 
11,627

 
11,657

 
11,578

 
4,275

 
45,879

 
17,801

Less: Tax impact of adjustments3
 
(440
)
 
538

 
293

 
242

 
356

 
633

 
942

Plus: Tax Act re-measurement
 

 
(688
)
 
(127
)
 
820

 
3,051

 
5

 
3,051

Plus: Other M&A discrete tax items
 

 

 

 

 
398

 

 
398

Net operating earnings
 
$
11,457

 
$
10,401

 
$
11,237

 
$
12,156

 
$
7,368

 
$
45,251

 
$
20,308

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average diluted shares outstanding
 
24,532

 
24,613

 
24,546

 
24,539

 
23,524

 
24,590

 
18,810

Diluted EPS
 
$
0.40

 
$
0.36

 
$
0.42

 
$
0.42

 
$
0.14

 
$
1.60

 
$
0.80

Diluted operating EPS
 
0.47

 
0.42

 
0.46

 
0.50

 
0.31

 
1.84

 
1.08


1 The Company previously adjusted operating income by excluding the impact of income recognized on acquired loans. The Company no longer includes this adjustment in order to align with industry peers for comparability purposes.
2 Lease exit costs, net for the three months ended March 31, 2018 includes a $1.5 million consent fee and $240 thousand in professional services paid in January 2018 to separately assign and sublease two of our branch leases that the Company ceased using in 2017 offset by the reversal of the corresponding assigned lease cease-use liability totaling $669 thousand.
3 During the fourth quarter, the Company initiated a transaction cost study which to through December 31, 2018 resulted in $727 thousand of expenses paid that are non-deductible merger and acquisition expenses. As such, the $727 thousand of non-deductible expenses are reflected in the quarter ended and year-ended December 31, 2018 tax impact of adjustments amounts reported. All other non-merger related adjustments to operating earnings are taxed at the statutory rate.




19








 
 
For the Quarter Ended
 
For the Year Ended
 
 
Dec 31, 2018
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
 
Dec 31, 2018
 
Dec 31, 2017
 
 
(Dollars in thousands)
Pre-Tax, Pre-Provision Operating Earnings
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income available to common stockholders
 
$
9,825

 
$
8,935

 
$
10,193

 
$
10,388

 
$
3,257

 
$
39,341

 
$
15,110

Plus: Provision for income taxes
 
3,587

 
1,448

 
2,350

 
3,511

 
7,227

 
10,896

 
13,029

Pus: Provision for loan losses
 
1,364

 
3,057

 
1,504

 
678

 
2,529

 
6,603

 
5,114

Plus: Loss on sale of securities available for sale, net
 
42

 

 

 

 

 
42

 

Plus: Loss (gain) on sale of disposed branch assets
 

 

 

 
(388
)
 

 
(388
)
 

Plus: Lease exit costs, net1
 

 

 

 
1,071

 

 
1,071

 

Plus: Branch closure expenses
 

 

 

 
172

 

 
172

 

Plus: One-time issuance of shares to all employees
 

 

 
421

 

 

 
421

 

Plus: Merger and acquisition expenses
 
1,150

 
2,692

 
1,043

 
335

 
1,018

 
5,220

 
2,691

Net pre-tax, pre-provision operating earnings
 
$
15,968

 
$
16,132

 
$
15,511

 
$
15,767

 
$
14,031

 
$
63,311

 
$
35,944

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total average assets
 
$
3,243,168

 
$
3,233,214

 
$
3,059,456

 
$
2,989,974

 
$
2,691,288

 
$
3,132,428

 
$
1,980,968

Pre-tax, pre-provision operating return on average assets2
 
1.95
%
 
1.98
%
 
2.03
%
 
2.14
%
 
2.07
%
 
2.02
%
 
1.81
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average Total Assets
 
$
3,243,168

 
$
3,233,214

 
$
3,059,456

 
$
2,989,974

 
$
2,691,288

 
$
3,132,428

 
$
1,980,968

Return on average assets2
 
1.20
%
 
1.10
%
 
1.34
%
 
1.41
%
 
0.48
%
 
1.26
%
 
0.76
%
Operating return on average assets2
 
1.40

 
1.28

 
1.47

 
1.65

 
1.09

 
1.45

 
1.03

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating earnings adjusted for amortization of intangibles
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net operating earnings
 
$
11,457

 
$
10,401

 
$
11,237

 
$
12,156

 
$
7,368

 
$
45,251

 
$
20,308

Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Plus: Amortization of intangibles
 
945

 
935

 
975

 
1,205

 
685

 
4,060

 
1,270

Less: Tax benefit at the statutory rate
 
204

 
196

 
206

 
253

 
134

 
859

 
445

Operating earnings adjusted for amortization of intangibles
 
$
12,198

 
$
11,140

 
$
12,006

 
$
13,108

 
$
7,919

 
$
48,452

 
$
21,133

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average Tangible Common Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total average stockholders' equity
 
$
523,590

 
$
514,876

 
$
504,328

 
$
492,869

 
$
464,614

 
$
509,018

 
$
332,935

Adjustments:
 
 
 
 

 
 

 
 

 
 
 
 

 
 

Average goodwill
 
(161,447
)
 
(161,447
)
 
(161,433
)
 
(159,272
)
 
(144,042
)
 
(160,907
)
 
(73,656
)
Average intangibles assets
 
(16,254
)
 
(17,107
)
 
(17,984
)
 
(20,734
)
 
(14,240
)
 
(18,005
)
 
(5,311
)
Average tangible common equity
 
$
345,889

 
$
336,322

 
$
324,911

 
$
312,863

 
$
306,332

 
$
330,106

 
$
253,968

Operating Return on average tangible common equity2
 
13.99
%
 
13.14
%
 
14.82
%
 
16.99
%
 
10.26
%
 
14.68
%
 
8.32
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Efficiency ratio
 
54.27
%
 
57.58
%
 
53.51
%
 
54.28
%
 
53.60
%
 
54.92
%
 
56.24
%
Operating efficiency ratio
 
50.65
%
 
49.09
%
 
48.67
%
 
49.94
%
 
49.98
%

49.60
%
 
52.70
%

1 Lease exit costs, net for the three months ended March 31, 2018 includes a $1.5 million consent fee and $240 thousand in professional services paid in January 2018 to separately assign and sublease two of our branch leases that the Company ceased using in 2017 offset by the reversal of the corresponding assigned lease cease-use liability totaling $669 thousand.
2 Annualized ratio.



20









GREEN BANCORP, INC.
Financial Highlights
(Unaudited)
 
 
For the Quarter Ended
 
For the Twelve Months Ended
 
 
Dec 31, 2018
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
 
Dec 31, 2018
 
Dec 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
Per Share Data (Common Stock):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings per common share
 
$
0.41

 
$
0.42

 
$
0.44

 
$
0.25

 
$
0.07

 
$
1.52

 
$
0.92

Diluted earnings per share
 
0.41

 
0.41

 
0.44

 
0.25

 
0.07

 
1.50

 
0.92

Book value per common share
 
13.66

 
13.12

 
12.86

 
12.62

 
12.50

 
13.66

 
12.50

Tangible book value per common share1
 
11.18

 
10.63

 
10.36

 
10.10

 
9.97

 
11.18

 
9.97

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common Stock Data:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Shares outstanding at period end
 
37,384

 
37,368

 
37,289

 
37,163

 
37,103

 
37,384

 
37,103

Weighted average basic shares outstanding for the period
 
37,375

 
37,339

 
37,274

 
37,341

 
37,103

 
37,288

 
37,043

Weighted average diluted shares outstanding for the period
 
37,767

 
37,726

 
37,646

 
37,586

 
37,393

 
37,681

 
37,297

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selected Performance Metrics:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on average assets2
 
1.37
%
 
1.42
%
 
1.54
%
 
0.90
%
 
0.25
%
 
1.32
%
 
0.83
%
Pre-tax, pre-provision operating return on average assets(1)(2)
 
2.10

 
2.17

 
2.15

 
2.10

 
2.01

 
2.11

 
1.97

Return on average equity2
 
12.20

 
12.75

 
13.96

 
8.15

 
2.23

 
11.80

 
7.57

Return on average tangible common equity1, 2
 
15.20

 
16.01

 
17.65

 
10.47

 
3.02

 
14.88

 
9.84

Efficiency ratio
 
50.52

 
53.64

 
50.05

 
50.81

 
57.87

 
51.26

 
52.71

Loans to deposits ratio
 
95.55

 
98.50

 
94.05

 
90.81

 
93.92

 
95.55

 
93.92

Net interest margin
 
3.82

 
3.78

 
3.94

 
3.87

 
3.64

 
3.85

 
3.60

Noninterest expense to average assets2
 
2.03

 
2.20

 
2.13

 
2.13

 
2.23

 
2.12

 
2.04

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selected Performance Metrics - Operating:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted operating earnings per share1
 
$
0.44

 
$
0.49

 
$
0.44

 
$
0.26

 
$
0.14

 
$
1.61

 
$
1.01

Operating return on average assets1, 2
 
1.49
%
 
1.69
%
 
1.56
%
 
0.93
%
 
0.50
%
 
1.41
%
 
0.92
%
Operating return on average tangible common equity1, 2
 
16.40

 
19.00

 
17.88

 
10.81

 
5.90

 
15.97

 
10.82

Operating efficiency ratio1
 
47.77

 
47.07

 
49.45

 
49.90

 
47.69

 
48.95

 
49.32

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Green Bancorp Capital Ratios:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average shareholders’ equity to average total assets
 
11.3
%
 
11.1
%
 
11.1
%
 
11.1
%
 
11.1
%
 
11.1
%
 
11.0
%
Tier 1 capital to average assets (leverage)
 
10.2

 
10.1

 
10.0

 
9.8

 
9.5

 
10.2

 
9.5

Common equity tier 1 capital
 
11.2

 
10.9

 
10.9

 
10.9

 
10.5

 
11.2

 
10.5

Tier 1 capital to risk-weighted assets
 
11.6

 
11.2

 
11.3

 
11.2

 
10.9

 
11.6

 
10.9

Total capital to risk-weighted assets
 
13.3

 
13.1

 
13.2

 
13.3

 
12.7

 
13.3

 
12.7

Tangible common equity to tangible assets1
 
9.7

 
9.2

 
9.0

 
9.1

 
8.9

 
9.7

 
8.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Green Bank Capital Ratios:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tier 1 capital to average assets (leverage)
 
10.8
%
 
10.7
%
 
10.6
%
 
10.4
%
 
10.1
%
 
10.8
%
 
10.1
%
Common equity tier 1 capital
 
12.3

 
12.0

 
12.0

 
12.0

 
11.6

 
12.3

 
11.6

Tier 1 capital to risk-weighted assets
 
12.3

 
12.0

 
12.0

 
12.0

 
11.6

 
12.3

 
11.6

Total capital to risk-weighted assets
 
13.1

 
12.9

 
13.0

 
13.0

 
12.4

 
13.1

 
12.4

1 Refer to "Reconciliation of Non-GAAP Financial Measures" after the financial highlights of Veritex and Green, respectively, for a reconciliation of this non-GAAP financial measure to their most directly comparable GAAP measure.
2 Annualized ratio.


21








GREEN BANCORP, INC.
Financial Highlights
(Unaudited)
 
 
Dec 31, 2018
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
Period End Balance Sheet Data:
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
112,720

 
$
141,090

 
$
231,251

 
$
142,144

 
$
140,681

Securities
 
661,714

 
673,089

 
699,863

 
729,146

 
718,814

Other investments
 
40,953

 
44,775

 
42,962

 
38,157

 
27,283

 
 
 
 
 
 
 
 
 
 
 
Loans held for sale
 
9,360

 
7,627

 
4,992

 
7,461

 
7,156

Loans held for investment
 
3,311,967

 
3,363,354

 
3,222,108

 
3,136,336

 
3,190,485

Total Loans
 
3,321,327

 
3,370,981

 
3,227,100

 
3,143,797

 
3,197,641

Allowance for loan losses
 
(32,534
)
 
(35,186
)
 
(35,086
)
 
(38,233
)
 
(31,220
)
Goodwill
 
85,291

 
85,291

 
85,291

 
85,291

 
85,291

Core deposit intangibles, net
 
7,307

 
7,584

 
7,881

 
8,187

 
8,503

Real estate acquired through foreclosure
 
609

 
2,532

 
802

 
802

 
802

Premises and equipment, net
 
28,580

 
28,873

 
29,178

 
23,694

 
24,002

Bank owned life insurance
 
56,841

 
56,457

 
56,066

 
55,682

 
55,302

Other assets
 
38,377

 
44,388

 
46,369

 
36,580

 
34,817

Branch assets held for sale
 
84,568

 

 

 

 

Total assets
 
$
4,405,753

 
$
4,419,874

 
$
4,391,677

 
$
4,225,247

 
$
4,261,916

 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing deposits
 
$
825,365

 
$
833,827

 
$
824,753

 
$
849,297

 
$
803,210

Interest-bearing transaction and savings deposits
 
1,300,825

 
1,221,640

 
1,281,255

 
1,337,973

 
1,331,601

Certificates and other time deposits
 
1,340,159

 
1,359,005

 
1,320,042

 
1,266,457

 
1,262,332

Total deposits
 
3,466,349

 
3,414,472

 
3,426,050

 
3,453,727

 
3,397,143

Securities sold under agreements to repurchase
 
3,226

 
3,502

 
4,141

 
4,948

 
5,173

Advances from Federal Home Loan Bank
 
300,000

 
437,000

 
412,000

 
230,000

 
325,000

Subordinated debentures and subordinated notes
 
48,302

 
48,161

 
48,019

 
47,878

 
47,737

Other liabilities
 
25,004

 
26,535

 
21,974

 
19,816

 
23,068

Branch liabilities held for sale
 
52,293

 

 

 

 

Total liabilities
 
3,895,174

 
3,929,670

 
3,912,184

 
3,756,369

 
3,798,121

Shareholders' equity
 
510,579

 
490,204

 
479,493

 
468,878

 
463,795

Total liabilities and equity
 
$
4,405,753

 
$
4,419,874

 
$
4,391,677

 
$
4,225,247

 
$
4,261,916


22










GREEN BANCORP, INC.
Financial Highlights
(Unaudited)
 
 
For the Quarter Ended
 
For the Twelve Months Ended
 
 
Dec 31, 2018
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
 
Dec 31, 2018
 
Dec 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
Income Statement Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans, including fees
 
$
48,903

 
$
46,612

 
$
44,479

 
$
41,799

 
$
39,870

 
$
181,793

 
$
154,266

Securities
 
4,353

 
4,277

 
4,734

 
4,558

 
4,446

 
17,922

 
15,294

Other investments
 
398

 
360

 
341

 
300

 
241

 
1,399

 
847

Deposits in financial institutions and fed funds sold
 
872

 
651

 
659

 
493

 
671

 
2,675

 
1,843

Total interest income
 
54,526

 
51,900

 
50,213

 
47,150

 
45,228

 
203,789

 
172,250

Interest expense:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Transaction and savings deposits
 
4,455

 
3,393

 
3,023

 
2,464

 
2,588

 
13,335

 
9,298

Certificates and other time deposits
 
6,403

 
5,671

 
4,712

 
4,071

 
4,017

 
20,857

 
15,452

Subordinated debentures and subordinated notes
 
1,124

 
1,120

 
1,109

 
1,079

 
1,065

 
4,432

 
4,216

Other borrowed funds
 
2,098

 
2,197

 
1,608

 
1,294

 
738

 
7,197

 
2,237

Total interest expense
 
14,080

 
12,381

 
10,452

 
8,908

 
8,408

 
45,821

 
31,203

Net interest income
 
40,446

 
39,519

 
39,761

 
38,242

 
36,820

 
157,968

 
141,047

Provision for loan losses
 
2,420

 
320

 
1,897

 
9,663

 
4,405

 
14,300

 
14,360

Net interest income after provision for loan losses
 
38,026

 
39,199

 
37,864

 
28,579

 
32,415

 
143,668

 
126,687

Noninterest income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Customer service fees
 
2,855

 
2,874

 
2,578

 
2,395

 
2,273

 
10,702

 
9,103

Loan fees
 
622

 
942

 
996

 
833

 
704

 
3,393

 
3,515

(Loss) gain on sale of available-for-sale securities, net
 

 

 
66

 

 

 
66

 
(38
)
Loss on held for sale loans, net
 

 

 

 

 
(1,098
)
 

 
(2,308
)
Gain on sale of guaranteed portion of loans, net
 
81

 
705

 
1,112

 
941

 
1,648

 
2,839

 
5,755

Other
 
855

 
952

 
733

 
989

 
401

 
3,529

 
2,485

Total noninterest income
 
4,413

 
5,473

 
5,485

 
5,158

 
3,928

 
20,529

 
18,512

Noninterest expense:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
 
14,216

 
13,729

 
13,640

 
13,601

 
14,996

 
55,186

 
52,542

Occupancy
 
2,126

 
2,068

 
2,263

 
2,077

 
2,069

 
8,534

 
8,194

Professional and regulatory fees
 
1,054

 
1,359

 
2,172

 
2,261

 
2,241

 
6,846

 
8,868

Data processing
 
1,002

 
923

 
1,029

 
972

 
981

 
3,926

 
3,808

Software license and maintenance
 
643

 
732

 
703

 
716

 
636

 
2,794

 
2,027

Marketing
 
278

 
354

 
257

 
176

 
259

 
1,065

 
775

Loan related
 
187

 
587

 
467

 
47

 
632

 
1,288

 
1,804

Real estate acquired by foreclosure, net
 
128

 
(5
)
 
4

 
12

 
30

 
139

 
704

Merger and acquisition expenses
 
1,232

 
2,955

 

 

 

 
4,187

 

Other
 
1,797

 
1,430

 
2,110

 
2,191

 
1,738

 
7,528

 
5,377

Total noninterest expense
 
22,663

 
24,132

 
22,645

 
22,053

 
23,582

 
91,493

 
84,099

Income before income taxes
 
19,776

 
20,540

 
20,704

 
11,684

 
12,761

 
72,704

 
61,100

Provision for income taxes
 
4,449

 
4,943

 
4,283

 
2,322

 
10,142

 
15,997

 
26,964

Net income
 
$
15,327

 
$
15,597

 
$
16,421

 
$
9,362

 
$
2,619

 
$
56,707

 
$
34,136


23










GREEN BANCORP, INC.
Financial Highlights
(Unaudited)
 
 
For the Quarter Ended
 
 
December 31, 2018
 
September 30, 2018
 
December 31, 2017
 
 
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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-Earning Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans1
 
$
3,346,657

 
$
48,903

 
5.80
%
 
$
3,288,748

 
$
46,612

 
5.62
%
 
$
3,082,005

 
$
39,870

 
5.13
%
Securities
 
663,210

 
4,353

 
2.60

 
689,930

 
4,277

 
2.46

 
713,137

 
4,446

 
2.47

Other investments
 
44,531

 
398

 
3.55

 
43,655

 
360

 
3.27

 
23,359

 
241

 
4.09

Interest earning deposits in financial institutions and federal funds sold
 
151,026

 
872

 
2.29

 
126,021

 
651

 
2.05

 
197,454

 
671

 
1.35

Total interest-earning assets
 
4,205,424

 
54,526

 
5.14
%
 
4,148,354

 
51,900

 
4.96
%
 
4,015,955

 
45,228

 
4.47
%
Allowance for loan losses
 
(35,191
)
 
 
 
 
 
(36,003
)
 
 
 
 
 
(33,708
)
 
 
 
 
Noninterest-earning assets1
 
253,037

 
 
 
 
 
247,893

 
 
 
 
 
221,858

 
 
 
 
Total assets
 
$
4,423,270

 
 
 
 
 
$
4,360,244

 
 
 
 
 
$
4,204,105

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Shareholders’ Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand and savings deposits1
 
$
1,310,165

 
$
4,455

 
1.35
%
 
$
1,236,585

 
$
3,393

 
1.09
%
 
$
1,387,873

 
$
2,588

 
0.74
%
Certificates and other time deposits1
 
1,363,898

 
6,403

 
1.86

 
1,345,168

 
5,671

 
1.67

 
1,290,277

 
4,017

 
1.24

Other borrowed funds
 
348,232

 
2,098

 
2.39

 
390,225

 
2,197

 
2.23

 
243,142

 
738

 
1.20

Subordinated debentures and subordinated notes
 
48,239

 
1,124

 
9.24

 
48,096

 
1,120

 
9.24

 
47,673

 
1,065

 
8.86

Total interest-bearing liabilities
 
3,070,534

 
14,080

 
1.82
%
 
3,020,074

 
12,381

 
1.63
%
 
2,968,965

 
8,408

 
1.12
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing demand deposits1
 
827,271

 
 
 
 
 
830,040

 
 
 
 
 
745,707

 
 
 
 
Other liabilities1
 
26,944

 
 
 
 
 
24,753

 
 
 
 
 
23,574

 
 
 
 
Total liabilities
 
3,924,749

 
 
 
 
 
3,874,867

 
 
 
 
 
3,738,246

 
 
 
 
Shareholders’ equity
 
498,521

 
 
 
 
 
485,377

 
 
 
 
 
465,859

 
 
 
 
Total liabilities and  shareholders’ equity
 
$
4,423,270

 
 
 
 
 
$
4,360,244

 
 
 
 
 
$
4,204,105

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest rate spread 2
 
 
 
 
 
3.32
%
 
 
 
 
 
3.33
%
 
 
 
 
 
3.35
%
Net interest income and margin3
 
 
 
$
40,446

 
3.82
%
 
 
 
$
39,519

 
3.78
%
 
 
 
$
36,820

 
3.64
%

1 Includes average outstanding balances of branch assets and liabilities held for sale in total loans, noninterest-bearing assets, interest-bearing demand and saving deposits, certificates and other time deposits, noninterest-bearing demand deposits and other liabilities.
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 interest-earning assets.



24










GREEN BANCORP, INC.
Financial Highlights
(Unaudited)
 
 
 
 
 
2018
 
2017
 
 
Average
Outstanding
Balance
 
Interest
Earned/
Interest
Paid
 
Average
Yield/
Rate
 
Average
Outstanding
Balance
 
Interest
Earned/
Interest
Paid
 
Average
Yield/
Rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
Assets
 
 
 
 
 
 
 
 
 
 
 
 
Interest-Earning Assets:
 
 
 
 
 
 
 
 
 
 
 
 
Loans1
 
$
3,231,133

 
$
181,793

 
5.63
%
 
$
3,065,360

 
$
154,266

 
5.03
%
Securities
 
696,499

 
17,922

 
2.57

 
669,588

 
15,294

 
2.28

Other investments
 
40,053

 
1,399

 
3.49

 
22,823

 
847

 
3.71

Interest earning deposits in financial institutions and federal funds sold
 
135,161

 
2,675

 
1.98

 
160,810

 
1,843

 
1.15

Total interest-earning assets
 
4,102,846

 
203,789

 
4.97
%
 
3,918,581

 
172,250

 
4.40
%
Allowance for loan losses
 
(35,084
)
 
 
 
 
 
(31,471
)
 
 
 
 
Noninterest-earning assets1
 
243,242

 
 
 
 
 
225,674

 
 
 
 
Total assets
 
$
4,311,004

 
 
 
 
 
$
4,112,784

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Shareholders’ Equity
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand and savings deposits1
 
$
1,284,569

 
$
13,335

 
1.04
%
 
$
1,370,503

 
$
9,298

 
0.68
%
Certificates and other time deposits1
 
1,316,548

 
20,857

 
1.58

 
1,317,180

 
15,452

 
1.17

Other borrowed funds
 
343,569

 
7,197

 
2.09

 
216,177

 
2,237

 
1.03

Subordinated debentures and subordinated notes
 
48,028

 
4,432

 
9.23

 
47,533

 
4,216

 
8.87

Total interest-bearing liabilities
 
2,992,714

 
45,821

 
1.53
%
 
2,951,393

 
31,203

 
1.06
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing demand deposits1
 
814,309

 
 
 
 
 
690,786

 
 
 
 
Other liabilities1
 
23,412

 
 
 
 
 
19,458

 
 
 
 
Total liabilities
 
3,830,435

 
 
 
 
 
3,661,637

 
 
 
 
Shareholders’ equity
 
480,569

 
 
 
 
 
451,147

 
 
 
 
Total liabilities and  shareholders’ equity
 
$
4,311,004

 
 
 
 
 
$
4,112,784

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest rate spread2
 
 
 
 
 
3.44
%
 
 
 
 
 
3.34
%
Net interest income and margin3
 
 
 
$
157,968

 
3.85
%
 
 
 
$
141,047

 
3.60
%

1 Includes average outstanding balances of branch assets and liabilities held for sale in total loans, noninterest-bearing assets, interest-bearing demand and saving deposits, certificates and other time deposits, noninterest-bearing demand deposits and other liabilities.
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 interest-earning assets.



25










GREEN BANCORP, INC.
Financial Highlights
(Unaudited)
Yield Trend
 
 
For the Quarter Ended
 
 
Dec 31, 2018
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
Average yield on interest-earning assets:
 
 
 
 
 
 
 
 
 
 
Loans, including fees1
 
5.80
%
 
5.62
%
 
5.65
%
 
5.42
%
 
5.13
%
Securities
 
2.60

 
2.46

 
2.66

 
2.57

 
2.47

Other investments
 
3.55

 
3.27

 
3.45

 
3.78

 
4.09

Interest-earning deposits in financial institutions and federal funds sold
 
2.29

 
2.05

 
1.90

 
1.61

 
1.35

Total interest-earning assets
 
5.14
%
 
4.96
%
 
4.97
%
 
4.77
%
 
4.47
%
 
 
 
 
 
 
 
 
 
 
 
Average rate on interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
Interest-bearing transaction and savings1
 
1.35
%
 
1.09
%
 
0.94
%
 
0.77
%
 
0.74
%
Certificates and other time deposits1
 
1.86

 
1.67

 
1.46

 
1.31

 
1.24

Other borrowed funds
 
2.39

 
2.23

 
2.05

 
1.64

 
1.20

Subordinated debentures and subordinated notes
 
9.24

 
9.24

 
9.28

 
9.15

 
8.86

Total interest-bearing liabilities
 
1.82
%
 
1.63
%
 
1.42
%
 
1.23
%
 
1.12
%
 
 
 
 
 
 
 
 
 
 
 
Net interest rate spread2
 
3.32
%
 
3.33
%
 
3.55
%
 
3.54
%
 
3.35
%
Net interest margin3
 
3.82
%
 
3.78
%
 
3.94
%
 
3.87
%
 
3.64
%

1 Includes average outstanding balances of branch assets and liabilities held for sale in total loans, noninterest-bearing assets, interest-bearing demand and saving deposits, certificates and other time deposits, noninterest-bearing demand deposits and other liabilities.
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 interest-earning assets.
Supplemental Yield Trend
 
 
For the Quarter Ended
 
 
Dec 31, 2018
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
Average cost of interest-bearing deposits
 
1.61
%
 
1.39
%
 
1.20
%
 
1.03
%
 
0.98
%
Average cost of total deposits, including noninterest-bearing
 
1.23

 
1.05

 
0.91

 
0.79

 
0.77




26










GREEN BANCORP, INC.
Financial Highlights
(Unaudited)
Portfolio Composition
 
 
For the Quarter Ended
 
 
Dec 31, 2018
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
Loans held for investment:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial & industrial
 
$
1,137,251

 
34.4
%
 
$
1,142,733

 
34.0
%
 
$
1,070,420

 
33.2
%
 
$
1,038,715

 
33.1
%
 
$
1,066,266

 
33.4
%
Mortgage warehouse
 
211,709

 
6.4

 
236,307

 
7.0

 
244,041

 
7.6

 
185,849

 
5.9

 
220,230

 
6.9

Real Estate:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Owner occupied commercial
 
426,777

 
12.9

 
435,667

 
13.0

 
436,153

 
13.5

 
435,366

 
13.9

 
415,230

 
13.0

Commercial
 
1,130,472

 
34.1

 
1,133,427

 
33.6

 
1,092,036

 
33.9

 
1,068,832

 
34.2

 
1,067,779

 
33.5

Construction, land & land development
 
136,004

 
4.1

 
153,257

 
4.6

 
130,533

 
4.1

 
148,732

 
4.7

 
164,952

 
5.2

Residential mortgage
 
255,611

 
7.7

 
249,046

 
7.4

 
235,192

 
7.3

 
242,529

 
7.7

 
238,580

 
7.5

Consumer and Other
 
14,143

 
0.4

 
12,917

 
0.4

 
13,733

 
0.4

 
16,313

 
0.5

 
17,448

 
0.5

Total loans held for investment
 
$
3,311,967

 
100.0
%
 
$
3,363,354

 
100.0
%
 
$
3,222,108

 
100.0
%
 
$
3,136,336

 
100.0
%
 
$
3,190,485

 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deposits:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Noninterest-bearing
 
$
825,365

 
23.8
%
 
$
833,827

 
24.4
%
 
$
824,753

 
24.1
%
 
$
849,297

 
24.6
%
 
$
803,210

 
23.6
%
Interest-bearing transaction
 
232,894

 
6.7

 
229,686

 
6.7

 
234,653

 
6.8

 
248,680

 
7.2

 
200,769

 
5.9

Money market
 
999,601

 
28.8

 
921,268

 
27.0

 
969,606

 
28.4

 
1,004,174

 
29.0

 
1,041,954

 
30.7

Savings
 
68,330

 
2.0

 
70,686

 
2.1

 
76,996

 
2.2

 
85,119

 
2.5

 
88,878

 
2.6

Certificates and other time deposits
 
1,340,159

 
38.7

 
1,359,005

 
39.8

 
1,320,042

 
38.5

 
1,266,457

 
36.7

 
1,262,332

 
37.2

Total deposits
 
$
3,466,349

 
100.0
%
 
$
3,414,472

 
100.0
%
 
$
3,426,050

 
100.0
%
 
$
3,453,727

 
100.0
%
 
$
3,397,143

 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loan to Deposit Ratio
 
95.5
%
 
 
 
98.5
%
 
 
 
94.0
%
 
 

 
90.8
%
 
 

 
93.9
%
 
 


27









GREEN BANCORP, INC.
Financial Highlights
(Unaudited)
Asset Quality
 
 
As of and for the Quarter Ended
 
For the Twelve Months Ended
 
 
Dec 31, 2018
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
 
Dec 31, 2018
 
Dec 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
Nonperforming Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonaccrual loans
 
$
54,055

 
$
60,211

 
$
52,885

 
$
55,565

 
$
47,892

 
$
54,055

 
$
47,892

Accruing loans 90 or more days past due
 
1,417

 
4,825

 
907

 
5,412

 
375

 
1,417

 
375

Restructured loans—nonaccrual
 
1,880

 
1,910

 
1,944

 
9,298

 
9,446

 
1,880

 
9,446

Restructured loans—accrual
 
2,955

 
3,009

 
3,055

 
13,623

 
13,093

 
2,955

 
13,093

Total nonperforming loans held for investment
 
60,307

 
69,955

 
58,791

 
83,898

 
70,806

 
60,307

 
70,806

Real estate acquired through foreclosure and repossessed assets
 
653

 
2,532

 
802

 
802

 
802

 
609

 
802

Total nonperforming assets
 
$
60,960

 
$72,487
 
$59,593
 
$84,700
 
$71,608
 
$
60,916

 
$71,608
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Charge-offs:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
$
(5,374
)
 
$
(179
)
 
$
(5,300
)
 
$
(2,699
)
 
$
(6,447
)
 
$
(13,552
)
 
$
(9,065
)
Owner occupied commercial real estate
 

 

 

 

 
(126
)
 

 
(1,087
)
Commercial real estate
 

 

 

 

 

 

 

Construction, land & land development
 

 

 

 

 

 

 
(95
)
Residential mortgage
 

 

 

 

 
(19
)
 

 
(19
)
Other consumer
 
(55
)
 
(113
)
 
(52
)
 
(24
)
 
(112
)
 
(244
)
 
(256
)
Total charge-offs
 
(5,429
)
 
(292
)
 
(5,352
)
 
(2,723
)
 
(6,704
)
 
(13,796
)
 
(10,522
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Recoveries:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
$
117

 
$
4

 
$
4

 
$
8

 
$
6

 
$
133

 
$
676

Owner occupied commercial real estate
 

 

 

 

 

 

 
4

Commercial real estate
 
1

 
2

 
5

 
2

 
1

 
10

 
8

Construction, land & land development
 

 

 

 

 
2

 

 
77

Residential mortgage
 
9

 
42

 
290

 
15

 
27

 
356

 
121

Other consumer
 
230

 
24

 
9

 
48

 
3

 
311

 
132

Total recoveries
 
357

 
72

 
308

 
73

 
39

 
810

 
1,018

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net (charge-offs) recoveries
 
$
(5,072
)
 
$
(220
)
 
$
(5,044
)
 
$
(2,650
)
 
$
(6,665
)
 
$
(12,986
)
 
$
(9,504
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses at end of period
 
$
32,534

 
$
35,186

 
$
35,086

 
$
38,233

 
$
31,220

 
$
32,534

 
$
31,220

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset Quality Ratios:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonperforming assets to total assets
 
1.38
%
 
1.64
%
 
1.36
%
 
2.00
%
 
1.68
%
 
1.38
%
 
1.68
%
Nonperforming loans to total loans held for investment
 
1.82

 
2.08

 
1.82

 
2.68

 
2.22

 
1.82

 
2.22

Allowance for loan losses to total loans held for investment
 
0.98

 
1.05

 
1.09

 
1.22

 
0.98

 
0.98

 
0.98

Net charge-offs (recoveries) to average loans outstanding
 
0.15

 
0.01

 
0.16

 
0.08

 
0.22

 
0.40

 
0.31



28









GREEN BANCORP, INC.
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
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. Green calculates: (a) tangible common equity as 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 shares of common stock outstanding. For tangible book value per common share, the most directly comparable financial measure calculated in accordance with GAAP is our book value per common share.

Green believes 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 intangible assets. 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 shareholders’ equity to tangible common equity and presents our tangible book value per common share compared with our book value per common share:
 
 
Dec 31, 2018
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands, except per share data)
Tangible Common Equity
 
 
 
 
 
 
 
 
 
 
Total shareholders’ equity
 
$
510,579

 
$
490,204

 
$
479,493

 
$
468,878

 
$
463,795

Adjustments:
 
 
 
 
 
 
 
 
 
 
Goodwill
 
85,291

 
85,291

 
85,291

 
85,291

 
85,291

Core deposit intangibles
 
7,307

 
7,584

 
7,881

 
8,187

 
8,503

Tangible common equity 
 
$
417,981

 
$
397,329

 
$
386,321

 
$
375,400

 
$
370,001

Common shares outstanding1
 
37,384

 
37,368

 
37,289

 
37,163

 
37,103

Book value per common share1
 
$
13.66

 
$
13.12

 
$
12.86

 
$
12.62

 
$
12.50

Tangible book value per common share1
 
$
11.18

 
$
10.63

 
$
10.36

 
$
10.10

 
$
9.97


1 Excludes the dilutive effect of common stock issuable upon exercise of outstanding stock options.  The number of exercisable options outstanding was 659,125 as of December 31, 2018; 618,289 as of September 30, 2018; 626,923 as of June 30, 2018; 627,059 as of March 31, 2018; and 754,110 as of December 31, 2017.

29









GREEN BANCORP, INC.
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. Green calculates: (a) tangible common equity as shareholders’ 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 common equity to tangible assets, the most directly comparable financial measure calculated in accordance with GAAP is total shareholders’ equity to total assets.

Green believes 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 intangible assets. Goodwill and other intangible assets have the effect of increasing both total shareholders’ equity and assets while not increasing Green's tangible common equity or tangible assets.

The following table reconciles, as of the dates set forth below, total shareholders’ equity to tangible common equity and total assets to tangible assets and presents Green's tangible common equity to tangible assets:
 
 
Dec 31, 2018
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
Tangible Common Equity
 
 
 
 
 
 
 
 
 
 
Total shareholders’ equity
 
$
510,579

 
$
490,204

 
$
479,493

 
$
468,878

 
$
463,795

Adjustments:
 
 
 
 
 
 
 
 
 
 
Goodwill
 
85,291

 
85,291

 
85,291

 
85,291

 
85,291

Core deposit intangibles
 
7,307

 
7,584

 
7,881

 
8,187

 
8,503

Tangible common equity 
 
$
417,981

 
$
397,329

 
$
386,321

 
$
375,400

 
$
370,001

Tangible Assets
 
 
 
 
 
 
 
 
 
 
Total assets
 
$
4,405,753

 
$
4,419,874

 
$
4,391,677

 
$
4,225,247

 
$
4,261,916

Less Adjustments:
 
 
 
 
 
 
 
 
 
 
Goodwill
 
(85,291
)
 
(85,291
)
 
(85,291
)
 
(85,291
)
 
(85,291
)
Core deposit intangibles
 
(7,307
)
 
(7,584
)
 
(7,881
)
 
(8,187
)
 
(8,503
)
Tangible assets 
 
$
4,313,155

 
$
4,326,999

 
$
4,298,505

 
$
4,131,769

 
$
4,168,122

Tangible Common Equity to Tangible Assets
 
9.69
%
 
9.18
%
 
8.99
%
 
9.09
%
 
8.88
%

30









GREEN BANCORP, INC.
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. Green calculates: (a) return as net income less the effect of intangible assets as net income, less amortization of core deposit intangibles, net of taxes; (b) average tangible common equity as average shareholders’ 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.

Green believes 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 intangible assets.  Goodwill and other intangible assets, including core deposit intangibles, have the effect of increasing total shareholders’ equity, while not increasing Green's tangible common equity.  This measure is particularly relevant to acquisitive institutions who may have higher balances in goodwill and other intangible assets 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 excluding amortization of core deposit intangibles, net of tax to net income and presents Green's return on average tangible common equity:
 
 
As of and for the Quarter Ended
 
For the Twelve Months Ended
 
 
Dec 31, 2018
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
 
Dec 31, 2018
 
Dec 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
Net income adjusted for amortization of core deposit intangibles
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
$
15,327

 
$
15,597

 
$
16,421

 
$
9,362

 
$
2,619

 
$
56,707

 
$
34,136

Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Plus: Amortization of core deposit intangibles
 
277

 
297

 
306

 
316

 
330

 
1,196

 
1,472

Less: Tax benefit at the statutory rate
 
59

 
62

 
64

 
66

 
116

 
251

 
515

Net income adjusted for amortization of core deposit intangibles
 
$
15,545

 
$
15,832

 
$
16,663

 
$
9,612

 
$
2,833

 
$
57,652

 
$
35,093

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average Tangible Common Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total average shareholders’ equity
 
$
498,521

 
$
485,377

 
$
471,958

 
$
466,015

 
$
465,859

 
$
480,569

 
$
451,147

Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average goodwill
 
85,291

 
85,291

 
85,291

 
85,291

 
85,291

 
85,291

 
85,291

Average core deposit intangibles
 
7,440

 
7,726

 
8,029

 
8,343

 
8,661

 
7,881

 
9,254

Average tangible common equity 
 
$
405,790

 
$
392,360

 
$
378,638

 
$
372,381

 
$
371,907

 
$
387,397

 
$
356,602

Return on Average Tangible Common Equity (Annualized)
 
15.20
%
 
16.01
%
 
17.65
%
 
10.47
%
 
3.02
%
 
14.88
%
 
9.84
%

31









GREEN BANCORP, INC.
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, Operating Return on Average Tangible Common Equity and Operating Efficiency Ratio. Operating earnings and pre-tax, pre-provision operating earnings are non-GAAP measures used by management to evaluate the Company’s financial performance. Green calculates (a) operating earnings as net income (loss) plus loss (gain) on sale of securities available-for-sale, net, plus loss (gain) on held for sale loans, net, plus stock based compensation expense for performance option vesting, plus shelf and secondary offering expenses. Green calculates (b) pre-tax, pre-provision operating earnings as (a) operating earnings plus provision (benefit) for income taxes, plus provision for loan losses. Green calculates (c) diluted operating earnings per share as operating earnings as described in clause (a) divided by weighted average diluted shares outstanding. Green calculates (d) operating return on average tangible common equity as operating earnings as described in clause (a) divided by average tangible common equity (average tangible common equity as average stockholders' equity less average goodwill and average intangible assets, net of accumulated amortization). Green calculates operating efficiency ratio as non-interest expense plus adjustments to operating non-interest expense divided by (i) non-interest income plus adjustments to operating non-interest income plus (ii) net interest income.

Green believes 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 earnings and pre-tax, pre-provision operating earnings and related metrics:

32








 
 
For the Quarter Ended
 
For the Twelve Months Ended
 
 
Dec 31, 2018
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
 
Dec 31, 2018
 
Dec 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
Operating Earnings
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income
 
$
15,327

 
$
15,597

 
$
16,421

 
$
9,362

 
$
2,619

 
56,707

 
34,136

Plus: Loss (gain) on sale of securities available-for-sale, net
 

 

 
(66
)
 

 

 
(66
)
 
38

Plus: Loss on held for sale loans, net
 

 

 

 

 
1,098

 

 
2,308

Plus: Stock based compensation expense for performance option vesting
 

 

 

 

 
3,051

 

 
3,051

Plus: Shelf and secondary offering expenses
 

 

 
337

 
397

 

 

 

Less: Tax benefit at the statutory rate
 

 

 
$
57

 
83

 
1,452

 
$
(14
)
 
$
1,889

Plus: Non-deductible merger and acquisition expenses
 
1,232

 
2,955

 

 

 

 
4,187

 

Net operating earnings
 
$
16,559

 
$
18,552

 
$
16,635

 
$
9,676

 
$
5,316

 
$
60,842

 
$
37,644

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average diluted shares outstanding
 
37,767

 
37,726

 
37,646

 
37,586

 
37,393

 
37,681

 
37,297

Diluted earnings per share
 
$
0.41

 
$
0.41

 
$
0.44

 
$
0.25

 
$
0.07

 
1.50

 
0.92

Diluted operating earnings per share
 
0.44

 
0.49

 
0.44

 
0.26

 
0.14

 
1.61

 
1.01

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-Tax, Pre-Provision Operating Earnings
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income
 
$
15,327

 
$
15,597

 
$
16,421

 
$
9,362

 
$
2,619

 
$
56,707

 
$
34,136

Plus: Provision for income taxes
 
4,449

 
4,943

 
4,283

 
2,322

 
10,142

 
15,997

 
26,964

Plus: Provision for loan losses
 
2,420

 
320

 
1,897

 
9,663

 
4,405

 
14,300

 
14,360

Plus: Loss (gain) on sale of securities available-for-sale, net
 

 

 
(66
)
 

 

 
(66
)
 
38

Plus: Loss on held for sale loans, net
 

 

 

 

 
1,098

 

 
2,308

Plus: Stock based compensation expense for performance option vesting
 

 

 

 

 
3,051

 

 
3,051

Plus: Shelf and secondary offering expenses
 

 

 
337

 
397

 

 

 

Plus: Merger and acquisition expenses
 
1,232

 
2,955

 

 

 

 
4,187

 

Net pre-tax, pre-provision operating earnings
 
$
23,428

 
$
23,815

 
$
22,872

 
$
21,744

 
$
21,315

 
$
91,125

 
$
80,857



33








 
 
For the Quarter Ended
 
For the Twelve Months Ended
 
 
Dec 31, 2018
 
Sep 30, 2018
 
Jun 30, 2018
 
Mar 31, 2018
 
Dec 31, 2017
 
Dec 31, 2018
 
Dec 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in thousands)
Total average assets
 
$
4,423,270

 
$
4,360,244

 
$
4,253,357

 
$
4,204,200

 
$
4,204,105

 
$
4,311,004

 
$
4,112,784

Pre-tax, pre-provision operating return on average assets (annualized)
 
2.10
%
 
2.17
%
 
2.15
%
 
2.10
%
 
2.01
%
 
2.11
%
 
1.97
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average Total Assets
 
$
4,423,270

 
$
4,360,244

 
$
4,253,357

 
$
4,204,200

 
$
4,204,105

 
4,311,004

 
4,112,784

Return on average assets1
 
1.37
%
 
1.42
%
 
1.54
%
 
0.90
%
 
0.25
%
 
1.32
%
 
0.83
%
Operating return on average assets1
 
1.49
%
 
1.69
%
 
1.56
%
 
0.93
%
 
0.50
%
 
1.41
%
 
0.92
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating earnings adjusted for amortization of core deposit intangibles
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating earnings
 
$
16,559

 
$
18,552

 
$
16,635

 
$
9,676

 
$
5,316

 
$
60,842

 
$
37,644

Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Plus: Amortization of core deposit intangibles
 
277

 
297

 
306

 
316

 
330

 
1,196

 
1,472

Less: Tax benefit at the statutory rate
 
58

 
62

 
64

 
66

 
116

 
184

 
515

Operating earnings adjusted for amortization of core deposit intangibles
 
$
16,778

 
$
18,787

 
$
16,877

 
$
9,926

 
$
5,530

 
$
61,854

 
$
38,601

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average Tangible Common Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total average shareholders’ equity
 
$
498,521

 
$
485,377

 
$
471,958

 
$
466,015

 
$
465,859

 
480,569

 
451,147

Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average goodwill
 
85,291

 
85,291

 
85,291

 
85,291

 
85,291

 
85,291

 
85,291

Average core deposit intangibles
 
7,440

 
7,726

 
8,029

 
8,343

 
8,661

 
7,881

 
9,254

Average tangible common equity 
 
$
405,790

 
$
392,360

 
$
378,638

 
$
372,381

 
$
371,907

 
$
387,397

 
$
356,602

Operating return on average tangible common equity1
 
16.40
%
 
19.00
%
 
17.88
%
 
10.81
%
 
5.90
%
 
15.97
%
 
10.82
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Efficiency ratio
 
50.52
%
 
53.64
%
 
50.05
%
 
50.81
%
 
57.87
%
 
51.26
%
 
52.71
%
Operating efficiency ratio
 
47.77
%
 
47.07
%
 
49.45
%
 
49.90
%
 
47.69
%
 
48.95
%
 
49.32
%

1 Annualized ratio.


34
Exhibit
Exhibit 99.2
https://cdn.kscope.io/34b89c01cd4bdc4f3b04cbf4cae3d6c4-veritexseclogo.jpg


PRESS RELEASE
FOR IMMEDIATE RELEASE

Veritex Holdings, Inc. Declares Cash Dividend on Common Stock

Dallas, TX – January 28, 2019 – Veritex Holdings, Inc. (Nasdaq: VBTX) (“Veritex” or the “Company”), the parent holding company for Veritex Community Bank, today announced that its Board of Directors declared the initiation of a regular quarterly cash dividend of $0.125 per share on its outstanding common stock. The dividend will be paid on or after February 21, 2019 to shareholders of record as of February 7, 2019. This is the first common stock dividend declared by the Board of Directors of the Company and reflects the strength of the Company's performance over the last fiscal year and the higher level of organic capital generation that resulted from the lower effective tax rates in the 2017 Tax Cuts and Jobs Act.
About Veritex Holdings, Inc.
Headquartered in Dallas, Texas, Veritex is a bank holding company that conducts banking activities through its wholly-owned subsidiary, Veritex Community Bank, with locations throughout the Dallas-Fort Worth metroplex and in the Houston metropolitan area. Veritex Community Bank is a Texas state chartered bank regulated by the Texas Department of Banking and the Board of Governors of the Federal Reserve System. For more information, visit www.veritexbank.com.
Forward Looking Statement
This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements include statements regarding Veritex's future financial performance, business and growth strategy, projected plans and objectives, including the expected payment date of its common stock dividend. Forward-looking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “target,” “estimate,” “continue,” “positions,” “prospects” or “potential,” by future conditional verbs such as “will,” “would,” “should,” “could” or “may”, or by variations of such words or by similar expressions. These forward-looking statements are subject to numerous assumptions, risks and uncertainties which change over time. Forward-looking statements speak only as of the date they are made and Veritex assumes no duty to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.
Source: Veritex Holdings, Inc.
Media Contact:
LaVonda Renfro
972-349-6200
lrenfro@veritexbank.com

Investor Relations:
Susan Caudle
972-349-6132
scaudle@veritexbank.com