Bay Street News

Veritex Holdings, Inc. Reports Second Quarter 2024 Operating Results

DALLAS, July 23, 2024 (GLOBE NEWSWIRE) — Veritex Holdings, Inc. (“Veritex”, the “Company”, “we” or “our”) (Nasdaq: VBTX), the holding company for Veritex Community Bank, today announced the results for the quarter ended June 30, 2024.

“We are pleased with the second quarter results, highlighted by improved credit quality, stabilized NIM and continued repositioning of our balance sheet,” said C. Malcolm Holland, III, the Company’s Chairman and Chief Executive Officer. “Our LDR, excluding mortgage warehouse, dropped below 86%, we built capital and continue to execute on our strategic plan.”

    Quarter to Date   Year to Date
Financial Highlights   Q2 2024   Q1 2024   Q2 2024   Q2 2023
    (Dollars in thousands, except per share data)
(unaudited)
GAAP                
Net income   $ 27,202     $ 24,156     $ 51,358     $ 72,141  
Diluted EPS     0.50       0.44       0.94       1.32  
Book value per common share     28.49       28.23       28.49       27.48  
Return on average assets1     0.87 %     0.79 %     0.83 %     1.18 %
Return on average equity1     7.10       6.33       6.72       9.74  
Net interest margin     3.29       3.24       3.27       3.60  
Efficiency ratio     59.11       62.45       60.72       49.17  
Non-GAAP2                
Operating earnings   $ 28,310     $ 29,137     $ 57,447     $ 77,947  
Diluted operating EPS     0.52       0.53       1.05       1.43  
Tangible book value per common share     20.62       20.33       20.62       19.41  
Pre-tax, pre-provision operating earnings     44,420       43,656       88,076       124,981  
Pre-tax, pre-provision operating return on average assets1     1.42 %     1.42 %     1.42 %     2.05 %
Pre-tax, pre-provision operating return on average loans1     1.83       1.84       1.83       2.63  
Operating return on average assets1     0.91       0.95       0.93       1.28  
Return on average tangible common equity1     10.54       9.52       10.03       14.55  
Operating return on average tangible common equity1     10.94       11.34       11.14       15.66  
Operating efficiency ratio     58.41       58.73       58.57       47.21  

1 Annualized ratio.
2 Refer to the section titled “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of these non-generally accepted accounting principles (“GAAP”) financial measures to their most directly comparable GAAP measures.


Other Second Quarter Financial, Credit and Company Highlights

Results of Operations for the Three Months Ended June 30, 2024

Net Interest Income

For the three months ended June 30, 2024, net interest income before provision for credit losses was $96.2 million and net interest margin was 3.29% compared to $92.8 million and 3.24%, respectively, for the three months ended March 31, 2024. The $3.4 million increase, or 3.7%, in net interest income before provision for credit losses was primarily due to a $5.0 million increase in interest income on loans driven by an increase in loan yields, a $1.7 million increase in interest income on debt securities and other investments and a $1.2 million decrease in interest expense on transaction and savings deposits. The increase in net interest income was partially offset by a $4.3 million increase in interest expense on certificates and other time deposits, during the three months ended June 30, 2024. NIM increased 5 bps compared to the three months ended March 31, 2024, primarily due to an increase in loan yields during the three months ended June 30, 2024, partially offset by an increase in rates on certificates and other time deposits.

Compared to the three months ended June 30, 2023, net interest income before provision for credit losses for the three months ended June 30, 2024 decreased by $4.6 million, or 4.6%. The decrease was primarily due to a $16.7 million increase in interest expense on certificates and other time deposits and a $12.7 million increase in interest expense on transaction and savings deposits. The decrease was partially offset by a $16.1 million decrease in interest expense on advances from the Federal Home Loan Bank (“FHLB”), a $5.2 million increase in interest income on debt securities and a $3.3 million increase in interest income on loans driven by an increase in loan yields and average balances. NIM decreased 22 bps from 3.51% for the three months ended June 30, 2023. The decrease was primarily due to the increase in funding costs on deposits during the three months ended June 30, 2024, partially offset by an increase in loan yields and debt securities.

Noninterest Income

Noninterest income for the three months ended June 30, 2024 was $10.6 million, an increase of $3.9 million, or 58.8%, compared to the three months ended March 31, 2024. The increase was primarily due to a $6.3 million loss on sales of investment securities in the prior quarter as a result of a strategic restructuring, in which we sold $120.1 million of lower-yielding available for sale (“AFS”) securities, at amortized cost, with a 3.11% average yield, and reinvested the proceeds in higher yielding AFS securities with a 6.24% average yield, which occurred in March of 2024, with no corresponding transaction in the three months ended June 30, 2024. The increase was partially offset by a $1.3 million decrease in government guaranteed loan income, primarily driven by a decrease in the Company’s SBA and USDA sales, a $746 thousand decrease in other income and a $303 thousand decrease in loan fees.

Compared to the three months ended June 30, 2023, noninterest income for the three months ended June 30, 2024 decreased by $3.1 million, or 22.7%. The decrease was primarily due to a $2.8 million decrease in government guaranteed loan income, primarily driven by a decrease in the Company’s USDA sales, a $657 thousand decrease in customer swap income and a $485 thousand decrease in equity method investment income. Additionally, the decrease was related to a $298 thousand decrease in service charges and fees on deposit accounts. The decrease was partially offset by a $687 thousand increase in loan fees and a $463 thousand increase in other income.

Noninterest Expense

Noninterest expense was $63.1 million for the three months ended June 30, 2024, compared to $62.1 million for the three months ended March 31, 2024, an increase of $1.0 million, or 1.7%. The increase was primarily due to a $1.4 million increase in other noninterest expense, a $430 thousand increase in marketing expenses and a $241 thousand increase in data processing and software expense. The increase is partially offset by a $575 thousand decrease in salaries and employee benefits and a decrease of $436 thousand in professional and regulatory fees driven by FDIC insurance assessment expense, which decreased $203 thousand compared to the three months ended March 31, 2024.

Compared to the three months ended June 30, 2023, noninterest expense for the three months ended June 30, 2024 increased by $5.9 million, or 10.4%. The increase was primarily due to a $4.1 million increase in salaries and employee benefits and a $3.6 million increase in other noninterest expense. The increase was partially offset by a $1.3 million decrease in professional and regulatory fees driven by FDIC insurance assessment expense, which decreased $937 thousand compared to the three months ended June 30, 2023 and a $651 thousand decrease in marketing expense.

Financial Condition

Total LHI was $9.21 billion at June 30, 2024, a decrease of $40.5 million, or 1.7% annualized, compared to March 31, 2024.

Total deposits were $10.72 billion at June 30, 2024, an increase of $71.0 million, or 2.7% annualized, compared to March 31, 2024. The increase was primarily the result of an increase of $257.8 million in certificates and other time deposits and an increase of $67.5 million in noninterest-bearing deposits. The increase was partially offset by a decrease of $13.6 million in correspondent money market account balances and a decrease of $240.7 million in interest-bearing transaction and savings deposits.

Credit Quality

NPAs totaled $83.0 million, or 0.65% of total assets, of which $58.8 million represents LHI and $24.3 million represents other real estate owned (“OREO”) at June 30, 2024, compared to $103.8 million, or 0.82% of total assets, at March 31, 2024. The Company had net charge-offs of $6.9 million for the three months ended June 30, 2024. Annualized net charge-offs to average loans outstanding were 28 bps, of which 16 bps were acquired credits, for the three months ended June 30, 2024, compared to 22 bps and 48 bps for the three months ended March 31, 2024 and June 30, 2023, respectively.

ACL as a percentage of LHI was 1.16%, 1.15% and 1.05% at June 30, 2024, March 31, 2024 and June 30, 2023, respectively. The Company recorded a provision for credit losses of $8.3 million, $7.5 million and $15.0 million for the three months ended June 30, 2024, March 31, 2024 and June 30, 2023, respectively. The recorded provision for credit losses for the three months ended June 30, 2024, compared to the three months ended March 31, 2024, was primarily attributable to an increase in general reserves as a result of changes in economic factors. As the balance for unfunded commitments for the three months ended June 30, 2024 remained stable compared to the three months ended March 31, 2024, the Company recorded no benefit or provision for unfunded commitments for the three months ended June 30, 2024. The Company recorded a $1.5 million and a $1.1 million benefit for unfunded commitments for the three months ended March 31, 2024, and June 30, 2023, respectively.

Income Tax

Income tax expense for the three months ended June 30, 2024 totaled $8.2 million, an increase of $1.0 million, or 13.6%, compared to the three months ended March 31, 2024. The Company’s effective tax rate was approximately 23.2% for the three months ended June 30, 2024. The increase was primarily due to an one-time tax expense of $527 thousand, which is excluded from operating earnings, and a net discrete tax expense of $410 thousand associated with the recognition of an excess tax expense realized on share-based payment awards.

Dividend Information

After the close of the market on Tuesday, July 23, 2024, Veritex’s Board of Directors declared a quarterly cash dividend of $0.20 per share on its outstanding shares of common stock. The dividend will be paid on or after August 23, 2024 to stockholders of record as of the close of business on August 9, 2024.

Non-GAAP Financial Measures

Veritex’s management uses certain non-GAAP (U.S. generally accepted accounting principles) financial measures to evaluate its operating performance and provide information that is important to investors. However, non-GAAP financial measures are supplemental and should be viewed in addition to, and not as an alternative for, Veritex’s reported results prepared in accordance with GAAP. Specifically, Veritex reviews and reports tangible book value per common share of the Company; operating earnings; tangible common equity to tangible assets; return on average tangible common equity; pre-tax, pre-provision operating earnings; pre-tax, pre-provision operating return on average assets; pre-tax, pre-provision operating return on average loans; diluted operating earnings per share; operating return on average assets; operating return on average tangible common equity; and operating efficiency ratio. Veritex has included in this earnings release information related to these non-GAAP financial measures for the applicable periods presented. Please refer to “Reconciliation of Non-GAAP Financial Measures” after the financial highlights at the end of this earnings release for a reconciliation of these non-GAAP financial measures.

Conference Call

The Company will host an investor conference call and webcast to review the results on Wednesday, July 24, 2024, at 8:30 a.m. Central Time. Participants may pre-register for the call by visiting https://edge.media-server.com/mmc/p/kp9m28ir and will receive a unique PIN, which can be used when dialing in for the call.

Participants may also register via teleconference: https://register.vevent.com/register/BIc18141b3387848439444d3060b38d779. Once registration is completed, participants will be provided with a dial-in number containing a personalized conference code to access the call. All participants are instructed to dial-in 15 minutes prior to the start time.

A replay will be available within approximately two hours after the completion of the call, and made accessible for one week thereafter. You may access the replay via webcast through the investor relations section of Veritex’s website.

About Veritex Holdings, Inc.

Headquartered in Dallas, Texas, Veritex is a bank holding company that conducts banking activities through its wholly owned subsidiary, Veritex Community Bank, with locations throughout the Dallas-Fort Worth metroplex and in the Houston metropolitan area. Veritex Community Bank is a Texas state chartered bank regulated by the Texas Department of Banking and the Board of Governors of the Federal Reserve System. For more information, visit www.veritexbank.com.

Media and Investor Relations:
investorrelations@veritexbank.com

Forward-Looking Statements

This earnings release includes “forward-looking statements”, within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on various facts and derived utilizing assumptions, current expectations, estimates and projections and are subject to known and unknown risks, uncertainties and other factors, which change over time and are beyond our control, that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.   Forward-looking statements include, without limitation, statements relating to the expected payment of Veritex Holdings, Inc.’s (“Veritex”) quarterly cash dividend; the impact of certain changes in Veritex’s accounting policies, standards and interpretations; turmoil in the banking industry, responsive measures to mitigate and manage such turmoil and related supervisory and regulatory actions and costs; and Veritex’s future financial performance, business and growth strategy, projected plans and objectives, as well as other projections based on macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact broader economic and industry trends, and any such variations may be material. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “seeks,” “targets,” “outlooks,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing words. We refer you to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Veritex’s Annual Report on Form 10-K for the year ended December 31, 2023 and any updates to those risk factors set forth in Veritex’s Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings with the Securities and Exchange Commission (“SEC”), which are available on the SEC’s website at www.sec.gov. If one or more events related to these or other risks or uncertainties materialize, or if Veritex’s underlying assumptions prove to be incorrect, actual results may differ materially from what Veritex anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made. Veritex does not undertake any obligation, and specifically declines any obligation, to supplement, update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by law. All forward-looking statements, expressed or implied, included in this earnings release are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that Veritex or persons acting on Veritex’s behalf may issue.


VERITEX HOLDINGS, INC. AND SUBSIDIARIES

Financial Highlights
(Unaudited)

    For the Quarter Ended   For the Six Months Ended
    Jun 30,
2024
  Mar 31,
2024
  Dec 31,
2023
  Sep 30,
2023
  Jun 30,
2023
  Jun 30,
2024
  Jun 30,
2023
    (Dollars and shares in thousands, except per share data)
Per Share Data (Common Stock):                            
Basic EPS   $ 0.50     $ 0.44     $ 0.06     $ 0.60     $ 0.62     $ 0.94     $ 1.33  
Diluted EPS     0.50       0.44       0.06       0.60       0.62       0.94       1.32  
Book value per common share     28.49       28.23       28.18       27.46       27.48       28.49       27.48  
Tangible book value per common share1     20.62       20.33       20.21       19.44       19.41       20.62       19.41  
Dividends paid per common share outstanding2     0.20       0.20       0.20       0.20       0.20       0.40       0.40  
                             
Common Stock Data:                            
Shares outstanding at period end     54,350       54,496       54,338       54,305       54,261       54,350       54,261  
Weighted average basic shares outstanding for the period     54,457       54,444       54,327       54,300       54,247       54,451       54,199  
Weighted average diluted shares outstanding for the period     54,823       54,842       54,691       54,597       54,486       54,832       54,546  
                             
Summary of Credit Ratios:                            
ACL to total LHI     1.16 %     1.15 %     1.14 %     1.14 %     1.05 %     1.16 %     1.05 %
NPAs to total assets     0.65       0.82       0.77       0.65       0.55       0.65       0.55  
NPAs to total loans and OREO     0.85       1.06       0.99       0.83       0.70       0.85       0.70  
Net charge-offs to average loans outstanding4     0.28       0.22       0.40       0.08       0.48       0.25       0.26  
                             
Summary Performance Ratios:                            
Return on average assets4     0.87 %     0.79 %     0.11 %     1.06 %     1.10 %     0.83 %     1.18 %
Return on average equity4     7.10       6.33       0.92       8.58       8.96       6.72       9.74  
Return on average tangible common equity1, 4     10.54       9.52       2.00       12.80       13.35       10.03       14.55  
Efficiency ratio     59.11       62.45       77.49       54.49       49.94       60.72       49.17  
Net interest margin     3.29       3.24       3.31       3.46       3.51       3.27       3.60  
                             
Selected Performance Metrics – Operating:                            
Diluted operating EPS1   $ 0.52     $ 0.53     $ 0.58     $ 0.60     $ 0.64     $ 1.05     $ 1.43  
Pre-tax, pre-provision operating return on average assets1, 4     1.42 %     1.42 %     1.54 %     1.61 %     1.90 %     1.42 %     2.05 %
Pre-tax, pre-provision operating return on average loans1, 4     1.83       1.84       1.97       2.05       2.43       1.83       2.63  
Operating return on average assets1,4     0.91       0.95       1.02       1.06       1.13       0.93       1.28  
Operating return on average tangible common equity1,4     10.94       11.34       12.37       12.80       13.70       11.14       15.66  
Operating efficiency ratio1     58.41       58.73       55.50       54.49       48.90       58.57       47.21  
                             
Veritex Holdings, Inc. Capital Ratios:                            
Average stockholders’ equity to average total assets     12.26 %     12.43 %     12.27 %     12.30 %     12.23 %     12.34 %     12.16 %
Tangible common equity to tangible assets1     9.14       9.02       9.18       8.86       8.76       9.14       8.76  
Tier 1 capital to average assets (leverage)     10.06       10.12       10.03       10.10       9.80       10.06       9.80  
Common equity tier 1 capital     10.49       10.37       10.29       10.11       9.76       10.49       9.76  
Tier 1 capital to risk-weighted assets     10.75       10.63       10.56       10.37       10.01       10.75       10.01  
Total capital to risk-weighted assets     13.45       13.33       13.18       12.95       12.51       13.45       12.51  
Risk weighted assets   $ 11,450,997     $ 11,407,446     $ 11,387,825     $ 11,617,229     $ 11,742,321     $ 11,450,997     $ 11,742,321  

1Refer to the section titled “Reconciliation of Non-GAAP Financial Measures” after the financial highlights for a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures.
2Dividend amount represents dividend paid per common share subsequent to each respective quarter end.
3Nonaccrual PCD loans consist of PCD loans that transitioned upon adoption of ASC 326 Financial Instruments – Credit Losses and were accounted for on a pooled basis that have subsequently been placed on nonaccrual status.
4Annualized ratio for quarterly metrics.


VERITEX HOLDINGS, INC. AND SUBSIDIARIES

Financial Highlights
(In thousands)

    Jun 30, 2024   Mar 31, 2024   Dec 31, 2023   Sep 30, 2023   Jun 30, 2023
    (unaudited)   (unaudited)       (unaudited)   (unaudited)
ASSETS                    
Cash and cash equivalents   $ 651,837     $ 740,769     $ 629,063     $ 713,408     $ 663,921  
Debt securities, net     1,349,354       1,344,930       1,257,042       1,060,629       1,144,020  
Other investments     75,885       76,788       76,238       80,869       138,894  
                     
Loans held for sale (“LHFS”)     57,046       64,762       79,072       41,313       29,876  
LHI, mortgage warehouse (“MW”)     568,047       449,531       377,796       390,767       436,255  
LHI, excluding MW     9,209,094       9,249,551       9,206,544       9,237,447       9,257,183  
Total loans     9,834,187       9,763,844       9,663,412       9,669,527       9,723,314  
ACL     (113,431 )     (112,032 )     (109,816 )     (109,831 )     (102,150 )
Bank-owned life insurance     84,233       85,359       84,833       84,867       84,375  
Bank premises, furniture and equipment, net     105,222       105,299       105,727       106,118       105,986  
Other real estate owned (“OREO”)     24,256       18,445                    
Intangible assets, net of accumulated amortization     35,817       38,679       41,753       44,294       48,293  
Goodwill     404,452       404,452       404,452       404,452       404,452  
Other assets     232,518       241,863       241,633       291,998       259,263  
Total assets   $ 12,684,330     $ 12,708,396     $ 12,394,337     $ 12,346,331     $ 12,470,368  
LIABILITIES AND STOCKHOLDERS’ EQUITY                    
Deposits:                    
Noninterest-bearing deposits   $ 2,416,727     $ 2,349,211     $ 2,218,036     $ 2,363,340     $ 2,234,109  
Interest-bearing transaction and savings deposits     3,979,454       4,220,114       4,348,385       3,936,070       3,590,253  
Certificates and other time deposits     3,744,596       3,486,805       3,191,737       3,403,427       2,928,949  
Correspondent money market deposits     584,067       597,690       580,037       493,681       480,598  
Total deposits     10,724,844       10,653,820       10,338,195       10,196,518       9,233,909  
Accounts payable and other liabilities     180,585       186,027       195,036       229,116       190,900  
Advances from FHLB           100,000       100,000       200,000       1,325,000  
Subordinated debentures and subordinated notes     230,285       230,034       229,783       229,531       229,279  
Total liabilities     11,135,714       11,169,881       10,863,014       10,855,165       10,979,088  
Commitments and contingencies                    
Stockholders’ equity:                    
Common stock     612       611       610       609       609  
Additional paid-in capital     1,321,995       1,319,144       1,317,516       1,314,459       1,311,687  
Retained earnings     473,801       457,499       444,242       451,513       429,753  
Accumulated other comprehensive loss     (76,713 )     (71,157 )     (63,463 )     (107,833 )     (83,187 )
Treasury stock     (171,079 )     (167,582 )     (167,582 )     (167,582 )     (167,582 )
Total stockholders’ equity     1,548,616       1,538,515       1,531,323       1,491,166       1,491,280  
Total liabilities and stockholders’ equity   $ 12,684,330     $ 12,708,396     $ 12,394,337     $ 12,346,331     $ 12,470,368  


VERITEX HOLDINGS, INC. AND SUBSIDIARIES

Financial Highlights
(In thousands, except per share data)

    For the Quarter Ended   For the Six Months Ended
    Jun 30, 2024   Mar 31, 2024   Dec 31, 2023   Sep 30, 2023   Jun 30, 2023   Jun 30, 2024   Jun 30, 2023
    (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)
Interest income:                            
Loans, including fees   $ 166,979   $ 161,942     $ 165,443     $ 167,368     $ 163,727     $ 328,921     $ 315,434  
Debt securities     15,408     13,695       12,282       10,928       10,166       29,103       21,154  
Deposits in financial institutions and Fed Funds sold     7,722     8,050       8,162       7,128       7,507       15,772       13,041  
Equity securities and other investments     1,138     900       1,717       1,691       1,118       2,038       2,526  
Total interest income     191,247     184,587       187,604       187,115       182,518       375,834       352,155  
Interest expense:                            
Transaction and savings deposits     45,619     46,784       46,225       39,936       32,957       92,403       62,814  
Certificates and other time deposits     44,811     40,492       40,165       36,177       28,100       85,303       49,067  
Advances from FHLB     1,468     1,391       2,581       8,523       17,562       2,859       29,920  
Subordinated debentures and subordinated notes     3,113     3,114       3,100       3,118       3,068       6,227       6,134  
Total interest expense     95,011     91,781       92,071       87,754       81,687       186,792       147,935  
Net interest income     96,236     92,806       95,533       99,361       100,831       189,042       204,220  
Provision for credit losses1     8,250     7,500       9,500       8,627       15,000       15,750       24,385  
(Benefit) provision for unfunded commitments         (1,541 )     (1,500 )     (909 )     (1,129 )     (1,541 )     368  
Net interest income after provisions     87,986     86,847       87,533       91,643       86,960       174,833       179,467  
Noninterest income:                            
Service charges and fees on deposit accounts     4,974     4,896       4,800       5,159       5,272       9,870       10,289  
Loan fees     2,207     2,510       1,200       1,564       1,520       4,717       3,584  
Loss on sales of debt securities         (6,304 )                       (6,304 )     (5,321 )
Government guaranteed loan income, net     1,320     2,614       4,378       1,772       4,144       3,934       13,832  
Equity method investment (loss) income               (29,417 )     (136 )     485             (1,036 )
Customer swap income     326     449       258       180       983       775       1,196  
Other income     1,751     2,497       989       1,135       1,288       4,248       4,679  
Total noninterest income (loss)     10,578     6,662       (17,792 )     9,674       13,692       17,240       27,223  
Noninterest expense:                            
Salaries and employee benefits     32,790     33,365       30,606       30,949       28,650       66,155       60,515  
Occupancy and equipment     4,585     4,677       4,670       4,881       4,827       9,262       9,800  
Professional and regulatory fees     5,617     6,053       7,626       7,283       6,868       11,670       11,257  
Data processing and software expense     5,097     4,856       4,569       4,541       4,709       9,953       9,429  
Marketing     1,976     1,546       1,945       2,353       2,627       3,522       4,406  
Amortization of intangibles     2,438     2,438       2,438       2,437       2,468       4,876       4,963  
Telephone and communications     365     261       356       362       355       626       833  
Other     10,273     8,920       8,028       6,608       6,693       19,193       12,609  
Total noninterest expense     63,141     62,116       60,238       59,414       57,197       125,257       113,812  
Income before income tax expense     35,423     31,393       9,503       41,903       43,455       66,816       92,878  
Income tax expense     8,221     7,237       6,004       9,282       9,725       15,458       20,737  
Net income   $ 27,202   $ 24,156     $ 3,499     $ 32,621     $ 33,730     $ 51,358     $ 72,141  
                             
Basic EPS   $ 0.50   $ 0.44     $ 0.06     $ 0.60     $ 0.62     $ 0.94     $ 1.33  
Diluted EPS   $ 0.50   $ 0.44     $ 0.06     $ 0.60     $ 0.62     $ 0.94     $ 1.32  
Weighted average basic shares outstanding     54,457     54,444       54,327       54,300       54,247       54,451       54,199  
Weighted average diluted shares outstanding     54,823     54,842       54,691       54,597       54,486       54,832       54,546  

1 Includes provision for credit losses on AFS securities of $885 thousand for the six months ended June 30, 2023.


VERITEX HOLDINGS, INC. AND SUBSIDIARIES

Financial Highlights
(Unaudited)

    For the Quarter Ended
    June 30, 2024   March 31, 2024   June 30, 2023
    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   $ 9,344,482     $ 160,323   6.90 %   $ 9,283,815     $ 157,585   6.83 %   $ 9,285,550     $ 158,685   6.85 %
LHI, MW     420,946       6,656   6.36       279,557       4,357   6.27       371,763       5,042   5.44  
Debt securities     1,352,293       15,408   4.58       1,294,994       13,695   4.25       1,133,845       10,166   3.60  
Interest-bearing deposits in other banks     560,586       7,722   5.54       584,593       8,050   5.54       583,818       7,507   5.16  
Equity securities and other investments     78,964       1,138   5.80       76,269       900   4.75       137,868       1,118   3.25  
Total interest-earning assets     11,757,271       191,247   6.54       11,519,228       184,587   6.44       11,512,844       182,518   6.36  
ACL     (115,978 )             (112,229 )             (102,559 )        
Noninterest-earning assets     937,413               929,043               939,938          
Total assets   $ 12,578,706             $ 12,336,042             $ 12,350,223          
                                     
Liabilities and Stockholders’ Equity                                    
Interest-bearing liabilities:                                    
Interest-bearing demand and savings deposits   $ 4,570,329     $ 45,619   4.01 %   $ 4,639,445     $ 46,784   4.06 %   $ 3,919,745     $ 32,957   3.37 %
Certificates and other time deposits     3,591,035       44,811   5.02       3,283,735       40,492   4.96       2,873,548       28,100   3.92  
Advances from FHLB and Other     106,648       1,468   5.54       100,989       1,391   5.54       1,472,912       17,562   4.78  
Subordinated debentures and subordinated notes     230,141       3,113   5.44       229,881       3,114   5.45       229,151       3,068   5.37  
Total interest-bearing liabilities     8,498,153       95,011   4.50       8,254,050       91,781   4.47       8,495,356       81,687   3.86  
                                     
Noninterest-bearing liabilities:                                    
Noninterest-bearing deposits     2,346,908               2,355,315               2,175,002          
Other liabilities     192,036               192,809               169,240          
Total liabilities     11,037,097               10,802,174               10,839,598          
Stockholders’ equity     1,541,609               1,533,868               1,510,625          
Total liabilities and stockholders’ equity   $ 12,578,706             $ 12,336,042             $ 12,350,223          
                                     
Net interest rate spread2           2.04 %           1.97 %           2.50 %
Net interest income and margin3       $ 96,236   3.29 %       $ 92,806   3.24 %       $ 100,831   3.51 %

1 Includes average outstanding balances of LHFS of $58.5 million, $53.9 million and $23.4 million for the quarters ended June 30, 2024, March 31, 2024, and June 30, 2023, respectively, and average balances of LHI, excluding MW.
2 Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
3 Net interest margin is equal to net interest income divided by average interest-earning assets.


VERITEX HOLDINGS, INC. AND SUBSIDIARIES

Financial Highlights
(In thousands, except percentages)

    For the Six Months Ended
    June 30, 2024   June 30, 2023
    Average Outstanding Balance   Interest Earned/ Interest Paid   Average Yield/ Rate   Average Outstanding Balance   Interest Earned/ Interest Paid   Average Yield/ Rate
Assets                        
Interest-earning assets:                        
Loans1   $ 9,314,148     $ 317,908   6.86 %   $ 9,213,742     $ 305,486   6.69 %
LHI, MW     350,252       11,013   6.32       366,000       9,948   5.48  
Debt securities     1,323,644       29,103   4.42       1,192,823       21,154   3.58  
Interest-bearing deposits in other banks     572,589       15,772   5.54       531,373       13,041   4.95  
Equity securities and other investments     77,616       2,038   5.28       131,462       2,526   3.87  
Total interest-earning assets     11,638,249       375,834   6.49       11,435,400       352,155   6.21  
ACL     (114,104 )             (97,639 )        
Noninterest-earning assets     933,229               944,883          
Total assets   $ 12,457,374             $ 12,282,644          
                         
Liabilities and Stockholders’ Equity                        
Interest-bearing liabilities:                        
Interest-bearing demand and savings deposits   $ 4,604,887     $ 92,403   4.04 %   $ 4,033,975     $ 62,814   3.14 %
Certificates and other time deposits     3,437,385       85,303   4.99       2,731,925       49,067   3.62  
Advances from FHLB and Other     103,819       2,859   5.54       1,298,765       29,920   4.65  
Subordinated debentures and subordinated notes     230,011       6,227   5.44       230,195       6,134   5.37  
Total interest-bearing liabilities     8,376,102       186,792   4.48       8,294,860       147,935   3.60  
                         
Noninterest-bearing liabilities:                        
Noninterest-bearing deposits     2,351,112               2,322,790          
Other liabilities     192,422               171,299          
Total liabilities     10,919,636               10,788,949          
Stockholders’ equity     1,537,738               1,493,695          
Total liabilities and stockholders’ equity   $ 12,457,374             $ 12,282,644          
                         
Net interest rate spread2           2.01 %           2.61 %
Net interest income and margin3       $ 189,042   3.27 %       $ 204,220   3.60 %

1 Includes average outstanding balances of LHFS of $56.2 million and $21.5 million for the six months ended June 30, 2024 and 2023, respectively, and average balances of LHI, excluding MW.
2 Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
3 Net interest margin is equal to net interest income divided by average interest-earning assets.


VERITEX HOLDINGS, INC. AND SUBSIDIARIES

Financial Highlights
(Unaudited)
Yield Trend

    For the Quarter Ended
    Jun 30,
2024
  Mar 31,
2024
  Dec 31,
2023
  Sep 30,
2023
  Jun 30,
2023
Average yield on interest-earning assets:                    
Loans1   6.90 %   6.83 %   6.88 %   6.92 %   6.85 %
LHI, MW   6.36     6.27     5.82     6.38     5.44  
Total Loans   6.88     6.81     6.85     6.90     6.80  
Debt securities   4.58     4.25     4.10     3.87     3.60  
Interest-bearing deposits in other banks   5.54     5.54     5.51     5.43     5.16  
Equity securities and other investments   5.80     4.75     8.28     4.94     3.25  
Total interest-earning assets   6.54 %   6.44 %   6.51 %   6.51 %   6.36 %
                     
Average rate on interest-bearing liabilities:                    
Interest-bearing demand and savings deposits   4.01 %   4.06 %   4.03 %   3.80 %   3.37 %
Certificates and other time deposits   5.02     4.96     4.85     4.55     3.92  
Advances from FHLB   5.54     5.54     5.60     4.66     4.78  
Subordinated debentures and subordinated notes   5.44     5.45     5.36     5.39     5.37  
Total interest-bearing liabilities   4.50 %   4.47 %   4.43 %   4.21 %   3.86 %
                     
Net interest rate spread2   2.04 %   1.97 %   2.08 %   2.30 %   2.50 %
Net interest margin3   3.29 %   3.24 %   3.31 %   3.46 %   3.51 %

  
1Includes average outstanding balances of LHFS of $58.5 million, $53.9 million, $31.2 million, $28.3 million and $23.4 million for the three months ended June 30, 2024, March 31, 2024, December 31, 2023, September 30, 2023, and June 30, 2023, respectively, and average balances of LHI, excluding MW.
2 Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
3 Net interest margin is equal to net interest income divided by average interest-earning assets.

Supplemental Yield Trend

    For the Quarter Ended   For the Six Months Ended
    Jun 30,
2024
  Mar 31,
2024
  Dec 31,
2023
  Sep 30,
2023
  Jun 30,
2023
  Jun 30,
2024
  Jun 30,
2023
Average cost of interest-bearing deposits   4.46 %   4.43 %   4.38 %   4.12 %   3.61 %   4.44 %   3.33 %
Average costs of total deposits, including noninterest-bearing   3.46     3.42     3.37     3.15     2.73     3.44     2.48  


VERITEX HOLDINGS, INC. AND SUBSIDIARIES

Financial Highlights
(Unaudited)

LHI and Deposit Portfolio Composition

  Jun 30,
2024
  Mar 31,
2024
  Dec 31,
2023
  Sep 30,
2023
  Jun 30,
2023
  (In thousands, except percentages)
LHI1                                      
Commercial and Industrial (“C&I”) $ 2,798,260     30.4 %   $ 2,785,987     30.1 %   $ 2,752,063     29.9 %   $ 2,841,024     30.7 %   $ 2,850,084     30.7 %
Real Estate:                                      
Owner occupied commercial (“OOCRE”)   806,285     8.7       788,376     8.5       794,088     8.6       697,299     7.5       671,602     7.2  
Non-owner occupied commercial (“NOOCRE”)   2,369,848     25.7       2,352,993     25.5       2,350,725     25.5       2,398,060     26.1       2,509,731     27.1  
Construction and land   1,536,580     16.7       1,568,257     16.9       1,734,254     18.8       1,705,053     18.4       1,659,700     17.9  
Farmland   30,512     0.3       30,979     0.3       31,114     0.3       59,684     0.6       51,663     0.6  
1-4 family residential   917,402     10.0       969,401     10.5       937,119     10.2       933,225     10.1       923,442     10.0  
Multi-family residential   748,740     8.1       751,607     8.1       605,817     6.6       603,395     6.5       592,473     6.4  
Consumer   9,245     0.1       8,882     0.1       10,149     0.1       9,845     0.1       11,189     0.1  
Total LHI $ 9,216,872     100 %   $ 9,256,482     100 %   $ 9,215,329     100 %   $ 9,247,585     100 %   $ 9,269,884     100 %
                                       
MW   568,047           449,531           377,796           390,767           436,255      
                                       
Total LHI1 $ 9,784,919         $ 9,706,013         $ 9,593,125         $ 9,638,352         $ 9,706,139      
                                       
Total LHFS   57,046           64,762           79,072           41,313           29,876      
                                       
Total Loans $ 9,841,965         $ 9,770,775         $ 9,672,197         $ 9,679,665         $ 9,736,015      
                                       
Deposits                                      
Noninterest-bearing $ 2,416,727     22.5 %   $ 2,349,211     22.1 %   $ 2,218,036     21.5 %   $ 2,363,340     23.2 %   $ 2,234,109     24.2 %
Interest-bearing transaction   523,272     4.9       724,171     6.8       927,193     8.9       739,098     7.2       676,653     7.3  
Money market   3,268,286     30.5       3,326,742     31.2       3,284,324     31.8       3,096,498     30.4       2,816,769     30.5  
Savings   187,896     1.8       169,201     1.6       136,868     1.3       100,474     1.0       96,831     1.0  
Certificates and other time deposits   3,744,596     34.9       3,486,805     32.7       3,191,737     30.9       3,403,427     33.4       2,928,949     31.7  
Correspondent money market accounts   584,067     5.4       597,690     5.6       580,037     5.6       493,681     4.8       480,598     5.3  
Total deposits $ 10,724,844     100 %   $ 10,653,820     100 %   $ 10,338,195     100 %   $ 10,196,518     100 %   $ 9,233,909     100 %
                                       
Total Loans to Deposits Ratio   91.8 %         91.7 %         93.6 %         94.9 %         105.4 %    
                                       
Total Loans to Deposit Ratio, excluding MW loans and LHFS   85.9 %         86.9 %         89.1 %         90.7 %         100.4 %    

1 Total LHI does not include deferred fees of $7.8 million, $6.9 million, $8.8 million, $10.1 million and $12.7 million at June 30, 2024, March 31, 2024, December 31, 2023, September 30, 2023 and June 30, 2023, respectively.


VERITEX HOLDINGS, INC. AND SUBSIDIARIES

Financial Highlights
(Unaudited)
Asset Quality

  For the Quarter Ended   For the Six Months Ended
  Jun 30,
2024
  Mar 31,
2024
  Dec 31,
2023
  Sep 30,
2023
  Jun 30,
2023
  Jun 30,
2024
  Jun 30,
2023
  (In thousands, except percentages)        
NPAs:                          
Nonaccrual loans $ 58,537     $ 75,721     $ 79,133     $ 65,676     $ 54,055     $ 58,537     $ 54,055  
Nonaccrual PCD loans1   73       9,419       13,715       13,718       13,721       73       13,721  
Accruing loans 90 or more days past due2   143       220       2,975       474       528       143       528  
Total nonperforming loans held for investment (“NPLs”)   58,753       85,360       95,823       79,868       68,304       58,753       68,304  
Other real estate owned   24,256       18,445                         24,256        
Total NPAs $ 83,009     $ 103,805     $ 95,823     $ 79,868     $ 68,304     $ 83,009     $ 68,304  
                           
Charge-offs:                          
1-4 family residential $ (31 )   $     $ (21 )   $     $     $ (31 )   $  
Multifamily   (198 )           (192 )                 (198 )      
OOCRE         (120 )     (364 )     (375 )           (120 )     (116 )
NOOCRE   (1,969 )     (4,293 )     (5,434 )           (8,215 )     (6,262 )     (8,215 )
C&I   (5,601 )     (946 )     (3,893 )     (1,929 )     (3,540 )     (6,547 )     (4,591 )
Consumer   (30 )     (71 )     (33 )     (49 )     (92 )     (101 )     (154 )
Total charge-offs $ (7,829 )   $ (5,430 )   $ (9,937 )   $ (2,353 )   $ (11,847 )   $ (13,259 )   $ (13,076 )
                           
Recoveries:                          
1-4 family residential $     $ 1     $ 1     $     $ 1     $ 1     $ 2  
OOCRE   120                               120        
NOOCRE                     200       150             150  
C&I   361       96       387       308       106       457       470  
Consumer   497       49       34       14       46       546       52  
Total recoveries $ 978     $ 146     $ 422     $ 522     $ 303     $ 1,124     $ 674  
                           
Net charge-offs $ (6,851 )   $ (5,284 )   $ (9,515 )   $ (1,831 )   $ (11,544 )   $ (12,135 )   $ (12,402 )
                           
Provision for credit losses $ 8,250     $ 7,500     $ 9,500     $ 8,627     $ 15,000     $ 15,750     $ 24,385  
                           
ACL $ 113,431     $ 112,032     $ 109,816     $ 109,831     $ 102,150     $ 113,431     $ 102,150  
                           
Asset Quality Ratios:                          
NPAs to total assets   0.65 %     0.82 %     0.77 %     0.65 %     0.55 %     0.65 %     0.55 %
NPAs, excluding nonaccrual PCD loans, to total assets   0.65       0.74       0.66       0.54       0.44       0.65       0.44  
NPAs to total loans and OREO   0.85       1.06       0.99       0.83       0.70       0.85       0.70  
NPLs to total LHI   0.60       0.88       1.00       0.83       0.70       0.60       0.70  
NPLs, excluding nonaccrual PCD loans, to total LHI   0.60       0.78       0.86       0.69       0.56       0.60       0.56  
ACL to total LHI   1.16       1.15       1.14       1.14       1.05       1.16       1.05  
ACL to total loans, excluding MW and LHFS   1.23       1.21       1.19       1.19       1.10       1.23       1.10  
Net charge-offs to average loans outstanding3   0.28       0.22       0.40       0.08       0.48       0.25       0.26  

1 Nonaccrual PCD loans consist of PCD loans that transitioned upon adoption of ASC 326 Financial Instruments – Credit Losses and were accounted for on a pooled basis that have subsequently been placed on nonaccrual status.
2 Accruing loans greater than 90 days past due exclude purchase credit deteriorated loans greater than 90 days past due that are accounted for on a pooled basis.
3Annualized ratio for quarterly metrics.


VERITEX HOLDINGS, INC. AND SUBSIDIARIES

Reconciliation of Non-GAAP Financial Measures
(Unaudited)

We identify certain financial measures discussed in this earnings release as being “non-GAAP financial measures.” In accordance with SEC rules, we classify a financial measure as being a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with GAAP, in our statements of income, balance sheets or statements of cash flows. Non-GAAP financial measures do not include operating and other statistical measures or ratios calculated using exclusively either one or both of (i) financial measures calculated in accordance with GAAP and (ii) operating measures or other measures that are not non-GAAP financial measures.

The non-GAAP financial measures that we present in this earnings release should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which we calculate the non-GAAP financial measures that we present in this earnings release may differ from that of other companies reporting measures with similar names. You should understand how such other financial institutions calculate their financial measures that appear to be similar or have similar names to the non-GAAP financial measures we have discussed in this earnings release when comparing such non-GAAP financial measures.

Tangible Book Value Per Common Share. Tangible book value is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) tangible common equity as total stockholders’ equity less goodwill and core deposit intangibles, net of accumulated amortization; and (b) tangible book value per common share as tangible common equity (as described in clause (a)) divided by number of common shares outstanding. For tangible book value per common share, the most directly comparable financial measure calculated in accordance with GAAP is book value per common share.

We believe that this measure is important to many investors in the marketplace who are interested in changes from period to period in book value per common share exclusive of changes in core deposit intangibles. Goodwill and other intangible assets have the effect of increasing total book value while not increasing our tangible book value.

The following table reconciles, as of the dates set forth below, total stockholders’ equity to tangible common equity and presents our tangible book value per common share compared with our book value per common share:

    As of
    Jun 30, 2024   Mar 31, 2024   Dec 31, 2023   Sep 30, 2023   Jun 30, 2023
    (Dollars in thousands, except per share data)
Tangible Common Equity                    
Total stockholders’ equity   $ 1,548,616     $ 1,538,515     $ 1,531,323     $ 1,491,166     $ 1,491,280  
Adjustments:                    
Goodwill     (404,452 )     (404,452 )     (404,452 )     (404,452 )     (404,452 )
Core deposit intangibles     (23,619 )     (26,057 )     (28,495 )     (30,933 )     (33,371 )
Tangible common equity   $ 1,120,545     $ 1,108,006     $ 1,098,376     $ 1,055,781     $ 1,053,457  
Common shares outstanding     54,350       54,496       54,338       54,305       54,261  
                     
Book value per common share   $ 28.49     $ 28.23     $ 28.18     $ 27.46     $ 27.48  
Tangible book value per common share   $ 20.62     $ 20.33     $ 20.21     $ 19.44     $ 19.41  


VERITEX HOLDINGS, INC. AND SUBSIDIARIES

Reconciliation of Non-GAAP Financial Measures
(Unaudited)

Tangible Common Equity to Tangible Assets. Tangible common equity to tangible assets is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) tangible common equity as total stockholders’ equity, less goodwill and core deposit intangibles, net of accumulated amortization; (b) tangible assets as total assets less goodwill and core deposit intangibles, net of accumulated amortization; and (c) tangible common equity to tangible assets as tangible common equity (as described in clause (a)) divided by tangible assets (as described in clause (b)). For tangible common equity to tangible assets, the most directly comparable financial measure calculated in accordance with GAAP is total stockholders’ equity to total assets.

We believe that this measure is important to many investors in the marketplace who are interested in the relative changes from period to period in common equity and total assets, in each case, exclusive of changes in core deposit intangibles. Goodwill and other intangible assets have the effect of increasing both total stockholders’ equity and assets while not increasing our tangible common equity or tangible assets.

The following table reconciles, as of the dates set forth below, total stockholders’ equity to tangible common equity and total assets to tangible assets and presents our tangible common equity to tangible assets:

    As of
    Jun 30, 2024   Mar 31, 2024   Dec 31, 2023   Sep 30, 2023   Jun 30, 2023
    (Dollars in thousands)
Tangible Common Equity                    
Total stockholders’ equity   $ 1,548,616     $ 1,538,515     $ 1,531,323     $ 1,491,166     $ 1,491,280  
Adjustments:                    
Goodwill     (404,452 )     (404,452 )     (404,452 )     (404,452 )     (404,452 )
Core deposit intangibles     (23,619 )     (26,057 )     (28,495 )     (30,933 )     (33,371 )
Tangible common equity   $ 1,120,545     $ 1,108,006     $ 1,098,376     $ 1,055,781     $ 1,053,457  
Tangible Assets                    
Total assets   $ 12,684,330     $ 12,708,396     $ 12,394,337     $ 12,346,331     $ 12,470,368  
Adjustments:                    
Goodwill     (404,452 )     (404,452 )     (404,452 )     (404,452 )     (404,452 )
Core deposit intangibles     (23,619 )     (26,057 )     (28,495 )     (30,933 )     (33,371 )
Tangible Assets   $ 12,256,259     $ 12,277,887     $ 11,961,390     $ 11,910,946     $ 12,032,545  
Tangible Common Equity to Tangible Assets     9.14 %     9.02 %     9.18 %     8.86 %     8.76 %


VERITEX HOLDINGS, INC. AND SUBSIDIARIES

Reconciliation of Non-GAAP Financial Measures
(Unaudited)

Return on Average Tangible Common Equity. Return on average tangible common equity is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) net income available for common stockholders adjusted for amortization of core deposit intangibles (which we refer to as “return”) as net income, plus amortization of core deposit intangibles, less tax benefit at the statutory rate; (b) average tangible common equity as total average stockholders’ equity less average goodwill and average core deposit intangibles, net of accumulated amortization; and (c) return (as described in clause (a)) divided by average tangible common equity (as described in clause (b)). For return on average tangible common equity, the most directly comparable financial measure calculated in accordance with GAAP is return on average equity.

We believe that this measure is important to many investors in the marketplace who are interested in the return on common equity, exclusive of the impact of core deposit intangibles. Goodwill and core deposit intangibles have the effect of increasing total stockholders’ equity while not increasing our tangible common equity. This measure is particularly relevant to acquisitive institutions that may have higher balances in goodwill and core deposit intangibles than non-acquisitive institutions.

The following table reconciles, as of the dates set forth below, average tangible common equity to average common equity and net income available for common stockholders adjusted for amortization of core deposit intangibles, net of taxes to net income and presents our return on average tangible common equity:

    For the Quarter Ended   For the Six Months Ended
    Jun 30,
2024
  Mar 31,
2024
  Dec 31,
2023
  Sep 30,
2023
  Jun 30,
2023
  Jun 30,
2024
  Jun 30,
2023
    (Dollars in thousands)
Net income available for common stockholders adjusted for amortization of core deposit intangibles                            
Net income   $ 27,202     $ 24,156     $ 3,499     $ 32,621     $ 33,730     $ 51,358     $ 72,141  
Adjustments:                            
Plus: Amortization of core deposit intangibles     2,438       2,438       2,438       2,438       2,438       4,876       4,876  
Less: Tax benefit at the statutory rate     512       512       512       512       512       1,024       1,024  
Net income available for common stockholders adjusted for amortization of core deposit intangibles   $ 29,128     $ 26,082     $ 5,425     $ 34,547     $ 35,656     $ 55,210     $ 75,993  
                             
Average Tangible Common Equity                            
Total average stockholders’ equity   $ 1,541,609     $ 1,533,868     $ 1,510,286     $ 1,508,170     $ 1,510,625     $ 1,537,738     $ 1,493,695  
Adjustments:                            
Average goodwill     (404,452 )     (404,452 )     (404,452 )     (404,452 )     (404,452 )     (404,452 )     (404,452 )
Average core deposit intangibles     (25,218 )     (27,656 )     (30,093 )     (32,540 )     (34,969 )     (26,437 )     (36,159 )
Average tangible common equity   $ 1,111,939     $ 1,101,760     $ 1,075,741     $ 1,071,178     $ 1,071,204     $ 1,106,849     $ 1,053,084  
Return on Average Tangible Common Equity (Annualized)     10.54 %     9.52 %     2.00 %     12.80 %     13.35 %     10.03 %     14.55 %


VERITEX HOLDINGS, INC. AND SUBSIDIARIES

Reconciliation of Non-GAAP Financial Measures
(Unaudited)

Operating Earnings, Pre-tax, Pre-provision Operating Earnings and performance metrics calculated using Operating Earnings and Pre-tax, Pre-provision Operating Earnings, including Diluted Operating Earnings per Share, Operating Return on Average Assets, Pre-tax, Pre-Provision Operating Return on Average Assets, Pre-tax, Pre-Provision Operating Return on Average Loans, Operating Return on Average Tangible Common Equity and Operating Efficiency Ratio. Operating earnings, pre-tax, pre-provision operating earnings and the performance metrics calculated using these metrics, listed below, are non-GAAP measures used by management to evaluate the Company’s financial performance. We calculate (a) operating earnings as net income plus severance payments, plus loss on sale of debt securities AFS, net, plus M&A expenses less tax impact of adjustments, plus nonrecurring tax adjustments. We calculate (b) diluted operating earnings per share as operating earnings as described in clause (a) divided by weighted average diluted shares outstanding. We calculate (c) pre-tax, pre-provision operating earnings as operating earnings as described in clause (a) plus provision for income taxes, plus provision (benefit) for credit losses and unfunded commitments. We calculate (d) pre-tax, pre-provision operating return on average assets as pre-tax, pre-provision operating earnings as described in clause (a) divided by total average assets. We calculate (e) operating return on average assets as operating earnings as described in clause (a) divided by total average assets. We calculate (f) operating return on average tangible common equity as operating earnings as described in clause (a), adjusted for the amortization of intangibles and tax benefit at the statutory rate, divided by total average tangible common equity (average stockholders’ equity less average goodwill and average core deposit intangibles, net of accumulated amortization). We calculate (g) operating efficiency ratio as noninterest expense plus adjustments to operating noninterest expense divided by noninterest income plus adjustments to operating noninterest income, plus net interest income.

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

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

    For the Quarter Ended   For the Six Months Ended
    Jun 30,
2024
  Mar 31,
2024
  Dec 31,
2023
  Sep 30,
2023
  Jun 30,
2023
  June 30,
2024
  Jun 30,
2023
    (Dollars in thousands, except per share data)
Operating Earnings                            
Net income   $ 27,202   $ 24,156   $ 3,499   $ 32,621   $ 33,730   $ 51,358   $ 72,141
Plus: Severance payments1     613                 1,194     613     2,029
Plus: Loss on sale of AFS securities, net         6,304                 6,304     5,321
Plus: Equity method investment write-down             29,417                
Plus: FDIC special assessment     134         768             134    
Operating pre-tax income     27,949     30,460     33,684     32,621     34,924     58,409     79,491
Less: Tax impact of adjustments     166     1,323     2,059         251     1,489     1,544
Plus: Nonrecurring tax adjustments     527                     527    
Operating earnings   $ 28,310   $ 29,137   $ 31,625   $ 32,621   $ 34,673   $ 57,447   $ 77,947
                             
Weighted average diluted shares outstanding     54,823     54,842     54,691     54,597     54,486     54,832     54,546
Diluted EPS   $ 0.50   $ 0.44   $ 0.06   $ 0.60   $ 0.62   $ 0.94   $ 1.32
Diluted operating EPS   $ 0.52   $ 0.53   $ 0.58   $ 0.60   $ 0.64   $ 1.05   $ 1.43

1 Severance payments relate to certain restructurings made during the periods disclosed.

  For the Quarter Ended   For the Six Months
Ended
  Jun 30,
2024
  Mar 31,
2024
  Dec 31,
2023
  Sep 30,
2023
  Jun 30,
2023
  Jun 30,
2024
  Jun 30,
2023
  (Dollars in thousands)
Pre-Tax, Pre-Provision Operating Earnings                          
Net income $ 27,202     $ 24,156     $ 3,499     $ 32,621     $ 33,730     $ 51,358     $ 72,141  
Plus: Provision for income taxes   8,221       7,237       6,004       9,282       9,725       15,458       20,737  
Plus: Provision for credit losses and unfunded commitments   8,250       5,959       8,000       7,718       13,871       14,209       24,753  
Plus: Severance payments   613                         1,194       613       2,029  
Plus: Loss on sale of AFS securities, net         6,304                         6,304       5,321  
Plus: Equity method investment write-down               29,417                          
Plus: FDIC special assessment   134             768                   134        
Pre-tax, pre-provision operating earnings $ 44,420     $ 43,656     $ 47,688     $ 49,621     $ 58,520     $ 88,076     $ 124,981  
                           
Average total assets $ 12,578,706     $ 12,336,042     $ 12,306,634     $ 12,259,062     $ 12,350,223     $ 12,457,374     $ 12,282,644  
Pre-tax, pre-provision operating return on average assets1   1.42 %     1.42 %     1.54 %     1.61 %     1.90 %     1.42 %     2.05 %
                           
Average loans $ 9,765,428     $ 9,563,372     $ 9,581,784     $ 9,625,005     $ 9,657,313     $ 9,664,400     $ 9,579,742  
Pre-tax, pre-provision operating return on average loans1   1.83 %     1.84 %     1.97 %     2.05 %     2.43 %     1.83 %     2.63 %
                           
Average total assets $ 12,578,706     $ 12,336,042     $ 12,306,634     $ 12,259,062     $ 12,350,223     $ 12,457,374     $ 12,282,644  
Return on average assets1   0.87 %     0.79 %     0.11 %     1.06 %     1.10 %     0.83 %     1.18 %
Operating return on average assets1   0.91       0.95       1.02       1.06       1.13       0.93       1.28  
                           
Operating earnings adjusted for amortization of core deposit intangibles                          
Operating earnings $ 28,310     $ 29,137     $ 31,625     $ 32,621     $ 34,673     $ 57,447     $ 77,947  
Adjustments:                          
Plus: Amortization of core deposit intangibles   2,438       2,438       2,438       2,438       2,438       4,876       4,876  
Less: Tax benefit at the statutory rate   512       512       512       512       512       1,024       1,024  
Operating earnings adjusted for amortization of core deposit intangibles $ 30,236     $ 31,063     $ 33,551     $ 34,547     $ 36,599     $ 61,299     $ 81,799  
                           
Average Tangible Common Equity                          
Total average stockholders’ equity $ 1,541,609     $ 1,533,868     $ 1,510,286     $ 1,508,170     $ 1,510,625     $ 1,537,738     $ 1,493,695  
Adjustments:                          
Less: Average goodwill   (404,452 )     (404,452 )     (404,452 )     (404,452 )     (404,452 )     (404,452 )     (404,452 )
Less: Average core deposit intangibles   (25,218 )     (27,656 )     (30,093 )     (32,540 )     (34,969 )     (26,437 )     (36,159 )
Average tangible common equity $ 1,111,939     $ 1,101,760     $ 1,075,741     $ 1,071,178     $ 1,071,204     $ 1,106,849     $ 1,053,084  
Operating return on average tangible common equity1   10.94 %     11.34 %     12.37 %     12.80 %     13.70 %     11.14 %     15.66 %
                           
Efficiency ratio   59.11 %     62.45 %     77.49 %     54.49 %     49.94 %     60.72 %     49.17 %
Operating efficiency ratio                          
Net interest income $ 96,236     $ 92,806     $ 95,533     $ 99,361     $ 100,831     $ 189,042     $ 204,220  
Noninterest income   10,578       6,662       (17,792 )     9,674       13,692       17,240       27,223  
Plus: Loss on sale of AFS securities, net         6,304                         6,304       5,321  
Plus: Equity method investment write-down               29,417                          
Operating noninterest income   10,578       12,966       11,625       9,674       13,692       23,544       32,544  
Noninterest expense   63,141       62,116       60,238       59,414       57,197       125,257       113,812  
Less: FDIC special assessment   134             768                   134        
Less: Severance payments   613                         1,194       613       2,029  
Operating noninterest expense $ 62,394     $ 62,116     $ 59,470     $ 59,414     $ 56,003     $ 124,510     $ 111,783  
Operating efficiency ratio   58.41 %     58.73 %     55.50 %     54.49 %     48.90 %     58.57 %     47.21 %

1 Annualized ratio for quarterly metrics.


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