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home / news releases / VBTX - Veritex Holdings Inc. Reports First Quarter Operating Results

VBTX - Veritex Holdings Inc. Reports First Quarter Operating Results

Veritex Holdings Inc.

DALLAS, April 26, 2022 (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 March 31, 2022.

“The first quarter of 2022 was another outstanding financial and growth quarter for our Company,” said President and CEO, C. Malcolm C. Holland, III. “We reported operating diluted EPS of $0.66 and delivered outstanding growth this quarter reflected by overall annualized loan growth of 21% and annualized deposit growth of 29%. We continue our focus on growth, investing in experienced and proven talent and maximizing shareholder returns.”

Quarter to Date
Financial Highlights
Q1 2022
Q4 2021
Q1 2021
(Dollars in thousands, except per share data)
(unaudited)
GAAP
Net income
$
33,470
$
41,506
$
31,787
Diluted EPS
0.65
0.82
0.64
Book value per common share
26.86
26.64
24.96
Return on average assets 2
1.36
%
1.68
%
1.44
%
Efficiency ratio
52.84
48.53
49.62
Return on average equity 2
10.00
12.65
10.53
Non-GAAP 1
Operating earnings
$
34,014
$
42,410
$
32,213
Diluted operating EPS
0.66
0.84
0.64
Tangible book value per common share
18.51
17.49
16.34
Pre-tax, pre-provision operating earnings
42,265
48,640
40,210
Pre-tax, pre-provision operating return on average assets 2
1.71
%
1.97
%
1.82
%
Operating return on average assets 2
1.38
1.72
1.46
Operating efficiency ratio
52.05
47.64
49.62
Return on average tangible common equity 2
15.84
20.06
17.17
Operating return on average tangible common equity 2
16.08
20.48
17.39
1 Refer to the section titled “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of these non-generally accepted accounting principles (“”GAAP”) financial measures to their most directly comparable GAAP measures.
2 Annualized ratio.


Other First Quarter Highlights

  • Total loans held for investment (“LHI”), excluding mortgage warehouse (“MW”) and paycheck protection program (“PPP”) loans, grew $359.4 million, or 21.2% annualized, during the three months ended March 31, 2022 from $6.8 billion at the end of the fourth quarter of 2021;
  • Total deposits grew $526.0 million, or 28.6% annualized, with the average cost of total deposits decreasing to 0.17% for the three months ended March 31, 2022 from 0.18% and 0.31% from the three months ended December 31, 2021 and March 31, 2021, respectively;
  • Non-performing assets (“NPAs”) to total assets decreased to 0.46%, or 5 bps from December 31, 2021 and 46 bps from March 31, 2021, respectively;
  • Completed common stock offering with net proceeds, after deducting underwriting discounts and offering expenses, of approximately $153.8 million;
  • Announced proposed transaction to acquire interLINK, a technology-enabled deposit gathering and processing platform, to (i) enhance liquidity with flexible and scalable access to approximately $5.7 billion in highly diversified, scalable core deposits and (ii) provide low-cost, stable core deposits to fund sustainable long-term growth. The acquisition is expected to close in the third quarter of 2022, subject to satisfaction of customary closing conditions, including receipt of regulatory approvals from the FDIC and the Texas Department of Banking; and
  • Declared quarterly cash dividend of $0.20 per share of outstanding common stock payable on May 27, 2022.

Results of Operations for the Three Months Ended March 31, 2022

Net Interest Income

For the three months ended March 31, 2022, net interest income before provision for credit losses was $73.0 million and net interest margin was 3.22% compared to $76.7 million and 3.37%, respectively, for the three months ended December 31, 2021. The $3.7 million decrease in net interest income before provision for credit losses was primarily due to a $2.7 million decrease in interest income on loans driven by a decrease in average balances during the three months ended March 31, 2022 and recovery income recognized on fully paid off nonaccrual loans during the three months ended December 31, 2021, with no corresponding recovery income during the three months ended March 31, 2022. Further, this decrease was due to the recognition of $2.1 million of prepayment penalty income on debt securities during the three months ended December 31, 2021, with no corresponding prepayment penalty income recognized during the three months ended March 31, 2022. The decrease in net interest income was slightly offset by a $359 thousand decrease in interest expense on subordinated debentures and subordinated notes and a $281 thousand decrease in interest expense on certificates and other time deposits during the three months ended March 31, 2022. Net interest margin decreased 15 basis points compared to the three months ended December 31, 2021, primarily due to the increase in yields earned on debt securities as a result of the recognition of $2.1 million of prepayment penalty income during three months ended December 31, 2021 with no corresponding prepayment penalty income during the three months ended March 31, 2022. There was no change in the average cost of interest-bearing deposits for the linked quarters.

Compared to the three months ended March 31, 2021, net interest income before provision for credit losses for the three months ended March 31, 2022 increased by $7.4 million, or 11.3%. The increase was primarily due to a $4.0 million increase in interest income on loans driven by an increase in average balances and a $1.7 million decrease in interest expenses on certificates and other time deposits. As a result, the average cost of interest-bearing deposits decreased 19 basis points to 0.26% for the three months ended March 31, 2022 from 0.45% for the three months ended March 31, 2021.

Noninterest Income

Noninterest income for the three months ended March 31, 2022 was $15.1 million, a decrease of $1.1 million, or 6.5%, compared to the three months ended December 31, 2021. The decrease was primarily due to a decrease of $1.4 million in insurance income from BOLI and a decrease of $870 thousand in equity method investment income, offset by a $1.5 million increase in government guaranteed loan income, net.

Compared to the three months ended March 31, 2021, noninterest income for the three months ended March 31, 2022 increased by $925 thousand, or 6.5%. The increase was primarily due to an increase of $1.5 million in loan fees and an increase of $1.1 million in service charges and fees on deposit accounts, offset by a decrease of $1.7 million in government guaranteed loan income, net.

Noninterest Expense

Noninterest expense was $46.6 million for the three months ended March 31, 2022, compared to $45.1 million for the three months ended December 31, 2021, an increase of $1.5 million, or 3.3%. This increase was primarily due to a $2.1 million increase in salaries and employee benefits primarily driven by (i) a $1.2 million increase in FICA taxes, (ii) a $960 thousand increase in stock-based compensation resulting from the vesting of February 1, 2019 performance restricted stock unit awards which vested at 150% due the Company performing at the top quartile of total shareholder return (as defined by the equity awards) and (iii) a $531 thousand increase in salaries as a result of our continued investment in talent which was slightly offset by a $333 thousand decrease in stock-based compensation associate with non-qualified stock options.

Compared to the three months ended March 31, 2021, noninterest expense for the three months ended March 31, 2022 increased by $7.0 million, or 17.6%. The increase was primarily driven by a $4.6 million increase in salaries and employee benefits as a result of a (i) $2.7 million increase in salaries resulting from continued investment in talent, (ii) a $960 thousand increase in stock-based compensation resulting from the vesting of February 1, 2019 performance restricted stock unit awards which vested at 150% due the Company performing at the top quartile of total shareholder return (as defined by the equity awards) and (iii) a $829 thousand increase in FICA taxes. The increase was also due to a $700 thousand increase in merger and acquisition expenses recognized during the three months ended March 31, 2022.

Financial Condition

Total LHI, excluding MW and PPP loans, were $7.1 billion at March 31, 2022, an increase of $359.4 million, or 21.2% annualized, compared to December 31, 2021. The increase was the result of the continued execution and success of our loan growth strategy.

Total deposits were $7.9 billion at March 31, 2022, an increase of $526.0 million, or 28.6% annualized, compared to December 31, 2021. The increase was primarily the result of increases of $412.0 million in interest-bearing transaction and savings deposits and an increase of $255.2 million in noninterest-bearing demand deposits, offset by a decrease of $141.2 million in certificates and other time deposits.

Asset Quality

Nonperforming assets totaled $48.0 million, or 0.46% of total assets at March 31, 2022, compared to $50.1 million, or 0.51% of total assets, at December 31, 2021. The Company had net charge-offs of $4.8 million for the quarter, which were fully reserved against in prior quarters under our allowance for credit loss (“ACL”) model.

The Company recorded a benefit for credit losses of $500 thousand and $3.3 million for the three months ended March 31, 2022 and December 31, 2021, respectively, compared to no provision for credit losses for the three months ended March 31, 2021. The recorded benefit for credit losses for the three months ended March 31, 2022, compared to the three months ended December 31, 2021, was primarily attributable to a decrease in specific reserves on certain nonaccrual loans slightly offset by an increase in general reserves as a result of continued loan growth. For the three months ended March 31, 2022, we also recorded a $493 thousand provision for unfunded commitments, which was attributable to higher unfunded balances. ACL as a percentage of LHI, excluding MW and PPP loans, was 1.02%, 1.15% and 1.76% at March 31, 2022, December 31, 2021 and March 31, 2021, respectively.

Dividend Information

On April 26, 2022, 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 May 27, 2022 to stockholders of record as of the close of business on May 13, 2022.

Non-GAAP Financial Measures

Veritex’s management uses certain non-GAAP (U.S. generally accepted accounting principles) financial measures to evaluate its operating performance and provide information that is important to investors. However, non-GAAP financial measures are supplemental and should be viewed in addition to, and not as an alternative for, Veritex’s reported results prepared in accordance with GAAP. Specifically, Veritex reviews and reports tangible book value per common share, operating earnings, tangible common equity to tangible assets, return on average tangible common equity, pre-tax, pre-provision operating earnings, pre-tax, pre-provision operating return on average assets, 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 to review the results on Wednesday, April 27, 2022 at 8:30 a.m. Central Time. Participants may pre-register for the call by visiting https://edge.media-server.com/mmc/p/chbsqqsh and will receive a unique PIN, which can be used when dialing in for the call. This will allow attendees to access 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, https://ir.veritexbank.com/. An audio replay will be available one hour after the conclusion of the call at (855) 859-2056, Conference #9446379. This replay, as well as the webcast, will be available until May 4, 2022.

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 Statements

This earnings release contains certain “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 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 date of Veritex’s quarterly cash dividend, the impact of certain changes in Veritex’s accounting policies, standards and interpretations, the effects of the COVID-19 pandemic and actions taken in response thereto, 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,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing words. We refer you to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Veritex’s Annual Report on Form 10-K for the year ended December 31, 2021 and any updates to those risk factors set forth in Veritex’s Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings with the Securities and Exchange Commission (“SEC”), which are available on the SEC’s website at www.sec.gov. If one or more events related to these or other risks or uncertainties materialize, or if Veritex’s underlying assumptions prove to be incorrect, actual results may differ materially from what Veritex anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made. Veritex does not undertake any obligation, and specifically declines any obligation, to 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
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
2022
2021
2021
2021
2021
(Dollars and shares in thousands)
Per Share Data (Common Stock):
Basic EPS
$
0.66
$
0.84
$
0.75
$
0.60
$
0.64
Diluted EPS
0.65
0.82
0.73
0.59
0.64
Book value per common share
26.86
26.64
26.09
25.72
24.96
Tangible book value per common share 1
18.51
17.49
17.53
17.16
16.34
Dividends paid per common share outstanding 2
0.20
0.20
0.20
0.20
0.17
Common Stock Data:
Shares outstanding at period end
53,907
49,372
49,229
49,498
49,433
Weighted average basic shares outstanding for the period
50,695
49,329
49,423
49,476
49,394
Weighted average diluted shares outstanding for the period
51,571
50,441
50,306
50,331
49,998
Summary of Credit Ratios:
ACL to total LHI, excluding MW and PPP loans
1.02
%
1.15
%
1.42
%
1.59
%
1.76
%
NPAs to total assets
0.46
0.51
0.77
0.85
0.92
Net charge-offs to average loans outstanding
0.07
0.19
0.09
0.09
—
Summary Performance Ratios:
Return on average assets 3
1.36
1.68
1.56
1.27
1.44
Return on average equity 3
10.00
12.65
11.32
9.42
10.53
Return on average tangible common equity 1, 3
15.84
20.06
17.72
15.18
17.17
Efficiency ratio
52.84
48.53
47.55
52.42
49.62
Net interest margin
3.22
3.37
3.26
3.11
3.22
Selected Performance Metrics - Operating:
Diluted operating EPS 1
$
0.66
$
0.84
$
0.70
$
0.60
$
0.64
Pre-tax, pre-provision operating return on average assets 1, 2
1.71
%
1.97
%
1.85
%
1.66
%
1.82
%
Operating return on average assets 1, 3
1.38
1.72
1.48
1.29
1.46
Operating return on average tangible common equity 1, 3
16.08
20.48
16.92
15.42
17.39
Operating efficiency ratio 1
52.05
47.64
48.51
51.63
49.62
Veritex Holdings, Inc. Capital Ratios:
Average stockholders' equity to average total assets
13.58
%
13.30
%
13.75
%
13.46
%
13.69
%
Tangible common equity to tangible assets 1
9.98
9.28
9.43
9.51
9.17
Tier 1 capital to average assets (leverage)
10.66
9.05
9.54
9.38
9.50
Common equity tier 1 capital
9.84
8.58
8.75
9.03
9.27
Tier 1 capital to risk-weighted assets
10.14
8.89
9.06
9.36
9.61
Total capital to risk-weighted assets
12.73
11.60
12.31
12.86
13.38
1 Refer 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.
2 Dividend amount represents dividend paid per common share subsequent to each respective quarter end.
3 Annualized ratio for quarterly metrics.


VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(In thousands)

Mar 31, 2022
Dec 31, 2021
Sep 30, 2021
Jun 30, 2021
Mar 31, 2021
(unaudited)
(unaudited)
(unaudited)
(unaudited)
ASSETS
Cash and cash equivalents
$
551,573
$
379,784
$
229,712
$
390,027
$
468,029
Debt securities
1,244,514
1,052,494
1,103,745
1,125,877
1,077,860
Other investments
188,699
190,591
191,786
87,558
87,226
Loans held for sale
18,721
26,007
18,896
12,065
19,864
LHI, PPP loans, carried at fair value
18,512
53,369
135,842
291,401
407,353
LHI, MW
542,877
565,645
615,045
559,939
599,001
LHI, excluding MW and PPP
7,125,429
6,766,009
6,615,905
6,272,087
5,963,493
Total loans
7,705,539
7,411,030
7,385,688
7,135,492
6,989,711
ACL
(72,485
)
(77,754
)
(93,771
)
(99,543
)
(104,936
)
Bank-owned life insurance
83,641
83,194
83,781
83,304
83,318
Bank premises, furniture and equipment, net
109,138
109,271
116,063
123,504
114,585
Other real estate owned (“OREO”)
1,062
—
—
2,467
2,337
Intangible assets, net of accumulated amortization
63,986
66,017
54,682
57,143
59,236
Goodwill
404,452
403,771
370,840
370,840
370,840
Other assets
173,561
138,851
129,774
72,856
89,304
Total assets
$
10,453,680
$
9,757,249
$
9,572,300
$
9,349,525
$
9,237,510
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Noninterest-bearing deposits
$
2,765,895
$
2,510,723
$
2,302,925
$
2,388,068
$
2,171,719
Interest-bearing transaction and savings deposits
3,688,292
3,276,312
3,228,306
3,112,974
3,189,693
Certificates and other time deposits
1,435,409
1,576,580
1,647,521
1,477,860
1,543,158
Total deposits
7,889,596
7,363,615
7,178,752
6,978,902
6,904,570
Accounts payable and other liabilities
105,552
69,160
66,571
55,499
55,902
Advances from Federal Home Loan Bank (“FHLB”)
777,522
777,562
777,601
777,640
777,679
Subordinated debentures and subordinated notes
228,018
227,764
262,761
262,766
262,774
Securities sold under agreements to repurchase
4,996
4,069
2,455
1,811
2,777
Total liabilities
9,005,684
8,442,170
8,288,140
8,076,618
8,003,702
Commitments and contingencies
Stockholders’ equity:
Common stock
605
560
559
558
557
Additional paid-in capital
1,297,161
1,142,758
1,137,889
1,134,603
1,131,324
Retained earnings
298,830
275,273
243,633
216,704
195,661
Accumulated other comprehensive income
18,982
64,070
69,661
77,189
62,413
Treasury stock
(167,582
)
(167,582
)
(167,582
)
(156,147
)
(156,147
)
Total stockholders’ equity
1,447,996
1,315,079
1,284,160
1,272,907
1,233,808
Total liabilities and stockholders’ equity
$
10,453,680
$
9,757,249
$
9,572,300
$
9,349,525
$
9,237,510


VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(In thousands, except per share data)

For the Quarter Ended
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
2022
2021
2021
2021
2021
Interest income:
Loans, including fees
$
71,443
$
74,174
$
71,139
$
67,814
$
67,399
Debt securities
7,762
9,553
7,613
7,529
7,437
Deposits in financial institutions and Fed Funds sold
262
165
130
167
127
Equity securities and other investments
910
1,004
898
672
663
Total interest income
80,377
84,896
79,780
76,182
75,626
Interest expense:
Transaction and savings deposits
1,751
1,629
1,588
1,661
1,980
Certificates and other time deposits
1,380
1,661
1,934
2,423
3,061
Advances from FHLB
1,547
1,847
1,848
1,829
1,812
Subordinated debentures and subordinated notes
2,659
3,018
3,134
3,138
3,138
Total interest expense
7,337
8,155
8,504
9,051
9,991
Net interest income
73,040
76,741
71,276
67,131
65,635
(Benefit) provision for credit losses
(500
)
(3,349
)
—
—
—
Provision (benefit) for unfunded commitments
493
(1,040
)
(448
)
577
(570
)
Net interest income after provisions
73,047
81,130
71,724
66,554
66,205
Noninterest income:
Service charges and fees on deposit accounts
4,710
4,782
4,484
3,847
3,629
Loan fees
2,794
2,697
1,746
1,823
1,341
Loss on sales of investment securities
—
—
(188
)
—
—
Gain on sales of mortgage loans held for sale
307
293
407
385
507
Government guaranteed loan income, net
4,891
3,423
2,341
3,448
6,548
Equity method investment income
367
1,238
4,522
—
—
Other
2,028
3,717
2,315
2,953
2,147
Total noninterest income
15,097
16,150
15,627
12,456
14,172
Noninterest expense:
Salaries and employee benefits
27,513
25,401
22,964
23,451
22,932
Occupancy and equipment
4,517
4,398
4,536
4,233
4,096
Professional and regulatory fees
3,158
3,017
3,401
3,086
3,441
Data processing and software expense
2,921
2,597
2,494
2,536
2,319
Marketing
1,187
1,443
1,151
1,841
909
Amortization of intangibles
2,495
2,494
2,509
2,517
2,537
Telephone and communications
385
380
380
337
337
Merger and acquisition (“M&A”) expense
700
826
—
—
—
Other
3,696
4,521
3,886
3,716
3,026
Total noninterest expense
46,572
45,077
41,321
41,717
39,597
Income before income tax expense
41,572
52,203
46,030
37,293
40,780
Income tax expense
8,102
10,697
9,195
7,837
8,993
Net income
$
33,470
$
41,506
$
36,835
$
29,456
$
31,787
Basic EPS
$
0.66
$
0.84
$
0.75
$
0.60
$
0.64
Diluted EPS
$
0.65
$
0.82
$
0.73
$
0.59
$
0.64
Weighted average basic shares outstanding
50,695
49,329
49,423
49,476
49,394
Weighted average diluted shares outstanding
51,571
50,441
50,306
50,331
49,998


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

For the Quarter Ended
March 31, 2022
December 31, 2021
March 31, 2021
Interest
Interest
Interest
Average
Earned/
Average
Average
Earned/
Average
Average
Earned/
Average
Outstanding
Interest
Yield/
Outstanding
Interest
Yield/
Outstanding
Interest
Yield/
Balance
Paid
Rate
Balance
Paid
Rate
Balance
Paid
Rate
(In thousands, expect percentages)
Assets
Interest-earning assets:
Loans 1
$
6,872,943
$
68,297
4.03
%
$
6,777,397
$
70,334
4.12
%
$
5,897,815
$
62,702
4.31
%
LHI, MW
421,680
3,069
2.95
483,850
3,629
2.98
510,678
3,815
3.03
PPP loans
31,335
77
1.00
83,553
211
1.00
356,356
882
1.00
Debt securities
1,140,834
7,762
2.76
1,092,089
9,553
3.47
1,063,538
7,437
2.84
Interest-bearing deposits in other banks
554,864
262
0.19
417,266
165
0.16
341,483
127
0.15
Equity securities and other investments
190,002
910
1.94
191,031
1,004
2.09
87,178
663
3.08
Total interest-earning assets
9,211,658
80,377
3.54
9,045,186
84,896
3.72
8,257,048
75,626
3.71
ACL
(77,843
)
(95,218
)
(105,972
)
Noninterest-earning assets
865,107
838,703
790,195
Total assets
$
9,998,922
$
9,788,671
$
8,941,271
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Interest-bearing demand and savings deposits
$
3,471,645
$
1,751
0.20
%
$
3,357,958
$
1,629
0.19
%
$
3,038,586
$
1,980
0.26
%
Certificates and other time deposits
1,501,852
1,380
0.37
1,615,066
1,661
0.41
1,509,836
3,061
0.82
Advances from FHLB
777,538
1,547
0.81
777,577
1,847
0.94
777,694
1,812
0.94
Subordinated debentures and subordinated notes
231,875
2,659
4.65
259,191
3,018
4.62
265,356
3,138
4.80
Total interest-bearing liabilities
5,982,910
7,337
0.50
6,009,792
8,155
0.54
5,591,472
9,991
0.72
Noninterest-bearing liabilities:
Noninterest-bearing deposits
2,591,504
2,413,443
2,069,233
Other liabilities
67,060
63,760
56,272
Total liabilities
8,641,474
8,486,995
7,716,977
Stockholders’ equity
1,357,448
1,301,676
1,224,294
Total liabilities and stockholders’ equity
$
9,998,922
$
9,788,671
$
8,941,271
Net interest rate spread 2
3.04
%
3.18
%
2.99
%
Net interest income and margin 3
73,040
3.22
%
76,741
3.37
%
65,635
3.22
%
1 Includes average outstanding balances of loans held for sale of $12,769, $8,987 and $16,602 for the three months ended March 31, 2022, December 31, 2021, and March 31, 2021, respectively, and average balances of LHI, excluding MW and PPP loans.
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

Yield Trend
For the Quarter Ended
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
2022
2021
2021
2021
2021
Average yield on interest-earning assets:
Loans 1
4.03
%
4.12
%
4.16
%
4.16
%
4.31
%
LHI, MW
2.95
2.98
3.15
3.06
3.03
PPP loans
1.00
1.00
1.00
1.00
1.00
Debt securities
2.76
3.47
2.70
2.76
2.84
Interest-bearing deposits in other banks
0.19
0.16
0.15
0.12
0.15
Equity securities and other investments
1.94
2.09
2.13
3.08
3.08
Total interest-earning assets
3.54
%
3.72
%
3.64
%
3.53
%
3.71
%
Average rate on interest-bearing liabilities:
Interest-bearing demand and savings deposits
0.20
%
0.19
%
0.20
%
0.21
%
0.26
%
Certificates and other time deposits
0.37
0.41
0.50
0.64
0.82
Advances from FHLB
0.81
0.94
0.94
0.94
0.94
Subordinated debentures and subordinated notes
4.65
4.62
4.70
4.75
4.80
Total interest-bearing liabilities
0.50
%
0.54
%
0.59
%
0.63
%
0.72
%
Net interest rate spread 2
3.04
%
3.18
%
3.05
%
2.90
%
2.99
%
Net interest margin 3
3.22
%
3.37
%
3.26
%
3.11
%
3.22
%
1 Includes average outstanding balances of loans held for sale of $12,769, $8,987, $8,542, $14,364 and $16,602 for the three months ended March 31, 2022, December 31, 2021, September 30, 2021, June 30, 2021 and March 31, 2021, respectively, and average balances of LHI, excluding MW and PPP loans.
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
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
2022
2021
2021
2021
2021
Average cost of interest-bearing deposits
0.26
%
0.26
%
0.30
%
0.35
%
0.45
%
Average costs of total deposits, including noninterest-bearing
0.17
0.18
0.20
0.23
0.31


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

LHI and Deposit Portfolio Composition
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
2022
2021
2021
2021
2021
(In thousands, expect percentages)
LHI 1
Commercial
$
2,125,900
29.8
%
$
2,006,876
29.6
%
$
1,793,740
27.1
%
$
1,771,100
28.2
%
$
1,632,040
27.4
%
Real Estate:
Owner occupied commercial (“OOCRE”)
633,615
8.9
665,537
9.8
711,476
10.7
744,899
11.9
733,310
12.3
Non-owner occupied commercial (“NOOCRE”)
2,145,826
30.0
2,120,309
31.3
2,194,438
33.1
1,986,538
31.6
1,970,945
33.0
Construction and land
1,297,338
18.2
1,062,144
15.7
936,174
14.1
871,765
13.9
723,444
12.1
Farmland
48,095
0.7
55,827
0.8
73,550
1.1
13,661
0.2
14,751
0.2
1-4 family residential
604,408
8.5
542,566
8.0
543,518
8.2
513,635
8.2
492,609
8.3
Multi-family residential
272,250
3.8
310,241
4.6
356,885
5.4
367,445
5.9
386,844
6.5
Consumer
9,533
0.1
11,998
0.2
14,266
0.3
10,530
0.1
12,431
0.2
Total LHI
$
7,136,965
100
%
$
6,775,498
100
%
$
6,624,047
100
%
$
6,279,573
100
%
$
5,966,374
100
%
MW
542,877
565,645
615,045
559,939
599,001
PPP loans
18,512
53,369
135,842
291,401
407,353
Total LHI 1
$
7,698,354
$
7,394,512
$
7,374,934
$
7,130,913
$
6,972,728
Deposits
Noninterest-bearing
$
2,765,895
35.1
%
$
2,510,723
34.1
%
$
2,302,925
32.1
%
$
2,388,068
34.1
%
$
2,171,719
31.6
%
Interest-bearing transaction
599,580
7.6
579,408
7.9
514,537
7.2
451,307
6.5
463,343
6.7
Money market
2,958,790
37.5
2,568,843
34.9
2,585,926
36.0
2,539,061
36.4
2,602,903
37.7
Savings
129,922
1.6
128,061
1.7
127,843
1.8
122,606
1.8
123,447
1.8
Certificates and other time deposits
1,435,409
18.2
1,576,580
21.4
1,647,521
22.9
1,477,860
21.2
1,543,158
22.2
Total deposits
$
7,889,596
100
%
$
7,363,615
100
%
$
7,178,752
100
%
$
6,978,902
100
%
$
6,904,570
100
%
Loan to Deposit Ratio
97.6
%
100.4
%
102.7
%
102.2
%
101.0
%
Loan to Deposit Ratio, excluding MW and PPP loans
90.5
%
92.0
%
92.3
%
90.0
%
86.4
%
1 Total LHI does not include deferred fees of $11.5 million, $9.5 million, and $8.1 million at March 31, 2022, December 31, 2021 and September 30, 2021, respectively, deferred costs of $7.5 million and $2.9 million at June 30, 2021 and March 31, 2021, respectively.


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

Asset Quality
For the Quarter Ended
Mar 31,
Dec 31,
Sep 30,
Jun 30,
Mar 31,
2022
2021
2021
2021
2021
(In thousands)
NPAs:
Nonaccrual loans
$
46,680
$
49,687
$
72,317
$
76,994
$
73,594
Accruing loans 90 or more days past due 1
264
441
1,711
462
9,093
Total nonperforming loans held for investment (“NPLs”)
46,944
50,128
74,028
77,456
82,687
OREO
1,062
—
—
2,467
2,337
Total NPAs
$
48,006
$
50,128
$
74,028
$
79,923
$
85,024
Charge-offs:
1-4 family residential
$
—
$
—
$
(64
)
$
(300
)
$
(15
)
OOCRE
(1,341
)
(898
)
(813
)
(689
)
—
NOOCRE
(553
)
(7,936
)
—
—
—
Commercial
(3,294
)
(4,114
)
(5,508
)
(5,608
)
(346
)
Consumer
(134
)
(44
)
(17
)
(20
)
(18
)
Total charge-offs
(5,322
)
(12,992
)
(6,402
)
(6,617
)
(379
)
Recoveries:
1-4 family residential
—
6
26
29
3
OOCRE
—
—
—
500
—
NOOCRE
400
—
—
—
—
Commercial
144
61
596
659
226
Consumer
9
257
8
36
2
Total recoveries
553
324
630
1,224
231
Net charge-offs
$
(4,769
)
$
(12,668
)
$
(5,772
)
$
(5,393
)
$
(148
)
ACL
$
72,485
$
77,754
$
93,771
$
99,543
$
104,936
Asset Quality Ratios:
NPAs to total assets
0.46
%
0.51
%
0.77
%
0.85
%
0.92
%
NPLs to total LHI, excluding MW and PPP loans
0.66
0.74
1.12
1.23
1.39
ACL to total LHI, excluding MW and PPP loans
1.02
1.15
1.42
1.59
1.76
Net charge-offs to average loans outstanding
0.07
0.19
0.09
0.09
—
1 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.


VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)

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

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

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

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

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

As of
Mar 31, 2022
Dec 31, 2021
Sep 30, 2021
Jun 30, 2021
Mar 31, 2021
(Dollars in thousands, except per share data)
Tangible Common Equity
Total stockholders' equity
$
1,447,996
$
1,315,079
$
1,284,160
$
1,272,907
$
1,233,808
Adjustments:
Goodwill
(404,452
)
(403,771
)
(370,840
)
(370,840
)
(370,840
)
Core deposit intangibles
(45,560
)
(47,998
)
(50,436
)
(52,873
)
(55,311
)
Tangible common equity
$
997,984
$
863,310
$
862,884
$
849,194
$
807,657
Common shares outstanding
53,907
49,372
49,229
49,498
49,433
Book value per common share
$
26.86
$
26.64
$
26.09
$
25.72
$
24.96
Tangible book value per common share
$
18.51
$
17.49
$
17.53
$
17.16
$
16.34


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
Mar 31, 2022
Dec 31, 2021
Sep 30, 2021
Jun 30, 2021
Mar 31, 2021
(Dollars in thousands)
Tangible Common Equity
Total stockholders' equity
$
1,447,996
$
1,315,079
$
1,284,160
$
1,272,907
$
1,233,808
Adjustments:
Goodwill
(404,452
)
(403,771
)
(370,840
)
(370,840
)
(370,840
)
Core deposit intangibles
(45,560
)
(47,998
)
(50,436
)
(52,873
)
(55,311
)
Tangible common equity
$
997,984
$
863,310
$
862,884
$
849,194
$
807,657
Tangible Assets
Total assets
$
10,453,680
$
9,757,249
$
9,572,300
$
9,349,525
$
9,237,510
Adjustments:
Goodwill
(404,452
)
(403,771
)
(370,840
)
(370,840
)
(370,840
)
Core deposit intangibles
(45,560
)
(47,998
)
(50,436
)
(52,873
)
(55,311
)
Tangible Assets
$
10,003,668
$
9,305,480
$
9,151,024
$
8,925,812
$
8,811,359
Tangible Common Equity to Tangible Assets
9.98
%
9.28
%
9.43
%
9.51
%
9.17
%


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
Mar 31, 2022
Dec 31, 2021
Sep 30, 2021
Jun 30, 2021
Mar 31, 2021
(Dollars in thousands)
Net income available for common stockholders adjusted for amortization of core deposit intangibles
Net income
$
33,470
$
41,506
$
36,835
$
29,456
$
31,787
Adjustments:
Plus: Amortization of core deposit intangibles
2,438
2,438
2,438
2,438
2,447
Less: Tax benefit at the statutory rate
512
512
512
512
514
Net income available for common stockholders adjusted for amortization of core deposit intangibles
$
35,396
$
43,432
$
38,761
$
31,382
$
33,720
Average Tangible Common Equity
Total average stockholders' equity
$
1,357,448
$
1,301,676
$
1,290,528
$
1,254,371
$
1,224,294
Adjustments:
Average goodwill
(404,014
)
(393,220
)
(370,840
)
(370,840
)
(370,840
)
Average core deposit intangibles
(47,158
)
(49,596
)
(52,043
)
(54,471
)
(56,913
)
Average tangible common equity
$
906,276
$
858,860
$
867,645
$
829,060
$
796,541
Return on Average Tangible Common Equity (Annualized)
15.84
%
20.06
%
17.72
%
15.18
%
17.17
%


VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)

Operating Earnings, Pre-tax, Pre-provision Operating Earnings and performance metrics calculated using Operating Earnings and Pre-tax, Pre-provision Operating Earnings, including Diluted Operating Earnings per Share, Operating Return on Average Assets, Pre-tax, Pre-Provision Operating Return on Average Assets, 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 securities, net, less Thrive PPP loan forgiveness income, 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 benefit (provision) 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 non interest expense plus adjustments to operating non interest expense divided by non interest income plus adjustments to operating non interest 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 Three Months Ended
Mar 31, 2022
Dec 31, 2021
Sep 30, 2021
Jun 30, 2021
Mar 31, 2021
(Dollars in thousands)
Operating Earnings
Net income
$
33,470
$
41,506
$
36,835
$
29,456
$
31,787
Plus: Severance payments 1
—
—
—
627
—
Plus: Loss on sale of securities available for sale, net
—
—
188
—
—
Less: Thrive PPP loan forgiveness income 2
—
—
1,912
—
—
Plus: M&A expenses
700
826
—
—
—
Operating pre-tax income
34,170
42,332
35,111
30,083
31,787
Less: Tax impact of adjustments
156
(78
)
39
131
—
Plus: Nonrecurring tax adjustments 3
—
—
—
—
426
Operating earnings
$
34,014
$
42,410
$
35,072
$
29,952
$
32,213
Weighted average diluted shares outstanding
51,571
50,441
50,306
50,331
49,998
Diluted EPS
$
0.65
$
0.82
$
0.73
$
0.59
$
0.64
Diluted operating EPS
$
0.66
$
0.84
$
0.70
$
0.60
$
0.64
1 Severance payments relate to branch restructurings made during the three months ended June 30, 2021.
2 During the third quarter of 2021, Thrive’s PPP loan with another bank was 100% forgiven by the Small Business Administration. As a result of our 49% investment in Thrive, the $1.9 million represents our portion of the PPP loan forgiveness. PPP fee income is not taxable and as such has no tax impact.
3 A nonrecurring tax adjustment of $426 thousand recorded in the first quarter of 2021 was due to a true-up of a deferred tax liability.


For the Quarter Ended
Mar 31, 2022
Dec 31, 2021
Sep 30, 2021
Jun 30, 2021
Mar 31, 2021
(Dollars in thousands)
Pre-Tax, Pre-Provision Operating Earnings
Net income
$
33,470
$
41,506
$
36,835
$
29,456
$
31,787
Plus: Provision for income taxes
8,102
10,697
9,195
7,837
8,993
Plus: (Benefit) provision for credit losses and unfunded commitments
(7
)
(4,389
)
(448
)
577
(570
)
Plus: Severance payments
—
—
—
627
—
Plus: Loss on sale of securities, net
—
—
188
—
—
Less: Thrive PPP loan forgiveness income
—
—
1,912
—
—
Plus: M&A expenses
700
826
—
—
—
Pre-tax, pre-provision operating earnings
$
42,265
$
48,640
$
43,858
$
38,497
$
40,210
Average total assets
$
9,998,922
$
9,788,671
$
9,385,470
$
9,321,279
$
8,941,271
Pre-tax, pre-provision operating return on average assets 1
1.71
%
1.97
%
1.85
%
1.66
%
1.82
%
Average total assets
$
9,998,922
$
9,788,671
$
9,385,470
$
9,321,279
$
8,941,271
Return on average assets 1
1.36
%
1.68
%
1.56
%
1.27
%
1.44
%
Operating return on average assets 1
1.38
1.72
1.48
1.29
1.46
Operating earnings adjusted for amortization of core deposit intangibles
Operating earnings
$
34,014
$
42,410
$
35,072
$
29,952
$
32,213
Adjustments:
Plus: Amortization of core deposit intangibles
2,438
2,438
2,438
2,438
2,447
Less: Tax benefit at the statutory rate
512
512
512
512
514
Operating earnings adjusted for amortization of core deposit intangibles
$
35,940
$
44,336
$
36,998
$
31,878
$
34,146
Average Tangible Common Equity
Total average stockholders' equity
$
1,357,448
$
1,301,676
$
1,290,528
$
1,254,371
$
1,224,294
Adjustments:
Less: Average goodwill
(404,014
)
(393,220
)
(370,840
)
(370,840
)
(370,840
)
Less: Average core deposit intangibles
(47,158
)
(49,596
)
(52,043
)
(54,471
)
(56,913
)
Average tangible common equity
$
906,276
$
858,860
$
867,645
$
829,060
$
796,541
Operating return on average tangible common equity 1
16.08
%
20.48
%
16.92
%
15.42
%
17.39
%
Efficiency ratio
52.84
%
48.53
%
47.55
%
52.42
%
49.62
%
Operating efficiency ratio
Net interest income
$
73,040
$
76,741
$
71,276
$
67,131
$
65,635
Noninterest income
15,097
16,150
15,627
12,456
14,172
Plus: Loss on sale of securities, net
—
—
188
—
—
Less: Thrive PPP loan forgiveness income
—
—
1,912
—
—
Operating noninterest income
15,097
16,150
13,903
12,456
14,172
Noninterest expense
46,572
45,077
41,321
41,717
39,597
Less: Severance payments
—
—
—
627
—
Less: M&A expenses
700
826
—
—
—
Operating noninterest expense
$
45,872
$
44,251
$
41,321
$
41,090
$
39,597
Operating efficiency ratio
52.05
%
47.64
%
48.51
%
51.63
%
49.62
%
1 Annualized ratio for quarterly metrics.


Media and Investor Relations:investorrelations@veritexbank.com
Stock Information
Company Name: Veritex Holdings Inc.
Stock Symbol: VBTX
Market: NASDAQ
Website: veritexbank.com
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