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Veritex Holdings, Inc. Reports Fourth Quarter and Year-End 2019 Operating Results

DALLAS, Jan. 28, 2020 (GLOBE NEWSWIRE) -- Veritex Holdings, Inc. (“Veritex” or the “Company”) (VBTX), the holding company for Veritex Community Bank, today announced the results for the fourth quarter and full year of 2019. Net income for the quarter ended December 31, 2019 was $29.1 million, or $0.56 diluted earnings per share (“EPS”), compared to $27.4 million, or $0.51 diluted EPS, for the quarter ended September 30, 2019 and $9.8 million, or $0.40 diluted EPS, for the quarter ended December 31, 2018. Operating net income for the quarter ended December 31, 2019 totaled $30.3 million, or $0.58 diluted operating EPS1, compared to $28.6 million, or $0.53 diluted operating EPS1, for the quarter ended September 30, 2019 and $11.5 million, or $0.47 diluted operating EPS1, for the quarter ended December 31, 2018.

C. Malcolm Holland, III, the Company’s Chairman and Chief Executive Officer said: “2019 was a transformational year for Veritex.  We are not only a bigger company, but more importantly a better company, as a result of the Green merger and all the work that was completed in 2019.  The fourth quarter loan growth, excluding mortgage warehouse, and deposit growth, excluding time deposits, gives us substantial momentum heading into 2020 where we will look to exploit the merger disruption in Dallas-Fort Worth and Houston while continuing to return excess capital to our shareholders.”

Fourth Quarter 2019 Financial Highlights:

  • Diluted EPS was $0.56 and diluted operating EPS was $0.58 for the fourth quarter of 2019, resulting in a 23.4% increase in diluted operating EPS compared to the fourth quarter of 2018;
  • Return on average assets was 1.43%, operating return on average assets1 was 1.49% and pre-tax, pre-provision operating return on average assets1 was 2.07% for the fourth quarter of 2019;
  • Return on average tangible common equity was 16.22% and operating return on average tangible common equity1 was 16.87% for the fourth quarter of  2019;
  • Total loans, excluding mortgage warehouse, increased $86.9 million, or 6.1% annualized, and total deposits, excluding time deposits, increased $210.1 million, or 21.0% annualized, during the fourth quarter of  2019;
  • Increased and extended the previously announced stock buyback program during the fourth quarter of 2019.  During the fourth quarter and full year of 2019, Veritex repurchased 1,453,608 and 3,802,711 shares, respectively, of its outstanding common stock under its stock buyback program for an aggregate of $35.7 million and $94.5 million, respectively. Since inception, the buyback program has repurchased 7% of outstanding common stock;
  • Declared quarterly cash dividend of $0.17 payable on February 20, 2020 representing a 20% increase in the declared cash dividend from prior quarters.
 Summary of Financial Data   Quarter Ended December 31,   Year Ended December 31,
    2019   2018   2019   2018
    (Dollars in thousands)
GAAP                
Net income   $ 29,051      $ 9,825      $ 90,739      $ 39,341   
Diluted EPS   0.56      0.40      1.68      1.60   
Return on average assets2   1.43  %   1.20  %   1.14  %   1.26  %
Efficiency ratio   47.12      54.27      56.41      54.92   
Book value per common share   $ 23.32      $ 21.88      $ 23.32      $ 21.88   
Non-GAAP1                
Operating net income   $ 30,294      $ 11,457      $ 123,836      $ 45,251   
Diluted operating EPS   0.58      0.47      2.29      1.84   
Pre-tax, pre-provision operating return on average assets   2.07  %   1.95  %   2.24  %   2.02  %
Operating return on average assets2   1.49      1.40      1.56      1.44   
Operating efficiency ratio   45.67      50.65      43.80      49.76   
Return on average tangible common equity2   16.22      11.52      13.02      12.89   
Operating return on average tangible common equity2   16.87      13.37      17.39      14.68   
Tangible book value per common share   $ 14.74      $ 14.74      $ 14.74      $ 14.74   

1 Refer to the section titled "Reconciliation of Non-GAAP Financial Measures" for a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures.
2 Annualized ratio.


Result of Operations for the Three Months Ended December 31, 2019

Net Interest Income

For the three months ended December 31, 2019, net interest income before provision for loan losses was $69.9 million and net interest margin was 3.81% compared to $70.9 million and 3.90%, respectively, for the three months ended September 30, 2019. The $1.0 million decrease in net interest income was primarily due to a $3.2 million decrease in interest income on loans driven by a decrease in loan yields and was partially offset by a $2.2 million decrease in interest expense on interest-bearing transaction and savings deposits.  Net interest margin decreased 9 basis points from the three months ended September 30, 2019, primarily due to a 22 basis point decrease in yields earned on loan balances, exceeded by a 33 basis point decrease in the average rate paid on interest-bearing demand and savings deposits during the three months ended December 31, 2019.  As a result, the average cost of interest-bearing deposits decreased to 1.59% for the three months ended December 31, 2019 from 1.79% for the three months ended September 30, 2019.

Net interest income before provision for loan losses increased by $41.2 million from $28.7 million to $69.9 million and net interest margin decreased 8 basis points from 3.89% to 3.81% for the three months ended December 31, 2019 as compared to the same period in 2018. The increase in net interest income before provision for loan losses was primarily driven by higher loan balances and interest income resulting from loans acquired from Green Bancorp ("Green") in connection with Veritex's acquisition of Green in January 2019 and organic loan growth. For the three months ended December 31, 2019, average loan balances increased by $3.2 billion compared to the three months ended December 31, 2018, which resulted in a $45.8 million increase in interest income. Net interest margin decreased 8 basis points compared to the three months ended December 31, 2018 primarily due to a decrease in the average yield on interest-earning assets during the three months ended December 31, 2019. Average interest-bearing deposit accounts grew to $4.4 billion for the three months ended December 31, 2019 compared to $2.0 billion for the three months ended December 31, 2018, primarily due to the acquisition of Green. The average cost of interest-bearing deposits decreased to 1.59% for the three months ended December 31, 2019 from 1.75% for the three months ended December 31, 2018.

Noninterest Income

Noninterest income for the three months ended December 31, 2019 was $7.1 million, a decrease of $1.3 million, or 15.4% compared to the three months ended September 30, 2019. The decrease was primarily due to a $438 thousand loss on sales of certain investment securities, a $331 thousand decrease in loan fees, and a $349 thousand decrease in the gain on sale of Small Business Administration ("SBA") loans for the three months ended December 31, 2019.

Compared to the three months ended December 31, 2018, noninterest income for the three months ended December 31, 2019 grew $3.5 million or 97.1%. The increase was primarily due to a $2.9 million increase in service charges and fees on acquired deposit accounts resulting from the acquisition of Green deposit accounts and the associated income from these accounts and a $1.5 million increase in loan fees, partially offset by a $1.3 million decrease in the gain on sale of SBA loans.

Noninterest Expense

Noninterest expense was $36.3 million for the three months ended December 31, 2019, compared to $34.6 million for the three months ended September 30, 2019, an increase of $1.7 million, or 4.8%. The increase was primarily driven by a $1.4 million increase in salaries and employee benefits in the three months ended December 31, 2019 as compared to the three months ended September 30, 2019.

Compared to the three months ended December 31, 2018, noninterest expense for the three months ended December 31, 2019 increased $18.7 million, or 106.9%. The increase was primarily driven by a $10.6 million increase in salaries and employee benefits due to the addition of new Green employees as a result of the merger, and a $1.9 million, $1.8 million and $1.0 million  increase in amortization of intangibles, occupancy and equipment expenses, and data processing and software expenses, respectively, related to the acquisition of Green.

Financial Condition

Total loans were $5.9 billion at December 31, 2019, an increase of $37.0 million, or 2.51% annualized, compared to September 30, 2019 and $3.4 billion, or 132.14%, compared to December 31, 2018. The net increase was the result of Veritex's growth strategy and the acquisition of Green.

Total deposits were $5.9 billion at December 31, 2019, an increase of $16.5 million, or 0.3%, compared to September 30, 2019 and an increase of $3.3 billion, or 124.77%, compared to December 31, 2018. The increase from September 30, 2019 was primarily the result of an increase of $83.4 million in non-interest bearing demand deposits, which was offset by a decrease of $66.9 million in interest bearing accounts. The increase from December 31, 2018 was primarily the result of the acquisition of Green.

Asset Quality

Allowance for loan losses as a percentage of loans was 0.50%, 0.45% and 0.75% of total loans held for investment at December 31, 2019, September 30, 2019 and December 31, 2018, respectively. The allowance for loan losses as a percentage of total loans for each of the three quarters ended was determined by an evaluation of the qualitative factors around the nature, volume and mix of the loan portfolio. The increase at December 31, 2019 in the allowance for loan losses as a percentage of loans from September 30, 2019 was primarily attributable to the general provision required from an increase of loans acquired from Green that were re-underwritten in the fourth quarter of 2019. Once an acquired loan undergoes new underwriting and meets the criteria for a new loan, the loan becomes fully subject to Veritex's allowance for loan loss methodology.  The decrease in the allowance for loan losses as a percentage of loans held for investment from December 31, 2018 was attributable to the acquisition of Green, as acquired loans are recorded at fair value. Our allowance for loan losses and remaining purchase discount on acquired loans as a percentage of loans held for investment, including mortgage warehouse, was 1.31%, 1.44% and 1.23% of total loans at December 31, 2019, September 30, 2019 and December 31, 2018, respectively.

Veritex recorded a provision for loan losses of $3.5 million for the quarter ended December 31, 2019 compared to a provision of $9.7 million and $1.4 million for the quarter ended September 30, 2019 and December 31, 2018, respectively, which reflects adjustments to provision for loan losses as a result of Veritex's continued organic growth and timing of charge-offs and recoveries recorded during the respective quarters. The decrease in the recorded provision for loan losses compared to the three months ended September 30, 2019 was primarily attributable to a $6.1 million charge-off during the third quarter of 2019 related to a commercial loan relationship acquired from Sovereign Bancshares, Inc. in 2017. The acquired commercial loan relationship consisted of a $7.8 million loan to an independent oil and gas exploration company that filed for bankruptcy protection in 2018 and recently entered into a sales process pursuant to Section 363 of the Bankruptcy Code. The increase in the recorded provision for loan losses compared to the three months ended December 31, 2018 was primarily attributable to continued organic growth and loans acquired from Green that were re-underwritten in the fourth quarter of 2019.

Nonperforming assets totaled $39.4 million, or 0.50%, of total assets at December 31, 2019 compared to $17.0 million, or 0.21%, of total assets at September 30, 2019 and $24.7 million, or 0.77%, of total assets at December 31, 2018. The increase of $22.4 million compared to September 30, 2019 was primarily due to a $19.6 million increase in certain acquired non-purchased credit impaired loans that moved to nonaccrual status during the fourth quarter 2019  and a $2.9 million increase in other real estate owned. The $19.6 million increase in acquired nonaccrual loans due was primarily related to a single commercial loan relationship which required no provision for loan loss after it was individually analyzed for impairment.

Dividend Information

On January 28, 2020, Veritex's Board of Directors declared a quarterly cash dividend of $0.17 per share on its outstanding shares of common stock, payable on February 20, 2020, to stockholders of record as of February 6, 2020.

Non-GAAP Financial Measures

Veritex’s management uses certain non-GAAP (generally accepted accounting principles) financial measures to evaluate its operating performance and provide information that is important to investors. However, non-GAAP financial measures are supplemental and should be viewed in addition to, and not as an alternative for, Veritex’s reported results prepared in accordance with GAAP. Specifically, Veritex reviews and reports tangible book value, tangible book value per common share, operating net income, 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, January 29, 2020 at 8:30 a.m. Central Time. Participants may pre-register for the call by visiting https://edge.media-server.com/mmc/p/8groyitg and will receive a unique PIN number, which can be used when dialing in for the call. This will allow attendees to enter the call immediately. Alternatively, participants may call toll-free at (877) 703-9880.

The call and corresponding presentation slides will be webcast live on the home page of the Company's website, www.veritexbank.com. An audio replay will be available one hour after the conclusion of the call at (855) 859-2056, Conference #8717068. This replay, as well as the webcast, will be available until February 5, 2020.

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, 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, 2018 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. 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 SUBSIDIARY
Financial Highlights
(Unaudited)

    For the Quarter Ended   For the Year Ended
    Dec 31,
2019
  Sep 30,
2019
  Jun 30,
2019
  Mar 31,
2019
  Dec 31,
2018
  Dec 31,
2019
  Dec 31,
2018
    (Dollars and shares in thousands)
Per Share Data (Common Stock):                            
Basic EPS   $ 0.56      $ 0.52      $ 0.50      $ 0.14      $ 0.41      $ 1.71      $ 1.63   
Diluted EPS   0.56      0.51      0.49      0.13      0.40      1.68      1.60   
Book value per common share   23.32      23.02      22.55      21.88      21.88      23.32      21.88   
Tangible book value per common share1   14.74      14.61      14.27      13.76      14.74      14.74      14.74   
                             
Common Stock Data:                            
Shares outstanding at period end   51,064      52,373      53,457      54,563      24,254      51,064      24,254   
Weighted average basic shares outstanding for the period   51,472      52.915      53.969      54.293      24,224      53,154      24,169   
Weighted average diluted shares outstanding for the period   52,263      53,873      54,929      55,439      24,532      53,978      24,590   
                             
Summary Performance Ratios:                            
Return on average assets2   1.43  %   1.36  %   1.36  %   0.38  %   1.20  %   1.14  %   1.26  %
Return on average equity2   9.63      8.98      8.98      2.52      7.44      7.57      7.73   
Return on average tangible common equity1, 2   16.22      15.15      15.26      5.09      11.52      13.02      12.89   
Efficiency ratio   47.12      43.67      51.49      82.30      54.27      56.41      54.92   
                             
Selected Performance Metrics - Operating:                            
Diluted operating EPS1   $ 0.58      $ 0.53      $ 0.59      $ 0.59      $ 0.47      $ 2.29      $ 1.84   
Pre-tax, pre-provision operating return on average assets1, 2   2.07  %   2.26  %   2.22  %   2.40  %   1.95  %   2.24  %   2.02  %
Operating return on average assets1, 2   1.49      1.42      1.63      1.69      1.40      1.56      1.44   
Operating return on average tangible common equity1, 2   16.87      15.78      18.09      18.81      13.37      17.39      14.68   
Operating efficiency ratio1   45.67      42.36      43.66      43.54      50.65      43.80      49.60   
                             
Veritex Holdings, Inc. Capital Ratios:                            
Average stockholders' equity to average total assets   14.88  %   15.11  %   15.13  %   15.18  %   16.14  %   15.07  %   16.25  %
Tier 1 capital to average assets (leverage)   10.17      10.33      10.47      10.57      12.04      10.17      12.04   
Common equity tier 1 capital   10.60      10.82      11.32      11.07      11.80      10.60      11.80   
Tier 1 capital to risk-weighted assets   11.02      11.26      11.77      11.50      12.18      11.02      12.18   
Total capital to risk-weighted assets   13.10      12.26      12.80      12.45      12.98      13.10      12.98   
Tangible common equity to tangible assets1   10.01      10.17      10.08      10.02      11.78      10.01      11.78   
                             
Veritex Bank Capital Ratios:                            
Tier 1 capital to average assets (leverage)   11.07  %   10.64  %   10.80  %   10.65  %   10.87  %   11.07  %   10.87  %
Common equity tier 1 capital   12.00      11.61      12.16      11.61      11.01      12.00      11.01   
Tier 1 capital to risk-weighted assets   12.00      11.61      12.16      11.61      11.01      12.00      11.01   
Total capital to risk-weighted assets   12.44      12.00      12.54      11.93      11.64      12.44      11.64   

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


VERITEX HOLDINGS, INC. AND SUBSIDIARY
Financial Highlights
(in thousands)

    Dec 31, 2019   Sep 30, 2019   Jun 30, 2019   Mar 31, 2019   Dec 31, 2018
    (unaudited)   (unaudited)   (unaudited)   (unaudited)    
ASSETS                    
Cash and cash equivalents   $ 251,550      $ 252,592      $ 265,822      $ 339,473      $ 84,449   
Securities   997,330      1,023,393      1,020,279      950,671      262,695   
Other investments   89,923      89,795      81,088      75,920      23,174   
                     
Loans held for sale   14,080      10,715      7,524      8,002      1,258   
Loans held for investment, mortgage warehouse   183,628      233,577      200,017      114,158      —   
Loans held for investment   5,737,577      5,654,027      5,731,833      5,663,721      2,555,494   
Total Loans   5,935,285      5,898,319      5,939,374      5,785,881      2,556,752   
Allowance for loan losses   (29,834 )   (26,243 )   (24,712 )   (21,603 )   (19,255 )
Bank-owned life insurance   80,915      80,411      79,899      79,397      22,064   
Bank premises, furniture and equipment, net   118,536      118,449      115,373      119,354      78,409   
Other real estate owned   5,995      4,625      1,748      151      —   
Intangible assets, net   72,263      75,363      78,347      81,245      15,896   
Goodwill   370,658      370,463      370,221      368,268      161,447   
Other assets   62,086      75,716      82,667      69,474      22,919   
Branch assets held for sale   —      —      —      83,516      —   
Total assets   $ 7,954,707      $ 7,962,883      $ 8,010,106      $ 7,931,747      $ 3,208,550   
LIABILITIES AND STOCKHOLDERS’ EQUITY                    
Deposits:                    
Noninterest-bearing deposits   $ 1,556,500      $ 1,473,126      $ 1,476,668      $ 1,439,630      $ 626,283   
Interest-bearing transaction and savings deposits   2,654,972      2,528,293      2,646,154      2,617,117      1,313,161   
Certificates and other time deposits   1,682,878      1,876,427      2,042,266      2,240,968      682,984   
Total deposits   5,894,350      5,877,846      6,165,088      6,297,715      2,622,428   
Accounts payable and accrued expenses   37,197      45,475      44,414      42,621      5,413   
Accrued interest payable   6,569      6,054      7,069      6,846      5,361   
Advances from Federal Home Loan Bank   677,870      752,907      512,945      252,982      28,019   
Subordinated debentures and subordinated notes   145,571      72,284      72,486      72,719      16,691   
Other borrowings   2,353      2,787      2,811      2,778      —   
Branch liabilities held for sale   —      —      —      62,381      —   
Total liabilities   6,763,910      6,757,353      6,804,813      6,738,042      2,677,912   
Commitments and contingencies                    
Stockholders’ equity:                    
Common stock   511      524      535      546      243   
Additional paid-in capital   1,117,879      1,114,659      1,112,238      1,109,386      449,427   
Retained earnings   147,911      125,344      104,652      84,559      83,968   
Accumulated other comprehensive (loss)   19,061      23,837      17,741      7,016      (2,930 )
Treasury stock   (94,565 )   (58,834 )   (29,873 )   (7,802 )   (70 )
Total stockholders’ equity   1,190,797      1,205,530      1,205,293      1,193,705      530,638   
Total liabilities and stockholders’ equity   $ 7,954,707      $ 7,962,883      $ 8,010,106      $ 7,931,747      $ 3,208,550   


VERITEX HOLDINGS, INC. AND SUBSIDIARY
Financial Highlights
(in thousands, except per share data)

    For the Quarter Ended   For the Year Ended
    Dec 31,
2019
  Sep 30,
2019
  Jun 30,
2019
  Mar 31,
2019
  Dec 31,
2018
  Dec 31,
2019
  Dec 31,
2018
Interest income:                            
Loans, including fees   $ 82,469      $ 85,811      $ 86,786      $ 85,747      $ 35,028      $ 340,813      $ 134,460   
Securities   7,168      7,687      7,397      7,232      1,908      29,484      6,605   
Deposits in financial institutions and Fed Funds sold   1,285      1,329      1,372      1,554      833      5,540      3,149   
Other investments   820      816      622      691      413      2,949      855   
Total interest income   91,742      95,643      96,177      95,224      38,182      378,786      145,069   
Interest expense:                            
Transaction and savings deposits   8,203      10,381      11,405      10,366      5,412      40,355      17,599   
Certificates and other time deposits   9,455      10,283      10,145      8,792      3,394      38,675      9,714   
Advances from FHLB   2,661      3,081      2,187      2,055      377      9,984      1,701   
Subordinated debentures and subordinated notes   1,559      1,024      998      1,094      304      4,675      1,031   
Total interest expense   21,878      24,769      24,735      22,307      9,487      93,689      30,045   
Net interest income   69,864      70,874      71,442      72,917      28,695      285,097      115,024   
Provision for loan losses   3,493      9,674      3,335      5,012      1,364      21,514      6,603   
Net interest income after provision for loan losses   66,371      61,200      68,107      67,905      27,331      263,583      108,421   
Noninterest income:                            
Service charges and fees on deposit accounts   3,728      3,667      3,422      3,517      832      14,334      3,420   
Loan fees   1,921      2,252      1,932      1,677      387      7,782      1,332   
Loss on sales of investment securities   (438 )   —      (642 )   (772 )   (42 )   (1,852 )   (64 )
Gain on sales of loans   536      853      1,104      2,370      1,789      4,863      3,056   
Rental income   371      369      373      368      310      1,481      1,654   
Other   1,014      1,289      (155 )   1,324      343      3,472      1,677   
Total noninterest income   7,132      8,430      6,034      8,484      3,619      30,080      11,075   
Noninterest expense:                            
Salaries and employee benefits   18,917      17,530      17,459      18,885      8,278      72,791      31,138   
Occupancy and equipment   4,198      4,044      4,014      4,129      2,412      16,385      10,679   
Professional and regulatory fees   2,615      2,750      2,814      3,418      1,889      11,597      7,282   
Data processing and software expense   1,880      2,252      2,309      1,924      888      8,365      3,020   
Marketing   971      708      961      619      570      3,259      1,783   
Amortization of intangibles   2,696      2,712      2,719      2,760      835      10,887      3,467   
Telephone and communications   466      361      625      395      223      1,847      1,299   
Merger and acquisition expense   918      1,035      5,790      31,217      1,150      38,960      5,220   
Other   3,623      3,238      3,205      3,646      1,293      13,712      5,371   
Total noninterest expense   36,284      34,630      39,896      66,993      17,538      177,803      69,259   
Income before income tax expense   37,219      35,000      34,245      9,396      13,412      115,860      50,237   
Income tax expense   8,168      7,595      7,369      1,989      3,587      25,121      10,896   
Net income   $ 29,051      $ 27,405      $ 26,876      $ 7,407      $ 9,825      $ 90,739      $ 39,341   
Basic EPS   $ 0.56      $ 0.52      $ 0.50      $ 0.14      $ 0.41      $ 1.71      $ 1.63   
Diluted EPS   $ 0.56      $ 0.51      $ 0.49      $ 0.13      $ 0.40      $ 1.68      $ 1.60   
Weighted average basic shares outstanding   51,472      52,915      53,969      54,293      24,224      53,154      24,169   
Weighted average diluted shares outstanding   52,263      53,873      54,929      55,439      24,532      53,978      24,590   


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

    For the Quarter Ended
    December 31, 2019   September 30, 2019   December 31, 2018
    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   $ 5,692,773      $ 80,779      5.63  %   $ 5,702,696      $ 84,022      5.85  %   $ 2,502,084      $ 35,028      5.55  %
Loans held for investment, mortgage warehouse   191,132      1,690      3.51      182,793      1,789      3.88      —      —      —   
Securities   1,004,342      7,168      2.83      1,022,289      7,687      2.98      263,182      1,908      2.88   
Interest-earning deposits in other banks   312,530      1,285      1.63      234,087      1,329      2.25      136,879      833      2.41   
Other investments2   71,791      820      4.53      71,901      816      4.50      25,772      413      6.36   
Total interest-earning assets   7,272,568      91,742      5.00      7,213,766      95,643      5.26      2,927,917      38,182      5.17   
Allowance for loan losses   (27,564 )           (22,539 )           (18,338 )        
Noninterest-earning assets   798,501              818,150              333,589           
Total assets   $ 8,043,505              $ 8,009,377              $ 3,243,168           
                                     
Liabilities and Stockholders’ Equity                                    
Interest-bearing liabilities:                                    
Interest-bearing demand and savings deposits   $ 2,621,163      8,203      1.24  %   $ 2,621,701      $ 10,381      1.57  %   $ 1,337,901      5,412      1.60  %
Certificates and other time deposits   1,789,544      9,455      2.10      1,953,084      10,283      2.09      655,776      3,394      2.05   
Advances from FHLB   726,352      2,661      1.45      632,754      3,081      1.93      52,436      377      2.85   
Subordinated debentures and subordinated notes   118,193      1,559      5.23      74,869      1,024      5.43      16,691      304      7.23   
Total interest-bearing liabilities   5,255,252      21,878      1.65      5,282,408      24,769      1.86      2,062,804      9,487      1.82   
                                     
Noninterest-bearing liabilities:                                    
Noninterest-bearing deposits   1,540,406              1,467,127              643,958           
Other liabilities   50,656              49,695              12,816           
Total liabilities   6,846,314              6,799,230              2,719,578           
Stockholders’ equity   1,197,191              1,210,147              523,590           
Total liabilities and stockholders’ equity   $ 8,043,505              $ 8,009,377              $ 3,243,168           
                                     
Net interest rate spread3           3.35  %           3.40  %           3.35  %
Net interest income and margin4       $ 69,864      3.81  %       $ 70,874      3.90  %       $ 28,695      3.89  %

1 Includes average outstanding balances of loans held for sale of $10,643, $8,525, and $1,019 for the three months ended December 31, 2019, September 30, 2019 and December 31, 2018, respectively.
2 The Company historically reported dividend income in the "other noninterest income" line item and has reclassified $408 of dividend income into other investments as of December 31, 2018 in order to align with industry peers for comparability purposes.
3 Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
4 Net interest margin is equal to net interest income divided by average interest-earning assets.


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

    For the Year Ended December 31,
    2019   2018
    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   $ 5,722,039        $ 334,025      5.96  %   $ 2,382,946        $ 134,460      5.64  %
Loans held for investment, mortgage warehouse   162,325        6,788      4.18      —        —      —   
Securities   977,621        29,484      3.02      247,163        6,605      2.67   
Interest-earning deposits in other banks   259,866        5,540      2.13      160,402        3,149      1.96   
Other investments2   60,308        2,949      4.89      17,326        855      4.93   
Total interest-earning assets   7,182,159        378,786      5.27      2,807,837        145,069      5.17   
Allowance for loan losses   (23,533 )             (15,324 )          
Noninterest-earning assets   799,257                339,915             
Total assets   $ 7,957,883                $ 3,132,428             
                         
Liabilities and Stockholders’ Equity                        
Interest-bearing liabilities:                        
Interest-bearing demand and savings deposits   $ 2,648,113        40,355      1.52      $ 1,277,186        17,599      1.38   
Certificates and other time deposits   1,997,090        38,675      1.94      608,041        9,714      1.60   
Advances from FHLB   502,681        9,984      1.99      87,366        1,701      1.95   
Subordinated debentures and subordinated notes   86,110        4,675      5.43      16,748        1,031      6.16   
Total interest-bearing liabilities   5,233,994        93,689      1.79      1,989,341        30,045      1.51   
                         
Noninterest-bearing liabilities:                        
Noninterest-bearing deposits   1,480,207                621,613             
Other liabilities   44,809                12,456             
Total liabilities   6,759,010                2,623,410             
Stockholders’ equity   1,198,873                509,018             
Total liabilities and stockholders’ equity   $ 7,957,883                $ 3,132,428             
                         
Net interest rate spread3           3.48  %           3.66  %
Net interest income and margin4       $ 285,097      3.97  %       $ 115,024      4.10  %

1Includes average outstanding balances of loans held for sale of $8,762 and $1,198 for the twelve months ended December 31, 2019 and 2018, respectively.
2 The Company historically reported dividend income in the "other noninterest income" line item and has reclassified $835 of dividend income into other investments as of December 31, 2018 in order to align with industry peers for comparability purposes.
3 Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
4 Net interest margin is equal to net interest income divided by average interest-earning assets.


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

Yield Trend

...
    For the Quarter Ended
    Dec 31,
2019
  Sep 30,
2019
  Jun 30,
2019
  Mar 31,
2019
  Dec 31,
2018
Average yield on interest-earning assets:                    
Total loans1   5.63  %   5.85  %   5.92  %   5.96  %   5.55  %
Loans held for investment, mortgage warehouse   3.51      3.88      4.56      5.26      —   
Securities   2.83      2.98      3.10      3.17      2.88   
Interest-bearing deposits in other banks   1.63      2.25      2.41      2.39      2.41   
Other investments   4.53      4.50      4.19      4.92      6.36   
Total interest-earning assets   5.00  %   5.26  %   5.39  %   5.44  %   5.17  %
                     
Average rate on interest-bearing liabilities:                    
Interest-bearing demand and savings deposits   1.24  %   1.57  %   1.69  %   1.64  %   1.60  %
Certificates and other time deposits   2.10      2.09      1.93      1.59      2.05   
Advances from FHLB   1.45      1.93      2.62      2.68      2.85   
Subordinated debentures and subordinated notes   5.23      5.43      5.32      5.85      7.23   
Total interest-bearing liabilities   1.65  %   1.86  %   1.90  %   1.74  %   1.82