Veritex Holdings, Inc. Reports Second Quarter Operating Results

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DALLAS, July 28, 2020 (GLOBE NEWSWIRE) -- Veritex Holdings, Inc. (Veritex or the Company) (Nasdaq: VBTX), the holding company for Veritex Community Bank, today announced the results for the quarter ended June 30, 2020.

The second quarter was dominated by significant pandemic and economic challenges. Despite those headwinds, we delivered solid results while supporting our employees, customers and communities, said C. Malcolm Holland, III, the Companys Chairman and Chief Executive Officer. Our quarterly results reflect strong pre-tax, pre-provision operating net revenue, continued building of our allowance for credit losses and higher capital levels.  I couldnt be more proud of what the team accomplished during such a disruptive operating period.

Second Quarter Highlights

  • Net income of $24.0 million, or $0.48 diluted earnings per share (EPS), compared to $4.1 million, or $0.08 diluted EPS, for the quarter ended March 31, 2020 and $26.9 million, or $0.49 diluted EPS, for the quarter ended June 30, 2019;

  • Pre-tax, pre-provision operating earnings 1 totaled $45.7 million, compared to $39.1 million for the quarter ended March 31, 2020 and $44.0 million for the quarter ended June 30, 2019;

  • Provision for credit losses and unfunded commitments was $19.0 million, compared to $35.7 million for the quarter ended March 31, 2020, as a result of continued disruptions in the global economy from the COVID-19 pandemic and its impact on the Texas economic forecasts that drive the Companys current expected credit loss (CECL) model;

  • Allowance for credit losses (ACL) to total loans held for investments (LHI), excluding mortgage warehouse (MW) and Paycheck Protection Program (PPP) loans, was 2.01% for the quarter ended June 30, 2020 compared to 1.73% for the quarter ended March 31, 2020. Net charge-offs to average loans outstanding and nonperforming assets to total assets remained essentially flat quarter over quarter at 3 basis points and 62 basis points, respectively;

  • During the second quarter of 2020, the Company funded $400.9 million of PPP loans through the Small Business Administration (SBA) as a result of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The Company elected to carry these loans at fair value, and as a result, the Company recognized $12.5 million of PPP fee income, gross, during the second quarter of 2020;

  • Total deposits grew $325.6 million from the first quarter of 2020, or 22.4% annualized, with the average cost of interest-bearing deposits decreasing to 0.84% for the three months ended June 30, 2020 from 1.39% for the three months ended March 31, 2020;

  • Declared quarterly cash dividend of $0.17 payable on August 20, 2020.



Financial Highlights

 

QTD

 

YTD

 

 

Q2 2020

 

Q1 2020

 

Q2 2020

 

Q2 2019

 

 

(Dollars in thousands)
(unaudited)

GAAP

 

 

 

 

 

 

 

 

Net income

 

$

24,028 

 

 

$

4,134 

 

 

$

28,162 

 

 

$

34,283 

 

Diluted EPS

 

0.48 

 

 

0.08 

 

 

0.56 

 

 

0.62 

 

Return on average assets 2

 

1.11 

%

 

0.20 

%

 

0.68 

%

 

0.88 

%

Efficiency ratio

 

46.02 

 

 

47.61 

 

 

46.76 

 

 

67.28 

 

Book value per common share

 

$

23.45 

 

 

$

23.19 

 

 

$

23.45 

 

 

$

22.55 

 

Non-GAAP 1

 

 

 

 

 

 

 

 

Operating earnings

 

$

21,188 

 

 

$

4,134 

 

 

$

25,322 

 

 

$

64,913 

 

Diluted operating EPS

 

0.43 

 

 

0.08 

 

 

0.50 

 

 

1.18 

 

Pre-tax, pre-provision operating earnings

 

45,668 

 

 

39,107 

 

 

84,775 

 

 

90,409 

 

Pre-tax, pre-provision operating return on average assets

 

2.11 

%

 

1.94 

%

 

2.03 

%

 

2.31 

%

Operating return on average assets 2

 

0.98 

 

 

0.20 

 

 

0.61 

 

 

1.66 

 

Operating efficiency ratio

 

45.74 

 

 

47.61 

 

 

46.62 

 

 

43.60 

 

Tangible book value per common share

 

$

14.71 

 

 

$

14.39 

 

 

$

14.71 

 

 

$

14.27 

 

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.

Second Quarter Global Economic Developments

The COVID-19 pandemic has caused significant disruptions to the global economy and the communities which we serve. In response to the pandemic, we have implemented our operational response and preparedness plan during the first and second quarters of 2020, which includes dispersion of critical operational processes, increased monitoring focused on higher risk operations, enhanced remote access security and further restricted internet access, enhanced security around wire transfer execution and flexible scheduling provided to employees who are unable to work from home. Additionally, we are focused on taking care of our clients and communities who may be experiencing financial hardship due to the pandemic, including through our loan deferment program and participation in the PPP designed to provide a direct incentive for small businesses.

Results of Operations for the Three Months Ended June 30, 2020

Net Interest Income

For the three months ended June 30, 2020, net interest income before provision for credit losses was $65.8 million and net interest margin was 3.31% compared to $67.4 million and 3.67%, respectively, for the three months ended March 31, 2020. The $1.6 million decrease in net interest income was primarily due to a $7.4 million decrease in interest income on loans, slightly offset by a $4.1 million decrease in interest expense on transaction and savings deposits. Net interest margin decreased 36 basis points from the three months ended March 31, 2020 primarily due to a decrease in yields earned on loan balances and an unfavorable increase in the mix of lower yielding assets, partially offset by decreases in the average rates paid on interest-bearing demand and savings deposits and certificate and other time deposits during the three months ended June 30, 2020. As a result, the average cost of interest-bearing deposits decreased 55 basis points to 0.84% for the three months ended June 30, 2020 from 1.39% for the three months ended March 31, 2020.

Net interest income before provision for credit losses decreased by $5.6 million from $71.4 million to $65.8 million and net interest margin decreased by 69 basis points from 4.00% to 3.31% for the three months ended June 30, 2020 as compared to the same period in 2019. The decrease in net interest income before provision for credit losses was primarily due to a $16.3 million decrease in interest income on loans, partially offset by an $8.9 million decrease in interest expenses on transaction and savings deposits during the three months ended June 30, 2020 compared to the three months ended June 30, 2019. Net interest margin decreased 69 basis points from the three months ended June 30, 2019 primarily due to a decrease in yields earned on loan balances, partially offset by decreases in the average rate paid on interest-bearing demand and savings deposits for the three months ended June 30, 2020 and an unfavorable shift in the mix of earning assets compared to the three months ended June 30, 2019. As a result, the average cost of interest-bearing deposits decreased 95 basis points to 0.84% for the three months ended June 30, 2020 from 1.79% for the three months ended June 30, 2019.

Noninterest Income

Noninterest income for the three months ended June 30, 2020 was $21.3 million, an increase of $14.0 million, or 193.8%, compared to the three months ended March 31, 2020. The increase was primarily due to a $10.6 million of increase in government guaranteed loan income, net. In the second quarter, the Company earned fee income of 5% on PPP loans under $350 thousand, 3% on PPP loans between $350 thousand and $2 million and 1% on PPP loans greater than $2 million totaling $12.5 million. The recognized fee was partially offset by a valuation allowance on the PPP loans of $2.0 million as the Company elected to carry these loans at fair value. 

Compared to the three months ended June 30, 2019, noninterest income for the three months ended June 30, 2020 increased by $15.3 million, or 252.8%. The increase was primarily due to a $10.0 million increase in government guaranteed loan income, net, as a result of the fee income earned PPP loans discussed above and a $3.5 million increase in gain on sales of investment securities.

Noninterest Expense

Noninterest expense was $40.1 million for the three months ended June 30, 2020, compared to $35.5 million for the three months ended March 31, 2020, an increase of $4.5 million, or 12.7%. The increase was primarily driven by a $1.1 million increase in salaries and employee benefits, a $0.6 million increase in Federal Deposit Insurance Corporation (FDIC) assessment fees, and a $1.6 million increase in bank service charges resulting from pre-payment fees on Federal Home Loan Bank (FHLB) advances paid off early in the second quarter of 2020. Noninterest expense for the three months ended June 30, 2020 includes $1.2 million of COVID related expenses primarily related to Community Reinvestment Act donations, lender incentives, employee overtime and cleaning services.

Compared to the three months ended June 30, 2019, noninterest expense for the three months ended June 30, 2020 increased by $165 thousand, or 0.4%.

Financial Condition

Total loans were $6.6 billion at June 30, 2020, an increase of $355.9 million, or 22.8% annualized, compared to March 31, 2020. The net increase was primarily the result of the Companys origination of $400.9 million of loans in the second quarter of 2020 under the PPP. The Company has elected to carry such PPP loans at fair value, which represent $398.9 million of the Companys outstanding loan balance as of the second quarter 2020.

Total deposits were $6.1 billion at June 30, 2020, an increase of $325.6 million, or 22.4% annualized, compared to March 31, 2020. The increase was primarily the result of increases of $177.3 million and $358.4 million in interest-bearing transaction and savings deposits and noninterest-bearing demand deposits, respectively, partially offset by a decrease of $210.1 million in certificates and other time deposits.

Goodwill

During the second quarter of 2020, the Company observed a significant decline in the market valuation of our common shares as a result of sustained economic disruption occurring after the first quarter of 2020, including but not limited to the COVID-19 pandemic. As a result of the sustained economic disruption, the Company determined a triggering event had occurred that required an interim quantitative impairment assessment for the Companys reporting unit to determine if it is more likely than not that the fair value is less than the carrying value as a result of a sustained price decrease. The Company determined the fair value of its reporting unit using a combination of a market and income approach. The fair value of our reporting unit exceeded its related carrying value by approximately 26%.

Asset Quality and Adoption of ASU 2016-13

Nonperforming assets totaled $53.3 million, or 0.62% of total assets at June 30, 2020, compared to $39.4 million, or 0.50% of total assets, at December 31, 2019. The Company had a net charge-off of $1.8 million for the quarter, which is primarily the result of one relationship charge-off that was fully reserved against in the first quarter of 2020.

The Company recorded a provision for credit losses for the three months ended June 30, 2020 of $16.2 million, compared to $31.8 million and $3.3 million for the three months ended March 31, 2020 and June 30, 2019, respectively. The decrease in the recorded provision for credit losses for the three months ended June 30, 2020 was primarily attributable to changes in the Texas economic forecasts used in the CECL model in the second quarter of 2020 to reflect the expected impact of the COVID-19 pandemic as of June 30, 2020, as compared to our Texas economic forecasts and expected impact of the COVID-19 pandemic as of March 31, 2020. In the second quarter of 2020, we also recorded a $2.8 million provision for unfunded commitments which was also attributable to the change in the Texas economic forecasts as a result of the COVID-19 pandemic compared to a $3.9 million provision for unfunded commitments recorded for the three months ended March 31, 2020. Allowance for credit losses as a percentage of loans HFI, excluding MW and PPP loans, was 2.01%, 1.73% and 0.43% of total loans at June 30, 2020, March 31, 2020 and June 30, 2019, respectively.

Dividend Information

On July 28, 2020, Veritexs Board of Directors declared a quarterly cash dividend of $0.17 per share on its outstanding shares of common stock.  The dividend will be paid on or after August 20, 2020 to stockholders of record as of the close of business on August 6, 2020.

Non-GAAP Financial Measures

Veritexs 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, Veritexs 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, July 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/pckpzcgt 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 #3693902. This replay, as well as the webcast, will be available until August 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 Veritexs quarterly cash dividend, the impact of certain changes in Veritexs accounting policies, standards and interpretations, the effects of the COVID-19 pandemic and actions taken in response thereto, Veritexs 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 Managements Discussion and Analysis of Financial Condition and Results of Operations sections of Veritexs Annual Report on Form 10-K for the year ended December 31, 2019 and any updates to those risk factors set forth in Veritexs 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 SECs website at www.sec.gov.  If one or more events related to these or other risks or uncertainties materialize, or if Veritexs 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 Veritexs behalf may issue.


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

 

 

For the Three Months Ended

 

Six Months Ended

 

 

June 30, 2020

 

Mar 31, 2020

 

Dec 31, 2019

 

Sep 30, 2019

 

June 30, 2019

 

June 30, 2020

 

June 30, 2019

 

 

(Dollars and shares in thousands)

 

 

 

 

Per Share Data (Common Stock):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic EPS

 

$

0.48 

 

 

$

0.08 

 

 

$

0.56 

 

 

$

0.52 

 

 

$

0.50 

 

 

$

0.56 

 

 

$

0.63 

 

Diluted EPS

 

0.48 

 

 

0.08 

 

 

0.56 

 

 

0.51 

 

 

0.49 

 

 

0.56 

 

 

0.62 

 

Book value per common share

 

23.45 

 

 

23.19 

 

 

23.32 

 

 

23.02 

 

 

22.55 

 

 

23.45 

 

 

22.55 

 

Tangible book value per common share 1

 

14.71 

 

 

14.39 

 

 

14.73 

 

 

14.61 

 

 

14.27 

 

 

14.71 

 

 

14.27 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares outstanding at period end

 

49,633 

 

 

49,557 

 

 

51,064 

 

 

52,373 

 

 

53,457 

 

 

49,633 

 

 

53,457 

 

Weighted average basic shares outstanding for the period

 

49,597 

 

 

50,725 

 

 

51,472 

 

 

52,915 

 

 

53,969 

 

 

50,161 

 

 

54,130 

 

Weighted average diluted shares outstanding for the period

 

49,727 

 

 

51,056 

 

 

52,263 

 

 

53,873 

 

 

54,929 

 

 

50,383 

 

 

54,929 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary of Credit Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ACL to total LHI, excluding mortgage warehouse and PPP loans

 

2.01 

%

 

1.73 

%

 

0.52 

%

 

0.46 

%

 

0.43 

%

 

2.01 

%

 

0.43 

%

Nonperforming assets to total assets

 

0.62 

%

 

0.60 

%

 

0.50 

%

 

0.21 

%

 

0.54 

%

 

0.62 

%

 

0.60 

%

Net charge-offs to average loans outstanding

 

0.03 

 

 

 

 

 

 

 

 

0.14 

 

 

 

 

 

0.03 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary Performance Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets 2

 

1.11 

 

 

0.20 

 

 

1.43 

 

 

1.36 

 

 

1.36 

 

 

0.68 

 

 

0.88 

 

Return on average equity 2

 

8.36 

 

 

1.41 

 

 

9.63 

 

 

8.98 

 

 

8.98 

 

 

4.96 

 

 

5.79 

 

Return on average tangible common equity 1, 2

 

14.49 

 

 

3.27 

 

 

16.22 

 

 

15.15 

 

 

15.26 

 

 

9.12 

 

 

10.26 

 

Efficiency ratio

 

46.02 

 

 

47.61 

 

 

47.12 

 

 

43.67 

 

 

51.49 

 

 

46.76 

 

 

67.28 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected Performance Metrics - Operating:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted operating EPS 1

 

$

0.43 

 

 

$

0.08 

 

 

$

0.58 

 

 

$

0.53 

 

 

$

0.59 

 

 

$

0.50 

 

 

$

1.18 

 

Pre-tax, pre-provision operating return on average assets 1, 2

 

2.11 

%

 

1.94 

%

 

2.07 

%

 

2.26 

%

 

2.22 

%

 

2.03 

%

 

2.31 

%

Operating return on average assets 1, 2

 

0.98 

 

 

0.20 

 

 

1.49 

 

 

1.42 

 

 

1.63 

 

 

0.61 

 

 

1.66 

 

Operating return on average tangible common equity 1, 2

 

12.90 

 

 

3.27 

 

 

16.87 

 

 

15.78 

 

 

18.09 

 

 

8.31 

 

 

18.50 

 

Operating efficiency ratio 1

 

45.74 

 

 

47.61 

 

 

45.67 

 

 

42.36 

 

 

43.66 

 

 

46.62 

 

 

43.60 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Veritex Holdings, Inc. Capital Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tier 1 capital to average assets (leverage)

 

9.16 

 

 

9.49 

 

 

10.17 

 

 

10.33 

 

 

10.47 

 

 

9.16 

 

 

10.47 

 

Common equity tier 1 capital

 

9.66 

 

 

9.53 

 

 

10.60 

 

 

10.82 

 

 

11.32 

 

 

9.66 

 

 

11.32 

 

Tier 1 capital to risk-weighted assets

 

10.05 

 

 

9.92 

 

 

11.02 

 

 

11.26 

 

 

11.77 

 

 

10.05 

 

 

11.77 

 

Total capital to risk-weighted assets

 

12.71 

 

 

12.48 

 

 

13.10 

 

 

12.26 

 

 

12.80 

 

 

12.71 

 

 

12.80 

 

Tangible common equity to tangible assets 1

 

8.96 

 

 

8.81 

 

 

10.01 

 

 

10.17 

 

 

10.08 

 

 

8.96 

 

 

10.08 

 

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 Annualized ratio.


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

 

 

June 30, 2020

 

Mar 31, 2020

 

Dec 31, 2019

 

Sep 30, 2019

 

June 30, 2019

 

 

(unaudited)

 

(unaudited)

 

 

 

(unaudited)

 

(unaudited)

ASSETS

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

160,306 

 

 

 

$

430,842 

 

 

 

$

251,550 

 

 

 

$

252,592 

 

 

 

$

265,822 

 

 

Securities

 

1,112,061 

 

 

 

1,117,804 

 

 

 

997,330 

 

 

 

1,023,393 

 

 

 

1,020,279 

 

 

Other securities

 

104,213 

 

 

 

112,775 

 

 

 

84,063 

 

 

 

85,007 

 

 

 

76,016 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for sale

 

28,041 

 

 

 

15,048 

 

 

 

14,080 

 

 

 

10,715 

 

 

 

7,524 

 

 

PPP loans, at fair value

 

398,949 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for investment, mortgage warehouse

 

441,992 

 

 

 

371,161 

 

 

 

183,628 

 

 

 

233,577 

 

 

 

200,017 

 

 

Loans held for investment

 

5,726,873 

 

 

 

5,853,735 

 

 

 

5,737,577 

 

 

 

5,654,027 

 

 

 

5,731,833 

 

 

Total loans

 

6,595,855 

 

 

 

6,239,944 

 

 

 

5,935,285 

 

 

 

5,898,319 

 

 

 

5,939,374 

 

 

Allowance for credit losses

 

(115,365

)

 

 

(100,983

)

 

 

(29,834

)

 

 

(26,243

)

 

 

(24,712

)

 

Bank-owned life insurance

 

81,876 

 

 

 

81,395 

 

 

 

80,915 

 

 

 

80,411 

 

 

 

79,899 

 

 

Bank premises, furniture and equipment, net

 

115,560 

 

 

 

116,056 

 

 

 

118,536 

 

 

 

118,449 

 

 

 

115,373 

 

 

Other real estate owned

 

7,716 

 

 

 

7,720 

 

 

 

5,995 

 

 

 

4,625 

 

 

 

1,748 

 

 

Intangible assets, net

 

66,705 

 

 

 

69,444 

 

 

 

72,263 

 

 

 

75,363 

 

 

 

78,347 

 

 

Goodwill

 

370,840 

 

 

 

370,840 

 

 

 

370,840 

 

 

 

370,463 

 

 

 

370,221 

 

 

Other assets

 

88,091 

 

 

 

85,787 

 

 

 

67,994 

 

 

 

80,504 

 

 

 

87,739 

 

 

Total assets

 

$

8,587,858 

 

 

 

$

8,531,624 

 

 

 

$

7,954,937 

 

 

 

$

7,962,883 

 

 

 

$

8,010,106 

 

 

LIABILITIES AND STOCKHOLDERS EQUITY

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

$

1,907,697 

 

 

 

$

1,549,260 

 

 

 

$

1,556,500 

 

 

 

$

1,473,126 

 

 

 

$

1,476,668 

 

 

Interest-bearing transaction and savings deposits

 

2,714,149 

 

 

 

2,536,865 

 

 

 

2,654,972 

 

 

 

2,528,293 

 

 

 

2,646,154 

 

 

Certificates and other time deposits

 

1,503,701 

 

 

 

1,713,820 

 

 

 

1,682,878 

 

 

 

1,876,427 

 

 

 

2,042,266 

 

 

Total deposits

 

6,125,547 

 

 

 

5,799,945 

 

 

 

5,894,350 

 

 

 

5,877,846 

 

 

 

6,165,088 

 

 

Accounts payable and other liabilities

 

64,625 

 

 

 

56,339 

 

 

 

37,427 

 

 

 

45,475 

 

 

 

44,414 

 

 

Accrued interest payable

 

4,088 

 

 

 

5,407 

 

 

 

6,569 

 

 

 

6,054 

 

 

 

7,069 

 

 

Advances from Federal Home Loan Bank

 

1,087,794 

 

 

 

1,377,832 

 

 

 

677,870 

 

 

 

752,907 

 

 

 

512,945 

 

 

Subordinated debentures and subordinated notes

 

140,283 

 

 

 

140,406 

 

 

 

145,571 

 

 

 

72,284 

 

 

 

72,486 

 

 

Securities sold under agreements to repurchase

 

1,772 

 

 

 

2,426 

 

 

 

2,353 

 

 

 

2,787 

 

 

 

2,811 

 

 

Total liabilities

 

7,424,109 

 

 

 

7,382,355 

 

 

 

6,764,140 

 

 

 

6,757,353 

 

 

 

6,804,813 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

Stockholders equity:

 

 

 

 

 

 

 

 

 

 

Common stock

 

555 

 

 

 

554 

 

 

 

549 

 

 

 

524 

 

 

 

535 

 

 

Additional paid-in capital

 

1,122,063 

 

 

 

1,119,757 

 

 

 

1,117,879 

 

 

 

1,114,659 

 

 

 

1,112,238 

 

 

Retained earnings

 

143,277 

 

 

 

127,812 

 

 

 

147,911 

 

 

 

125,344 

 

 

 

104,652 

 

 

Accumulated other comprehensive income

 

42,014 

 

 

 

45,306 

 

 

 

19,061 

 

 

 

23,837 

 

 

 

17,741 

 

 

Treasury stock

 

(144,160

)

 

 

(144,160

)

 

 

(94,603

)

 

 

(58,834

)

 

 

(29,873

)

 

Total stockholders equity

 

1,163,749 

 

 

 

1,149,269 

 

 

 

1,190,797 

 

 

 

1,205,530 

 

 

 

1,205,293 

 

 

  Total liabilities and stockholders equity

 

$

8,587,858 

 

 

 

$

8,531,624 

 

 

 

$

7,954,937 

 

 

 

$

7,962,883 

 

 

 

$

8,010,106 

 

 



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

 

 

For the Three Months Ended

 

For the Six Months Ended

 

 

June 30, 2020

 

Mar 31, 2020

 

Dec 31, 2019

 

Sep 30, 2019

 

June 30, 2019

 

June 30, 2020

 

June 30, 2019

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

70,440 

 

 

$

77,861 

 

 

 

$

82,469 

 

 

 

$

85,811 

 

 

$

86,786 

 

 

 

$

148,301 

 

 

$

172,533 

 

 

Investment securities

 

7,825 

 

 

7,397 

 

 

 

7,168 

 

 

 

7,687 

 

 

7,397 

 

 

 

15,222 

 

 

14,629 

 

 

Deposits in financial institutions and Fed Funds sold

 

186 

 

 

871 

 

 

 

1,285 

 

 

 

1,329 

 

 

1,372 

 

 

 

1,057 

 

 

2,926 

 

 

Other investments

 

891 

 

 

850 

 

 

 

820 

 

 

 

816 

 

 

622 

 

 

 

1,741 

 

 

1,313 

 

 

Total interest income

 

79,342 

 

 

86,979 

 

 

 

91,742 

 

 

 

95,643 

 

 

96,177 

 

 

 

166,321 

 

 

191,401 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transaction and savings deposits

 

2,471 

 

 

6,552 

 

 

 

8,203 

 

 

 

10,381 

 

 

11,405 

 

 

 

9,023 

 

 

21,771 

 

 

Certificates and other time deposits

 

6,515 

 

 

8,240 

 

 

 

9,455 

 

 

 

10,283 

 

 

10,145 

 

 

 

14,755 

 

 

18,937 

 

 

Advances from FHLB

 

2,801 

 

 

2,879 

 

 

 

2,661 

 

 

 

3,081 

 

 

2,187 

 

 

 

5,680 

 

 

4,242 Subordinated debentures and subordinated notes 1,798 1,903 1,559 1,024 998 3,701 2,092 Total interest expense 13,585 19,574 21,878 24,769 24,735 33,159 47,042 Net interest income 65,757 67,405 69,864 70,874 71,442 133,162 144,359 Provision for credit losses 16,172 31,776 3,493 9,674 3,335 47,948 8,347 Provision for unfunded commitments 2,799 3,881 — — — 6,680 — Net interest income after provisions 46,786 31,748 66,371 61,200 68,107 78,534 136,012 Noninterest income: Service charges and fees on deposit accounts 2,960 3,642 3,728 3,667 3,422 6,602 6,939 Loan fees 1,240 845 1,921 2,252 1,932 2,085 3,609 Gain (loss) on sales of investment securities 2,879 — (438) — (642) 2,879 (1,414) Gain on sales of mortgage loans held for sale 308 142 81 138 143 450 256 Government guaranteed loan income, net 11,006 439 560 930 961 11,445 3,218 Rental income 547 551 371 369 373 1,098 741 Other 2,350 1,628 909 1,074 (155) 3,978 1,169 Total noninterest income 21,290 7,247 7,132 8,430 6,034 28,537 14,518 Noninterest expense: Salaries and employee benefits 20,019 18,870 18,917 17,530 17,459 38,889 36,344 Occupancy and equipment 3,994 4,273 4,198 4,044 4,014 8,267 8,143 Professional and regulatory fees 2,796 2,196 2,615 2,750 2,814 4,992 6,232 Data processing and software expense 2,434 2,089 1,880 2,252 2,309 4,523 4,233 Marketing 561 1,083 971 708 961 1,644 1,580 Amortization of intangibles 2,696 2,696 2,696 2,712 2,719 5,392 5,479 Telephone and communications 308 319 466 361 625 627 1,020 Merger and acquisition expense — — 918 1,035 5,790 — 37,007 COVID expenses 1,245 — — — — 1,245 — Other 6,008 4,019 3,623 3,238 3,205 10,027 6,851 Total noninterest expense 40,061 35,545 36,284 34,630 39,896 75,606 106,889 Income before income tax expense 28,015 3,450 37,219 35,000 34,245 31,465 43,641 Income tax (benefit) expense 3,987 (684) 8,168 7,595 7,369 3,303 9,358 Net income $24,028 $4,134 $29,051 $27,405 $26,876 $28,162 $34,283 Basic EPS $0.48 $0.08 $0.56 $0.52 $0.50 $0.56 $0.63 Diluted EPS $0.48 $0.08 $0.56 $0.51 $0.49 $0.56 $0.62 Weighted average basic shares outstanding 49,597 50,725 51,472 52,915 53,969 50,161 54,130 Weighted average diluted shares outstanding 49,727 51,056 52,263 53,873 54,929 50,383 54,929



VERITEX HOLDINGS, INC. AND SUBSIDIARY
Financial Highlights
(In thousands except percentages)

For the Three Months Ended

June 30, 2020

March 31, 2020

June 30, 2019

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

Assets

Interest-earning assets:

Loans1

$

5,797,989

$

67,404

4.68

%

$

5,784,965

$

76,527

5.32

%

$

5,762,257

$

85,030

5.92

%

Loans held for investment, mortgage warehouse

304,873

2,279

3.01

163,646

1,334

3.28

154,586

1,756

4.56

PPP loans

303,223

757

1.00

Securities

1,117,964

7,825

2.82

1,038,954

7,397

2.86

956,160

7,397

3.10

Interest-bearing deposits in other banks

366,764

186

0.20

308,546

871

1.14

228,461

1,372

2.41

Other investments2

110,672

891

3.24

91,917

850

3.72

59,508

622

4.19

Total interest-earning assets

8,001,485

79,342

3.99

7,388,028

86,979

4.74

7,160,972

96,177

5.39

Allowance for loan losses

(110,483

)

(44,270

)

(23,891

)

Noninterest-earning assets

798,772

782,024

800,238

Total assets

$

8,689,774

$

8,125,782

$

7,937,319

Liabilities and Stockholders’ Equity

Interest-bearing liabilities:

Interest-bearing demand and savings deposits

$

2,684,897

$

2,471

0.37

%

$

2,638,633

$

6,552

1.00

%

$

2,713,735

$

11,405

1.69

%

Certificates and other time deposits

1,625,971

6,515

1.61

1,650,678

8,240

2.01

2,107,567

10,145

1.93

Advances from FHLB

1,206,930

2,801

0.93

937,901

2,879

1.23

334,926

2,187

2.62

Subordinated debentures and subordinated notes

142,549

1,798

5.07

145,189

1,903

5.27

75,252

998

5.32

Total interest-bearing liabilities

5,660,347

13,585

0.97

5,372,401

19,574

1.47

5,231,480

24,735

1.90

Noninterest-bearing liabilities:

Noninterest-bearing deposits

1,826,327

1,523,702

1,456,538

Other liabilities

47,302

46,563

48,669

Total liabilities

7,533,976

6,942,666

6,736,687

Stockholders’ equity

1,155,798

1,183,116

1,200,632

Total liabilities and stockholders’ equity

$

8,689,774

$

8,125,782

$

7,937,319

Net interest rate spread2

3.02

%

3.27

%

3.49

%

Net interest income

$

65,757

$

67,405

$

71,442

Net interest margin3

3.31

%

3.67

%

4.00

%

1 Includes average outstanding balances of loans held for sale of $22,958, $10,995 and $8,140 for the three months ended June 30, 2020, March 31, 2020, and June 30, 2019, respectively, and average balances of loans held for investment, excluding mortgage warehouse.
2 Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
3 Net interest margin is equal to net interest income divided by average interest-earning assets.


VERITEX HOLDINGS, INC. AND SUBSIDIARY
Financial Highlights
(In thousands except percentages)

Six Months Ended

June 30, 2020

June 30, 2019

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

$

5,790,227

$

143,931

5.00

%

$

5,746,746

$

169,224

5.94

%

Loans held for investment, mortgage warehouse

234,260

3,613

3.10

137,280

3,309

4.86

PPP loans

152,861

757

1.00

Securities

1,078,459

15,222

2.84

941,336

14,629

3.13

Interest-bearing deposits in other banks

337,655

1,057

0.63

246,201

2,926

2.40

Other investments2

101,294

1,741

3.46

48,578

1,313

5.45

Total interest-earning assets

7,694,756

166,321

4.35

7,120,141

191,401

5.42

Allowance for loan losses

(77,376

)

(21,988

)

Noninterest-earning assets

763,567

789,890

Total assets

$

8,380,947

$

7,888,043

Liabilities and Stockholders’ Equity

Interest-bearing liabilities:

Interest-bearing demand and savings deposits

$

2,668,726

$

9,023

0.68

%

$

2,675,237

$

21,771

1.64

%

Certificates and other time deposits

1,639,807

14,755

1.81

2,124,951

18,937

1.80

Advances from FHLB

1,072,416

5,680

1.07

322,879

4,242

2.65

Subordinated debentures and subordinated notes

143,869

3,701

5.17

75,515

2,092

5.59

Total interest-bearing liabilities

5,524,818

33,159

1.21

5,198,582

47,042

1.82

Noninterest-bearing liabilities:

Noninterest-bearing deposits

1,675,015

1,456,086

Other liabilities

38,488

39,385

Total liabilities

7,238,321

6,694,053

Stockholders’ equity

1,142,626

1,193,990

Total liabilities and stockholders’ equity

$

8,380,947

$

7,888,043

Net interest rate spread3

3.14

%

3.60

%

Net interest income

$

133,162

$

144,359

Net interest margin4

3.48

%

4.09

%

1 Includes average outstanding balances of loans held for sale of $16,977 and $7,925 for the six months ended June 30, 2020 and June 30, 2019, respectively, and average balances of loans held for investment, excluding mortgage warehouse.
2 The Company historically reported dividend income in other noninterest income and has re-classed $1,287 of dividend income into other investments as of June 30, 2019 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

Yield Trend

For the Three Months Ended

June 30, 2020

March 31,
2020

December 31,
2019

September 30,
2019

June 30, 2019

Average yield on interest-earning assets:

Loans1

4.68

%

5.32

%

5.63

%

5.85

%

5.92

%

Loans held for investment, mortgage warehouse

3.01

3.28

3.51

3.88

4.56

PPP loans

1.00

Securities

2.82

2.86

2.83

2.98

3.10

Interest-bearing deposits in other banks

0.20

1.14

1.63

2.25

2.41

Other investments

3.24

3.72

4.53

4.50

4.19

Total interest-earning assets

3.99

%

4.74

%

5.00

%

5.26

%

5.39

%

Average rate on interest-bearing liabilities:

Interest-bearing demand and savings deposits

0.37

%

1.00

%

1.24

%

1.57

%

1.69

%

Certificates and other time deposits

1.61

2.01

2.10

2.09

1.93

Advances from FHLB

0.93

1.23

1.45

1.93

2.62

Subordinated debentures and subordinated notes

5.07

5.27

5.23

5.43

5.32

Total interest-bearing liabilities

0.97

%

1.47

%

1.65

%

1.86

%

1.90

%

Net interest rate spread2

3.02

%

3.27

%

3.35

%

3.40

%

3.49

%

Net interest margin3

3.31

%

3.67

%

3.81

%

3.90

%

4.00

%

1Includes average outstanding balances of loans held for sale of $22,958, $10,995, $10,643, $8,525 and $8,140 for the three months ended June 30, 2020, March 31, 2020, December 31, 2019, September 30, 2019 and June 30, 2019, respectively, and average balances of loans held for investment, excluding mortgage warehouse.
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 Three Months Ended

June 30, 2020

March 31,
2020

December 31,
2019

September 30,
2019

June 30, 2019

Average cost of interest-bearing deposits

0.84

%

1.39

%

1.59

%

1.79

%

1.79

%

Average costs of total deposits, including noninterest-bearing

0.59

1.02

1.18

1.36

1.38


VERITEX HOLDINGS, INC. AND SUBSIDIARY
Financial Highlights
(In thousands except percentages)

Total LHI and Deposit Portfolio Composition

June 30, 2020

March 31,
2020

December 31,
2019

September 30,
2019

June 30, 2019

(Dollars in thousands)

LHI1

Commercial

$

1,555,300

27.2

%

$

1,777,603

30.4

%

$

1,712,838

29.9

%

$

1,711,256

30.3

%

$

1,788,044

31.2

%

Real Estate:

Owner occupied commercial

769,952

13.4

723,839

12.4

706,782

12.3

716,130

12.7

746,768

13.0

Commercial

1,847,480

32.3

1,828,386

31.2

1,784,201

31.1

1,710,510

30.3

1,727,525

30.1

Construction and land

599,510

10.5

566,470

9.7

629,374

11.0

623,622

11.0

543,850

9.5

Farmland

14,723

0.3

14,930

0.3

16,939

0.3

7,986

0.1

17,472

0.3

1-4 family residential

528,688

9.2

536,892

9.2

549,811

9.6

559,310

9.9

557,056

9.7

Multi-family residential

394,829

6.9

388,374

6.6

320,041

5.6

306,966

5.4

330,877

5.8

Consumer

14,932

0.2

15,771

0.2

17,457

0.2

18,113

0.3

20,562

0.4

Total LHI

$

5,725,414

100

%

$

5,852,265

100

%

$

5,737,443

100

%

$

5,653,893

100

%

$

5,732,154

100

%

Mortgage warehouse

441,992

373,161

183,628

233,577

200,017

PPP loans

398,949

Total LHI1

$

6,566,355

$

6,225,426

$

5,921,071

$

5,887,470

$

5,932,171

Deposits

Noninterest-bearing

$

1,907,697

31.2

%

$

1,549,260

26.7

%

$

1,556,500

26.4

%

$

1,473,126

25.1

%

$

1,476,668

24.0

%

Interest-bearing transaction

343,640

5.6

306,641

5.3

388,877

6.6

373,997

6.4

373,982

6.1

Money market

2,272,520

37.1

2,143,874

37.0

2,180,017

37.0

2,066,315

35.2

2,178,274

35.3

Savings

97,989

1.6

86,350

1.5

86,078

1.5

87,981

1.5

93,898

1.5

Certificates and other time deposits

1,503,701

24.5

1,713,820

29.5

1,682,878

28.6

1,876,427

31.8

2,042,266

33.1

Total deposits

$

6,125,547

100

%

$

5,799,945

100

%

$

5,894,350

100

%

$

5,877,846

100

%

$

6,165,088

100

%

Loan to Deposit Ratio

107.2

%

107.3

%

100.5

%

100.2

%

96.2

%

Loan to Deposit Ratio, excluding mortgage warehouse and PPP loans

93.5

%

100.9

%

97.3

%

96.2

%

93.0

%

1 Total LHI does not include deferred costs of $1.5 million at June 30, 2020 and $1.5 million at March 31, 2020, deferred fees of $134 thousand at December 31, 2019 and September 30, 2019, respectively, and $321 thousand at June 30, 2019.


VERITEX HOLDINGS, INC. AND SUBSIDIARY
Financial Highlights
(In thousands except percentages)

Asset Quality

For the Three Months Ended

For the Six Months Ended

June 30, 2020

Mar 31, 2020

Dec 31, 2019

Sep 30, 2019

June 30, 2019

June 30, 2020

June 30, 2019

(Dollars in thousands)

Nonperforming Assets (“NPAs”):

Nonaccrual loans

$

43,594

$

38,836

$

29,779

$

10,172

$

15,733

$

43,594

$

15,733

Accruing loans 90 or more days past due1

2,021

4,764

3,660

2,194

25,774

2,021

25,774

Total nonperforming loans held for investment (“NPLs”)

45,615

43,600

33,439

12,366

41,507

45,615

41,507

Other real estate owned

7,716

7,720

5,995

4,625

1,748

7,716

1,748

Total NPAs

$

53,331

$

51,320

$

39,434

$

16,991

$

43,255

$

53,331

$

43,255

Charge-offs:

Residential

$

$

$

$

$

(157

)

$

$

(157

)

Commercial

(1,740

)

(8,101

)

(143

)

(1,740

)

(2,797

)

Consumer

(57

)

(68

)

(48

)

(113

)

(30

)

(125

)

(104

)

Total charge-offs

(1,797

)

(68

)

(48

)

(8,214

)

(330

)

(1,865

)

(3,058

)

Recoveries:

Residential

1

5

54

1

62

Commercial

7

29

135

71

10

36

20

Consumer

274

6

40

274

86

Total recoveries

7

304

146

71

104

311

168

Net charge-offs

$

(1,790

)

$

236

$

98

$

(8,143

)

$

(226

)

$

(1,554

)

$

(2,890

)

CECL transition adjustment

$

$

39,137

$

$

$

$

39,137

$

Allowance for credit losses (“ACL”) at end of period

$

115,365

$

100,983

$

29,834

$

26,243

$

24,712

$

115,365

$

24,712

Asset Quality Ratios:

NPAs to total assets

0.62

%

0.60

%

0.50

%

0.21

%

0.54

%

0.62

%

0.54

%

NPLs to total LHI, excluding mortgage warehouse and PPP loans

0.80

0.75

0.58

0.22

0.72

0.80

0.72

ACL to total LHI, excluding mortgage warehouse and PPP loans

2.01

1.73

0.52

0.46

0.43

2.01

0.43

Net charge-offs to average loans outstanding

0.03

0.14

0.03

0.05

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 SUBSIDIARY
Reconciliation of Non-GAAP Financial Measures
(Unaudited)

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

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

Tangible Book Value Per Common