Veritex Holdings, Inc. Reports Third Quarter Operating Results

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DALLAS, Oct. 27, 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 September 30, 2020.

Despite the economic headwinds resulting from the pandemic, we delivered a strong quarter.  Loans on active deferral have declined 87% since late July.  We remain optimistic about the current recovery and the long-term strength of the DFW and Houston economies, said C. Malcolm Holland, III, the Companys Chairman and Chief Executive Officer. Our quarterly results reflect strong pre-tax, pre-provision operating net revenue, slower building of our allowance for credit losses, higher capital levels and positive loan and deposit growth. I couldnt be more proud and encouraged by what the team has accomplished during 2020 which is proving to be a challenging operating period.

Third Quarter Highlights

  • Net income of $22.9 million, or $0.46 diluted earnings per share (EPS), compared to $24.0 million, or $0.48 diluted EPS, for the quarter ended June 30, 2020 and $27.4 million, or $0.51 diluted EPS, for the quarter ended September 30, 2019;

  • Pre-tax, pre-provision operating earnings 1 totaled $39.3 million, compared to $45.7 million for the quarter ended June 30, 2020 and $45.7 million for the quarter ended September 30, 2019;

  • Provision for credit losses and unfunded commitments was $10.1 million, compared to $19.0 million for the quarter ended June 30, 2020;

  • Allowance for credit losses (ACL) to total loans held for investments (LHI), excluding mortgage warehouse and Paycheck Protection Program (PPP) loans, was 2.10% for the quarter ended September 30, 2020 compared to 2.01% for the quarter ended June 30, 2020.

  • Total loans, excluding PPP loans, grew $165.3 million from the second quarter of 2020, or 10.7% annualized.

  • Total deposits grew $97.0 million from the second quarter of 2020, or 6.3% annualized, with the average cost of total deposits decreasing to 0.46% for the three months ended September 30, 2020 from 0.59% for the three months ended June 30, 2020;

  • Growth of $20.9 million in total common equity tier 1 capital for the three months ended September 30, 2020;

  • Declared quarterly cash dividend of $0.17 payable on November 19, 2020;

  • On October 5, 2020, issued $125 million in subordinated debt initially bearing a fixed interest rate of 4.125%; and

  • On October 27, 2020, extended the expiration date of the Stock Buyback Program from December 31, 2020 to March 31, 2021.

Financial Highlights

QTD

 

YTD

 

Q3 2020

 

Q2 2020

 

Q3 2020

 

Q3 2019

 

 

 

 

 

 

 

 

 

(Dollars in thousands) 
(unaudited)

GAAP

 

 

 

 

 

 

 

Net income

$

22,920

 

 

$

24,028

 

 

$

51,082

 

 

$

61,688

 

Diluted EPS

0.46

 

 

0.48

 

 

1.02

 

 

1.13

 

Return on average assets 2

1.06

%

 

1.11

%

 

0.81

%

 

1.04

%

Efficiency ratio

48.12

 

 

46.02

 

 

47.19

 

 

59.42

 

Book value per common share

$

23.87

 

 

$

23.45

 

 

$

23.87

 

 

$

23.02

 

Non-GAAP 1

 

 

 

 

 

 

 

Operating earnings

$

22,928

 

 

$

21,188

 

 

$

48,250

 

 

$

93,542

 

Diluted operating EPS

0.46

 

 

0.43

 

 

0.96

 

 

1.71

 

Pre-tax, pre-provision operating earnings

39,265

 

 

45,668

 

 

124,040

 

 

136,118

 

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

1.82

%

 

2.11

%

 

1.96

%

 

2.30

%

Tangible book value per common share

$

15.19

 

 

$

14.71

 

 

$

15.19

 

 

$

14.61

 

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.

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

Net Interest Income

For the three months ended September 30, 2020, net interest income before provision for credit losses was $65.9 million and net interest margin was 3.32% compared to $65.8 million and 3.31%, respectively, for the three months ended June 30, 2020. Net interest margin increased 1 basis point from the three months ended June 30, 2020 primarily due to decreases in the average rates paid on interest-bearing demand and savings deposits and certificate and other time deposits which is slightly offset by decreases in the average yields earned on loans the three months ended September 30, 2020. As a result, the average cost of interest-bearing deposits decreased 17 basis points to 0.67% for the three months ended September 30, 2020 from 0.84% for the three months ended June 30, 2020.

Net interest income before provision for credit losses decreased by $5.0 million from $70.9 million to $65.9 million and net interest margin decreased by 58 basis points from 3.90% to 3.32% for the three months ended September 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 $17.1 million decrease in interest income on loans, partially offset by $8.3 million and $5.3 million decrease in interest expenses on transaction and savings deposits and certificates and other time deposits, respectively, during the three months ended September 30, 2020 compared to the three months ended September 30, 2019. Net interest margin decreased 58 basis points from the three months ended September 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 and certificates and other time deposits for the three months ended September 30, 2020. As a result, the average cost of interest-bearing deposits decreased 112 basis points to 0.67% for the three months ended September 30, 2020 from 1.79% for the three months ended September 30, 2019.

Noninterest Income

Noninterest income for the three months ended September 30, 2020 was $9.8 million, a decrease of $11.5 million, or 54.0%, compared to the three months ended June 30, 2020. The decrease was primarily due to a $8.7 million decrease in government guaranteed loan income, net. In the second and third quarter of 2020, 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 fee income of $295 thousand in the third quarter of 2020 compared to $12.5 million in the second quarter of 2020. The recognized fee income on PPP loans 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 September 30, 2019, noninterest income for the three months ended September 30, 2020 increased by $1.4 million, or 16.2%. The increase was primarily due to a $1.3 million increase in government guaranteed loan income, net, as a result of the fee income earned on PPP loans.

Noninterest Expense

Noninterest expense was $36.4 million for the three months ended September 30, 2020, compared to $40.1 million for the three months ended June 30, 2020, a decrease of $3.7 million, or 9.1%. The decrease was primarily driven by a $1.6 million decrease in pre-payment fees on Federal Home Loan Bank (FHLB) advances paid in the second quarter of 2020 with no corresponding  pre-payment fees during the three months ended September 30, 2020. The decrease was also driven by a $1.2 million decrease in COVID related expenses primarily related to Community Reinvestment Act donations, lender incentives, employee overtime and cleaning services that were paid in the second quarter of 2020 with nominal COVID expenses for the three months ended September 30, 2020.

Compared to the three months ended September 30, 2019, noninterest expense for the three months ended September 30, 2020 increased by $1.8 million, or 5.1%. The increase was primarily driven by a $3.0 million increase in salaries and employee benefits offset by a $1.0 million decrease in merger and acquisition expenses.

Financial Condition

Total loans were $6.8 billion at September 30, 2020, an increase of $157.7 million, or 9.6% annualized, compared to June 30, 2020. The increase was the result of the continued execution and success of our loan growth strategy.

Total deposits were $6.2 billion at September 30, 2020, an increase of $97.0 million, or 6.3% annualized, compared to June 30, 2020. The increase was primarily the result of increases of $107.8 million and $13.0 million in interest-bearing transaction and savings deposits and noninterest-bearing demand deposits, respectively, partially offset by a decrease of $23.8 million in certificates and other time deposits.

Asset Quality

Nonperforming assets totaled $96.4 million, or 1.11% of total assets at September 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 $2.5 million for the quarter, which is primarily the result of one relationship charge-off that was fully reserved against in the second quarter of 2020.

The Company recorded a provision for credit losses for the three months ended September 30, 2020 of $8.7 million, compared to $16.2 million and $9.7 million for the three months ended June 30, 2020 and September 30, 2019, respectively. The decrease in the recorded provision for credit losses for the three months ended September 30, 2020, compared to the three months ended June 30, 2020, was primarily attributable to improvement in the Texas economic forecasts used in the Current Expected Credit Losses (CECL) model in the third quarter of 2020 to reflect the expected impact of the COVID-19 pandemic as of September 30, 2020, as compared to our Texas economic forecasts and expected impact of the COVID-19 pandemic as of June 30, 2020. Changes to the Texas economic forecasts were offset by a $13.2 million increase in specific reserves on certain lending relationships that moved onto nonaccrual status during the three months ended September 30, 2020. In the third quarter of 2020, we also recorded a $1.4 million provision for unfunded commitments which was attributable to higher unfunded balances compared to a $2.8 million provision for unfunded commitments recorded for the three months ended June 30, 2020. Allowance for credit losses as a percentage of LHI, excluding mortgage warehouse and PPP loans, was 2.10%, 2.01% and 0.46% of total loans at September 30, 2020, June 30, 2020 and September 30, 2019, respectively.

Dividend Information

On October 27, 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 November 19, 2020 to stockholders of record as of the close of business on November 5, 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, October 28, 2020 at 8:30 a.m. Central Time. Participants may pre-register for the call by visiting https://edge.media-server.com/mmc/p/yb2kmpoq 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
#1172928. This replay, as well as the webcast, will be available until November 4, 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.


VERITEX HOLDINGS, INC. AND SUBSIDIARY

Financial Highlights
(Unaudited)

 

For the Three Months Ended

 

For the Nine Months Ended

 

Sep 30,
2020

 

Jun 30,
2020

 

Mar 31,
2020

 

Dec 31,
2019

 

Sep 30,
2019

 

Sep 30,
2020

 

Sep 30,
2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars and shares in thousands)

Per Share Data (Common Stock):

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic EPS

$

0.46

 

 

$

0.48

 

 

$

0.08

 

 

$

0.56

 

 

$

0.52

 

 

$

1.02

 

 

$

1.15

 

Diluted EPS

0.46

 

 

0.48

 

 

0.08

 

 

0.56

 

 

0.51

 

 

1.02

 

 

1.13

 

Book value per common share

23.87

 

 

23.45

 

 

23.19

 

 

23.32

 

 

23.02

 

 

23.87

 

 

23.02

 

Tangible book value per common share 1

15.19

 

 

14.71

 

 

14.39

 

 

14.73

 

 

14.61

 

 

15.19

 

 

14.61

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares outstanding at period end

49,650

 

 

49,633

 

 

49,557

 

 

51,064

 

 

52,373

 

 

49,650

 

 

52,373

 

Weighted average basic shares outstanding for the period

49,647

 

 

49,597

 

 

50,725

 

 

51,472

 

 

52,915

 

 

49,989

 

 

53,721

 

Weighted average diluted shares outstanding for the period

49,775

 

 

49,727

 

 

51,056

 

 

52,263

 

 

53,873

 

 

50,176

 

 

54,633

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary of Credit Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

ACL to total LHI, excluding mortgage warehouse and PPP loans

2.10

%

 

2.01

%

 

1.73

%

 

0.52

%

 

0.46

%

 

2.10

%

 

0.46

%

Nonperforming assets to total assets

1.11

 

 

0.62

 

 

0.60

 

 

0.50

 

 

0.21

 

 

1.11

 

 

0.21

 

Net charge-offs to average loans outstanding

0.04

 

 

0.03

 

 

 

 

 

 

0.14

 

 

0.04

 

 

0.19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary Performance Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets 2

1.06

 

 

1.11

 

 

0.20

 

 

1.43

 

 

1.36

 

 

0.81

 

 

1.04

 

Return on average equity 2

7.74

 

 

8.36

 

 

1.41

 

 

9.63

 

 

8.98

 

 

5.91

 

 

6.88

 

Return on average tangible common equity 1, 2

13.27

 

 

14.49

 

 

3.27

 

 

16.22

 

 

15.15

 

 

10.56

 

 

11.93

 

Efficiency ratio

48.12

 

 

46.02

 

 

47.61

 

 

47.12

 

 

43.67

 

 

47.19

 

 

59.42

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected Performance Metrics - Operating:

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted operating EPS 1

$

0.46

 

 

$

0.43

 

 

$

0.08

 

 

$

0.58

 

 

$

0.53

 

 

$

0.96

 

 

$

1.71

 

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

1.82

%

 

2.11

%

 

1.94

%

 

2.07

%

 

2.26

%

 

1.96

%

 

2.30

%

Operating return on average assets 1, 2

1.06

 

 

0.98

 

 

0.20

 

 

1.49

 

 

1.42

 

 

0.76

 

 

1.58

 

Operating return on average tangible common equity 1, 2

13.27

 

 

12.90

 

 

3.27

 

 

16.87

 

 

15.78

 

 

10.04

 

 

17.57

 

Operating efficiency ratio 1

48.11

 

 

45.74

 

 

47.61

 

 

45.67

 

 

42.36

 

 

47.10

 

 

43.19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Veritex Holdings, Inc. Capital Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

Tier 1 capital to average assets (leverage)

9.54

 

 

9.16

 

 

9.49

 

 

10.17

 

 

10.33

 

 

9.54

 

 

10.33

 

Common equity tier 1 capital

9.67

 

 

9.66

 

 

9.53

 

 

10.60

 

 

10.82

 

 

9.67

 

 

10.82

 

Tier 1 capital to risk-weighted assets

10.05

 

 

10.05

 

 

9.92

 

 

11.02

 

 

11.26

 

 

10.05

 

 

11.26

 

Total capital to risk-weighted assets

12.70

 

 

12.71

 

 

12.48

 

 

13.10

 

 

12.26

 

 

12.70

 

 

12.26

 

Tangible common equity to tangible assets 1

9.12

 

 

8.96

 

 

8.81

 

 

10.01

 

 

10.17

 

 

9.12

 

 

10.17

 

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)

 

Sep 30, 2020

 

Jun 30, 2020

 

Mar 31, 2020

 

Dec 31, 2019

 

Sep 30, 2019

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

 

 

(unaudited)

ASSETS

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

128,767

 

 

$

160,306

 

 

$

430,842

 

 

$

251,550

 

 

$

252,592

 

Securities

1,091,440

 

 

1,112,061

 

 

1,117,804

 

 

997,330

 

 

1,023,393

 

Other securities

98,023

 

 

104,213

 

 

112,775

 

 

84,063

 

 

85,007

 

 

 

 

 

 

 

 

 

 

 

Loans held for sale

13,928

 

 

28,041

 

 

15,048

 

 

14,080

 

 

10,715

 

PPP loans, at fair value

405,465

 

 

398,949

 

 

 

 

 

 

 

Loans held for investment, mortgage warehouse

544,845

 

 

441,992

 

 

371,161

 

 

183,628

 

 

233,577

 

Loans held for investment

5,789,293

 

 

5,726,873

 

 

5,853,735

 

 

5,737,577

 

 

5,654,027

 

Total loans

6,753,531

 

 

6,595,855

 

 

6,239,944

 

 

5,935,285

 

 

5,898,319

 

Allowance for credit losses

(121,591

)

 

(115,365

)

 

(100,983

)

 

(29,834

)

 

(26,243

)

Bank-owned life insurance

82,366

 

 

81,876

 

 

81,395

 

 

80,915

 

 

80,411

 

Bank premises, furniture and equipment, net

115,794

 

 

115,560

 

 

116,056

 

 

118,536

 

 

118,449

 

Other real estate owned

5,796

 

 

7,716

 

 

7,720

 

 

5,995

 

 

4,625

 

Intangible assets, net

64,716

 

 

66,705

 

 

69,444

 

 

72,263

 

 

75,363

 

Goodwill

370,840

 

 

370,840

 

 

370,840

 

 

370,840

 

 

370,463

 

Other assets

112,693

 

 

88,091

 

 

85,787

 

 

67,994

 

 

80,504

 

Total assets

$

8,702,375

 

 

$

8,587,858

 

 

$

8,531,624

 

 

$

7,954,937

 

 

$

7,962,883

 

LIABILITIES AND STOCKHOLDERS EQUITY

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

$

1,920,715

 

 

$

1,907,697

 

 

$

1,549,260

 

 

$

1,556,500

 

 

$

1,473,126

 

Interest-bearing transaction and savings deposits

2,821,945

 

 

2,714,149

 

 

2,536,865

 

 

2,654,972

 

 

2,528,293

 

Certificates and other time deposits

1,479,896

 

 

1,503,701

 

 

1,713,820

 

 

1,682,878

 

 

1,876,427

 

Total deposits

6,222,556

 

 

6,125,547

 

 

5,799,945

 

 

5,894,350

 

 

5,877,846

 

Accounts payable and other liabilities

66,096

 

 

64,625

 

 

56,339

 

 

37,427

 

 

45,475

 

Accrued interest payable

3,444

 

 

4,088

 

 

5,407

 

 

6,569

 

 

6,054

 

Advances from Federal Home Loan Bank

1,082,756

 

 

1,087,794

 

 

1,377,832

 

 

677,870

 

 

752,907

 

Subordinated debentures and subordinated notes

140,158

 

 

140,283

 

 

140,406

 

 

145,571

 

 

72,284

 

Securities sold under agreements to repurchase

2,028

 

 

1,772

 

 

2,426

 

 

2,353

 

 

2,787

 

Total liabilities

7,517,038

 

 

7,424,109

 

 

7,382,355

 

 

6,764,140

 

 

6,757,353

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

Stockholders equity:

 

 

 

 

 

 

 

 

 

Common stock

555

 

 

555

 

 

554

 

 

549

 

 

524

 

Additional paid-in capital

1,124,148

 

 

1,122,063

 

 

1,119,757

 

 

1,117,879

 

 

1,114,659

 

Retained earnings

157,639

 

 

143,277

 

 

127,812

 

 

147,911

 

 

125,344

 

Accumulated other comprehensive income

47,155

 

 

42,014

 

 

45,306

 

 

19,061

 

 

23,837

 

Treasury stock

(144,160

)

 

(144,160

)

 

(144,160

)

 

(94,603

)

 

(58,834

)

Total stockholders equity

1,185,337

 

 

1,163,749

 

 

1,149,269

 

 

1,190,797

 

 

1,205,530

 

Total liabilities and stockholders equity

$

8,702,375

 

 

$

8,587,858

 

 

$

8,531,624

 

 

$

7,954,937

 

 

$

7,962,883

 


VERITEX HOLDINGS, INC. AND SUBSIDIARY

Financial Highlights
(In thousands, except per share data)

 

For the Three Months Ended

 

For the Nine Months Ended

 

Sep 30,
2020

 

Jun 30,
2020

 

Mar 31,
2020

 

Dec 31,
2019

 

Sep 30,
2019

 

Sep 30,
2020

 

Sep 30,
2019

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

$

68,685

 

 

$

70,440

 

 

$

77,861

 

 

$

82,469

 

 

$

85,811

 

 

$

216,986

 

 

$

258,344

 

Investment securities

7,852

 

 

7,825

 

 

7,397

 

 

7,168

 

 

7,687

 

 

23,074

 

 

22,316

 

Deposits in financial institutions and Fed Funds sold

65

 

 

186

 

 

871

 

 

1,285

 

 

1,329

 

 

1,122

 

 

4,255

 

Other investments

827

 

 

891

 

 

850

 

 

820

 

 

816

 

 

2,568

 

 

2,129

 

Total interest income

77,429

 

 

79,342

 

 

86,979

 

 

91,742

 

 

95,643

 

 

243,750

 

 

287,044

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Transaction and savings deposits

2,105

 

 

2,471

 

 

6,552

 

 

8,203

 

 

10,381

 

 

11,128

 

 

32,152

 

Certificates and other time deposits

5,004

 

 

6,515

 

 

8,240

 

 

9,455

 

 

10,283

 

 

19,759

 

 

29,220

 

Advances from FHLB

2,707

 

 

2,801

 

 

2,879

 

 

2,661

 

 

3,081

 

 

8,387

 

 

7,323

 

Subordinated debentures and subordinated notes

1,743

 

 

1,798

 

 

1,903

 

 

1,559

 

 

1,024

 

 

5,444

 

 

3,116

 

Total interest expense

11,559

 

 

13,585

 

 

19,574

 

 

21,878

 

 

24,769

 

 

44,718

 

 

71,811

 

Net interest income

65,870

 

 

65,757

 

 

67,405

 

 

69,864

 

 

70,874

 

 

199,032

 

 

215,233

 

Provision for credit losses

8,692

 

 

16,172

 

 

31,776

 

 

3,493

 

 

9,674

 

 

56,640

 

 

18,021

 

Provision for unfunded commitments

1,447

 

 

2,799

 

 

3,881

 

 

 

 

 

 

8,127

 

 

 

Net interest income after provisions

55,731

 

 

46,786

 

 

31,748

 

 

66,371

 

 

61,200

 

 

134,265

 

 

197,212

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges and fees on deposit accounts

3,130

 

 

2,960

 

 

3,642

 

 

3,728

 

 

3,667

 

 

9,732

 

 

10,606

 

Loan fees

1,260

 

 

1,240

 

 

845

 

 

1,921

 

 

1,536

 

 

3,345

 

 

4,026

 

(Loss) gain on sales of investment securities

(8

)

 

2,879

 

 

 

 

(438

)

 

 

 

2,871

 

 

(1,414

)

Gain on sales of mortgage loans held for sale

472

 

 

308

 

 

142

 

 

81

 

 

853

 

 

922

 

 

394

 

Government guaranteed loan income, net

2,257

 

 

11,006

 

 

439

 

 

560

 

 

930

 

 

13,702

 

 

4,148

 

Rental income

502

 

 

547

 

 

551

 

 

371

 

 

643

 

 

1,600

 

 

1,629

 

Other

2,182

 

 

2,350

 

 

1,628

 

 

909

 

 

801

 

 

6,160

 

 

3,559

 

Total noninterest income

9,795

 

 

21,290

 

 

7,247

 

 

7,132

 

 

8,430

 

 

38,332

 

 

22,948

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

20,553

 

 

20,019

 

 

18,870

 

 

18,917

 

 

17,530

 

 

59,442

 

 

53,874

 

Occupancy and equipment

3,980

 

 

3,994

 

 

4,273

 

 

4,198

 

 

4,044

 

 

12,247

 

 

12,187

 

Professional and regulatory fees

3,159

 

 

2,796

 

 

2,196

 

 

2,615

 

 

2,750

 

 

8,151

 

 

8,982

 

Data processing and software expense

2,452

 

 

2,434

 

 

2,089

 

 

1,880

 

 

2,252

 

 

6,975

 

 

6,485

 

Marketing

1,062

 

 

561

 

 

1,083

 

 

971

 

 

708

 

 

2,706

 

 

2,288

 

Amortization of intangibles

2,840

 

 

2,696

 

 

2,696

 

 

2,696

 

 

2,712

 

 

8,232

 

 

8,191

 

Telephone and communications

345

 

 

308

 

 

319

 

 

466

 

 

361

 

 

972

 

 

1,381

 

Merger and acquisition expense

 

 

 

 

 

 

918

 

 

1,035

 

 

 

 

38,042

 

COVID expenses

132

 

 

1,245

 

 

 

 

 

 

 

 

1,377

 

 

 

Other

1,885

 

 

6,008

 

 

4,019

 

 

3,623

 

 

3,238

 

 

11,912

 

 

10,089

 

Total noninterest expense

36,408

 

 

40,061

 

 

35,545

 

 

36,284

 

 

34,630

 

 

112,014

 

 

141,519

 

Income before income tax expense

29,118

 

 

28,015

 

 

3,450

 

 

37,219

 

 

35,000

 

 

60,583

 

 

78,641

 

Income tax (benefit) expense

6,198

 

 

3,987

 

 

(684

)

 

8,168

 

 

7,595

 

 

9,501

 

 

16,953

 

Net income

$

22,920

 

 

$

24,028

 

 

$

4,134

 

 

$

29,051

 

 

$

27,405

 

 

$

51,082

 

 

$

61,688

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic EPS

$

0.46

 

 

$

0.48

 

 

$

0.08

 

 

$

0.56

 

 

$

0.52

 

 

$

1.02

 

 

$

1.15

 

Diluted EPS

$

0.46

 

 

$

0.48

 

 

$

0.08

 

 

$

0.56

 

 

$

0.51

 

 

$

1.02

 

 

$

1.13

 

Weighted average basic shares outstanding

49,647

 

 

49,597

 

 

50,725

 

 

51,472

 

 

52,915

 

 

49,989

 

 

53,721

 

Weighted average diluted shares outstanding

49,775

 

 

49,727

 

 

51,056

 

 

52,263

 

 

53,873

 

 

50,176

 

 

54,633

 


VERITEX HOLDINGS, INC. AND SUBSIDIARY

Financial Highlights
(In thousands except percentages)

 

For the Three Months Ended

 

September 30, 2020

 

June 30, 2020

 

September 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:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans 1

$

5,753,859

 

 

$

64,958

 

 

4.49

%

 

$

5,797,989

 

 

$

67,404

 

 

4.68

%

 

$

5,702,696

 

 

$

84,022

 

 

5.85

%

Loans held for investment, mortgage warehouse

358,248

 

 

2,705

 

 

3.00

 

 

304,873

 

 

2,279

 

 

3.01

 

 

182,793

 

 

1,789

 

 

3.88

 

PPP loans

407,112

 

 

1,022

 

 

1.00

 

 

303,223

 

 

757

 

 

1.00

 

 

 

 

 

 

 

Securities

1,101,469

 

 

7,852

 

 

2.84

 

 

1,117,964

 

 

7,825

 

 

2.82

 

 

1,022,289

 

 

7,687

 

 

2.98

 

Interest-bearing deposits in other banks

175,201

 

 

65

 

 

0.15

 

 

366,764

 

 

186

 

 

0.20

 

 

234,087

 

 

1,329

 

 

2.25

 

Other investments

103,948

 

 

827

 

 

3.17

 

 

110,672

 

 

891

 

 

3.24

 

 

71,901

 

 

816

 

 

4.50

 

Total interest-earning assets

7,899,837

 

 

77,429

 

 

3.90

 

 

8,001,485

 

 

79,342

 

 

3.99

 

 

7,213,766

 

 

95,643

 

 

5.26

 

Allowance for loan losses

(116,859

)

 

 

 

 

 

(110,483

)

 

 

 

 

 

(22,539

)

 

 

 

 

Noninterest-earning assets

802,948

 

 

 

 

 

 

798,772

 

 

 

 

 

 

818,150

 

 

 

 

 

Total assets

$

8,585,926

 

 

 

 

 

 

$

8,689,774

 

 

 

 

 

 

$

8,009,377

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing demand and savings deposits

$

2,735,170

 

 

$

2,105

 

 

0.31

%

 

$

2,684,897

 

 

$

2,471

 

 

0.37

%

 

$

2,621,701

 

 

$

10,381

 

 

1.57

%

Certificates and other time deposits

1,459,046

 

 

5,004

 

 

1.36

 

 

1,625,971

 

 

6,515

 

 

1.61

 

 

1,953,084

 

 

10,283

 

 

2.09

 

Advances from FHLB

1,067,771

 

 

2,707

 

 

1.01

 

 

1,206,930

 

 

2,801

 

 

0.93

 

 

632,754

 

 

3,081

 

 

1.93

 

Subordinated debentures and subordinated notes

142,432

 

 

1,743

 

 

4.87

 

 

142,549

 

 

1,798

 

 

5.07

 

 

74,869

 

 

1,024

 

 

5.43

 

Total interest-bearing liabilities

5,404,419

 

 

11,559

 

 

0.85

 

 

5,660,347

 

 

13,585

 

 

0.97

 

 

5,282,408

 

 

24,769

 

 

1.86

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

1,937,921

 

 

 

 

 

 

1,826,327

 

 

 

 

 

 

1,467,127

 

 

 

 

 

Other liabilities

65,704

 

 

 

 

 

 

47,302

 

 

 

 

 

 

49,695

 

 

 

 

 

Total liabilities

7,408,044

 

 

 

 

 

 

7,533,976

 

 

 

 

 

 

6,799,230

 

 

 

 

 

Stockholders equity

1,177,882

 

 

 

 

 

 

1,155,798

 

 

 

 

 

 

1,210,147

 

 

 

 

 

Total liabilities and stockholders equity

$

8,585,926

 

 

 

 

 

 

$

8,689,774

 

 

 

 

 

 

$

8,009,377

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest rate spread 2

 

 

 

 

3.05

%

 

 

 

 

 

3.02

%

 

 

 

 

 

3.40

%

Net interest income

 

 

$

65,870

 

 

 

 

 

 

$

65,757

 

 

 

 

 

 

$

70,874

 

 

 

Net interest margin 3

 

 

 

 

3.32

%

 

 

 

 

 

3.31

%

 

 

 

 

 

3.90

%

1 Includes average outstanding balances of loans held for sale of $15,404, $22,958 and $8,525 for the three months ended September 30, 2020, June 30, 2020, and September 30, 2019, respectively, and average balances of loans held for investment, excluding mortgage warehouse 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 SUBSIDIARY

Financial Highlights
(In thousands except percentages)

 

Nine Months Ended

 

September 30, 2020

 

September 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:

 

 

 

 

 

 

 

 

 

 

 

Loans 1

$

5,779,469

 

 

$

208,889

 

4.83

%

 

$

5,731,902

 

 

$

253,247

 

5.91

%

Loans held for investment, mortgage warehouse

275,890

 

 

6,318

 

3.06

 

 

152,617

 

 

5,097

 

4.47

 

PPP loans

236,778

 

 

1,779

 

1.00

 

 

 

 

 

 

Securities

1,086,185

 

 

23,074

 

2.84

 

 

968,616

 

 

22,316

 

3.08

 

Interest-bearing deposits in other banks

283,108

 

 

1,122

 

0.53

 

 

242,119

 

 

4,255

 

2.35

 

Other investments

102,185

 

 

2,568

 

3.36

 

 

56,438

 

 

2,129

 

5.04

 

Total interest-earning assets

7,763,615

 

 

243,750

 

4.19

 

 

7,151,692

 

 

287,044

 

5.37

 

Allowance for loan losses

(90,633

)

 

 

 

 

 

(22,173

)

 

 

 

 

Noninterest-earning assets

776,790

 

 

 

 

 

 

799,509

 

 

 

 

 

Total assets

$

8,449,772

 

 

 

 

 

 

$

7,929,028

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders Equity

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing demand and savings deposits

$

2,680,925

 

 

$

11,128

 

0.55

%

 

$

2,657,195

 

 

$

32,152

 

1.62

%

Certificates and other time deposits

1,579,114

 

 

19,759

 

1.67

 

 

2,067,032

 

 

29,220

 

1.89

 

Advances from FHLB

1,070,856

 

 

8,387

 

1.05

 

 

427,306

 

 

7,323

 

2.29

 

Subordinated debentures and subordinated notes

143,387

 

 

5,444

 

5.07

 

 

75,298

 

 

3,116

 

5.53

 

Total interest-bearing liabilities

5,474,282

 

 

44,718

 

1.09

 

 

5,226,831

 

 

71,811

 

1.84

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

1,763,289

 

 

 

 

 

 

1,459,904

 

 

 

 

 

Other liabilities

57,737

 

 

 

 

 

 

42,853

 

 

 

 

 

Total liabilities

7,295,308

 

 

 

 

 

 

6,729,588

 

 

 

 

 

Stockholders equity

1,154,464

 

 

 

 

 

 

1,199,440

 

 

 

 

 

Total liabilities and stockholders equity

$

8,449,772

 

 

 

 

 

 

$

7,929,028

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest rate spread 2

 

 

 

 

3.10

%

 

 

 

 

 

3.53

%

Net interest income

 

 

$

199,032

 

 

 

 

 

$

215,233

 

 

Net interest margin 3

 

 

 

 

3.42

%

 

 

 

 

 

4.02

%

1 Includes average outstanding balances of loans held for sale of $16,448 and $8,127 for the nine months ended September 30, 2020 and September 30, 2019, respectively, and average balances of loans held for investment, excluding mortgage warehouse 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 SUBSIDIARY

Financial Highlights

Yield Trend

 

For the Three Months Ended

 

September 30,
2020

 

June 30, 
2020

 

March 31, 
2020

 

December 31, 
2019

 

September 30,
2019

Average yield on interest-earning assets:

 

 

 

 

 

 

 

 

 

Loans 1

4.49 

%

 

4.68 % 5.32 % 5.63 % 5.85 %Loans held for investment, mortgage warehouse3.00 3.01 3.28 3.51 3.88 PPP loans1.00 1.00 — — — Securities2.84 2.82 2.86 2.83 2.98 Interest-bearing deposits in other banks0.15 0.20 1.14 1.63 2.25 Other investments3.17 3.24 3.72 4.53 4.50 Total interest-earning assets3.90 % 3.99 % 4.74 % 5.00 % 5.26 % Average rate on interest-bearing liabilities: Interest-bearing demand and savings deposits0.31 % 0.37 % 1.00 % 1.24 % 1.57 %Certificates and other time deposits1.36 1.61 2.01 2.10 2.09 Advances from FHLB1.01 0.93 1.23 1.45 1.93 Subordinated debentures and subordinated notes4.87 5.07 5.27 5.23 5.43 Total interest-bearing liabilities0.85 % 0.97 % 1.47 % 1.65 % 1.86 % Net interest rate spread23.05 % 3.02 % 3.27 % 3.35 % 3.40 %Net interest margin33.32 % 3.31 % 3.67 % 3.81 % 3.90 %

1Includes average outstanding balances of loans held for sale of $15,404, $22,958, $10,995, $10,643 and $8,525 for the three months ended September 30, 2020, June 30, 2020, March 31, 2020, December 31, 2019 and September 30, 2019, respectively, and average balances of loans held for investment, excluding mortgage warehouse 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 Three Months Ended

September 30,
2020

June 30,
2020

March 31,
2020

December 31,
2019

September 30,
2019

Average cost of interest-bearing deposits

0.67

%

0.84

%

1.39

%

1.59

%

1.79

%

Average costs of total deposits, including noninterest-bearing

0.46

0.59

1.02

1.18

1.36


VERITEX HOLDINGS, INC. AND SUBSIDIARY

Financial Highlights
(In thousands except percentages)

Total LHI and Deposit Portfolio Composition

September 30,
2020

June 30,
2020

March 31,
2020

December 31,
2019

September 30,
2019

(Dollars in thousands)

LHI1

Commercial

$

1,623,249

28.0

%

$

1,555,300

27.2

%

$

1,777,603

30.4

%

$

1,712,838

29.9

%

$

1,711,256

30.3

%

Real Estate:

Owner occupied commercial

734,939

12.7

769,952

13.4

723,839

12.4

706,782

12.3

716,130

12.7

Commercial

1,817,013

31.4

1,847,480

32.3

1,828,386

31.2

1,784,201

31.1

1,710,510

30.3

Construction and land

623,496

10.8

599,510

10.5

566,470

9.7

629,374

11.0

623,622

11.0

Farmland

14,413

0.2

14,723

0.3

14,930

0.3

16,939

0.3

7,986

0.1

1-4 family residential

548,953

9.5

528,688

9.2

536,892

9.2

549,811

9.6

559,310

9.9

Multi-family residential

412,412

7.1

394,829

6.9

388,374

6.6

320,041

5.6

306,966

5.4

Consumer

14,127

0.2

14,932

0.2

15,771

0.2

17,457

0.2

18,113

0.3

Total LHI

$

5,788,602

100

%

$

5,725,414

100

%

$

5,852,265

100

%

$

5,737,443

100

%

$

5,653,893

100

%

Mortgage warehouse

544,845

441,992

373,161

183,628

233,577

PPP loans

405,465

398,949

Total LHI1

$

6,738,912

$

6,566,355

$

6,225,426

$

5,921,071

$

5,887,470

Deposits

Noninterest-bearing

$

1,920,715

31.0

%

$

1,907,697

31.2

%

$

1,549,260

26.7

%

$

1,556,500

26.4

%

$

1,473,126

25.1

%

Interest-bearing transaction

450,739

7.2

343,640

5.6

306,641

5.3

388,877

6.6

373,997

6.4

Money market

2,267,191

36.4

2,272,520

37.1

2,143,874

37.0

2,180,017

37.0

2,066,315

35.2

Savings

104,015

1.7

97,989

1.6

86,350

1.5

86,078

1.5

87,981

1.5

Certificates and other time deposits

1,479,896

23.8

1,503,701

24.5

1,713,820

29.5

1,682,878

28.5

1,876,427

31.8

Total deposits

$

6,222,556

100

%

$

6,125,547

100

%

$

5,799,945

100

%

$

5,894,350

100

%

$

5,877,846

100

%

Loan to Deposit Ratio

108.3%

107.2%

107.3%

100.5%

100.2%

Loan to Deposit Ratio, excluding mortgage warehouse and PPP loans

93.0 %

93.5 %

100.9 %

97.3 %

96.2 %

1 Total LHI does not include deferred fees of $691 thousand at September 30, 2020, deferred costs of $1.5 million and $1.5 million at June 30, 2020 and March 31, 2020, respectively, deferred fees of $134 thousand at March 31, 2020 and December 31, 2019, respectively, and $134 thousand at September 30, 2019.


VERITEX HOLDINGS, INC. AND SUBSIDIARY

Financial Highlights
(In thousands except percentages)

Asset Quality

For the Three Months Ended

For the Nine Months Ended

Sep 30,
2020

Jun 30,
2020

Mar 31,
2020

Dec 31,
2019

Sep 30,
2019

Sep 30,
2020

Sep 30,
2019

(Dollars in thousands)

Nonperforming Assets (“NPAs”):

Nonaccrual loans

$

88,877

$

43,594

$

38,836

$

29,779

$

10,172

$

88,877

$

10,172

Accruing loans 90 or more days past due1

1,689

2,021

4,764

3,660

2,194

1,689

2,194

Total nonperforming loans held for investment (“NPLs”)

90,566

45,615

43,600

33,439

12,366

90,566

12,366

Other real estate owned

5,796

7,716

7,720

5,995

4,625

5,796

4,625

Total NPAs

$

96,362

$

53,331

$

51,320

$

39,434

$

16,991

$

96,362

$

16,991

Charge-offs:

Residential

$

$

$

$

$

$

$

(157

)

Owner occupied commercial real estate

(2,421

)

(2,421

)

Commercial

(68

)

(1,740

)

(8,101

)

(1,808

)

(10,898

)

Consumer

(11

)

(57

)

(68

)

(48

)

(113

)

(136

)

(217

)

Total charge-offs

(2,500

)

(1,797

)

(68

)

(48

)

(8,214

)

(4,365

)

(11,272

)

Recoveries:

Residential

7

1

5

8

62

Commercial

14

7

29

135

71

50

91

Consumer

13

274

6

287

86

Total recoveries

34

7

304

146

71

345

239

Net charge-offs

$

(2,466

)

$

(1,790

)

$

236

$

98

$

(8,143

)

$

(4,020

)

$

(11,033

)

CECL transition adjustment

$

$

$

39,137

$

$

$

39,137

$

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

$

121,591

$

115,365

$

100,983

$

29,834

$

26,243

$

121,591

$

26,243

Asset Quality Ratios:

NPAs to total assets

1.11

%

0.62

%

0.60

%

0.50

%

0.21

%

1.11

%

0.21

%

NPLs to total LHI, excluding mortgage warehouse and PPP loans

1.56

0.80

0.75

0.58

0.22

1.56

0.22

ACL to total LHI, excluding mortgage warehouse and PPP loans

2.10

2.01

1.73

0.52

0.46

2.10

0.46

Net charge-offs to average loans outstanding

0.04

0.03

0.14

0.07

0.19

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 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

Sep 30, 2020

Jun 30, 2020

Mar 31, 2020

Dec 31, 2019

Sep 30, 2019

(Dollars in thousands, except per share data)

Tangible Common Equity

Total stockholders' equity

$

1,185,337

$

1,163,749

$

1,149,269

$

1,190,797

$

1,205,530

Adjustments:

Goodwill

(370,840

)

(370,840

)

(370,840

)

(370,840

)

(370,463

)

Core deposit intangibles

(60,209

)

(62,661

)

(65,112

)

(67,563

)

(70,014

)

Tangible common equity

$

754,288

$

730,248

$

713,317

$

752,394

$

765,053

Common shares outstanding

49,650

49,633

49,557

51,064

52,373

Book value per common share

$

23.87

$

23.45

$

23.19

$

23.32

$

23.02

Tangible book value per common share

$

15.19

$

14.71

$

14.39

$

14.73

$

14.61


VERITEX HOLDINGS, INC. AND SUBSIDIARY

Reconciliation of Non-GAAP Financial Measures
(Unaudited)

Tangible Common Equity to Tangible Assets. Tangible common equity to tangible assets is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) tangible common equity as 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

Sep 30, 2020

Jun 30, 2020

Mar 31, 2020

Dec 31, 2019

Sep 30, 2019

(Dollars in thousands)

Tangible Common Equity

Total stockholders' equity

$

1,185,337

$

1,163,749

$

1,149,269

$

1,190,797

$

1,205,530

Adjustments:

Goodwill

(370,840

)

(370,840

)

(370,840

)

(370,840

)

(370,463

)

Core deposit intangibles

(60,209

)

(62,661

)

(65,112

)

(67,563

)

(70,014

)

Tangible common equity

$

754,288

$

730,248

$

713,317

$

752,394

$

765,053

Tangible Assets

Total assets

$

8,702,375

$

8,587,858

$

8,531,624

$

7,954,937

$

7,962,883

Adjustments:

Goodwill

(370,840

)

(370,840

)

(370,840

)

(370,840

)

(370,463

)

Core deposit intangibles

(60,209

)

(62,661

)

(65,112

)

(67,563

)

(70,014

)

Tangible Assets

$

8,271,326

$

8,154,357

$

8,095,672

$

7,516,534

$

7,522,406

Tangible Common Equity to Tangible Assets

9.12

%

8.96

%

8.81

%

10.01

%

10.17

%


VERITEX HOLDINGS, INC. AND SUBSIDIARY

Reconciliation of Non-GAAP Financial Measures
(Unaudited)

Return on Average Tangible Common Equity. Return on average tangible common equity is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) 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 Three Months Ended

For the Nine Months Ended

Sep 30, 2020

Jun 30, 2020

Mar 31, 2020

Dec 31, 2019

Sep 30, 2019

Sep 30, 2020

Sep 30, 2019

(Dollars in thousands)

Net income available for common stockholders adjusted for amortization of core deposit intangibles

Net income

$

22,920

$

24,028

$

4,134

$