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Veritex Holdings, Inc. Reports Third Quarter Operating Results

DALLAS, Oct. 21, 2019 (GLOBE NEWSWIRE) -- Veritex Holdings, Inc. (“Veritex” or the “Company”) (VBTX), the holding company for Veritex Community Bank, today announced the results for the quarter ended September 30, 2019. The Company reported net income of $27.4 million, or $0.51 diluted earnings per share (“EPS”), compared to $26.9 million, or $0.49 diluted EPS, for the quarter ended June 30, 2019 and $8.9 million, or $0.36 diluted EPS, for the quarter ended September 30, 2018. Operating net income totaled $28.6 million, or $0.53 diluted operating EPS1, compared to $32.2 million, or $0.59 diluted operating EPS1, for the quarter ended June 30, 2019 and $10.4 million, or $0.42 diluted operating EPS1, for the quarter ended September 30, 2018.

C. Malcolm Holland, III, the Company’s Chairman and Chief Executive Officer said: “I am excited about the 3rd quarter and year-to-date financial results of Veritex. The quarterly earnings power of the Company has been consistent throughout the year. These results have been accomplished while integrating and converting Green Bank and now much of the execution risk is behind us. We are focused on rebuilding our growth momentum, maintaining our asset quality and returning our excess capital to our shareholders.”


Third Quarter 2019 Highlights:

• Diluted EPS was $0.51 and diluted operating EPS1 was $0.53 for the third quarter of 2019, resulting in a 26.2% increase in diluted operating EPS compared to the third quarter of 2018;

• Book value per common share was $23.02 and tangible book value per common share1 was $14.61 for the third quarter of 2019, reflecting operating net income, merger expenses, dividends and share repurchase activity;

• Return on average assets was 1.36%, operating return on average assets1 was 1.42% and pre-tax, pre-provision operating return on average assets1 was 2.26% for the third quarter of 2019;

• Efficiency ratio was 43.67% and operating efficiency ratio1 was 42.36% for the third quarter of 2019, reflecting three consecutive quarters of operating efficiency ratio1 below 44%;

• Increased and extended previously announced stock buyback program.  In the third quarter of 2019, Veritex repurchased 1,177,241 shares of its outstanding common stock under its stock buyback program for an aggregate of $29.0 million resulting in an aggregate of 2,349,103 shares as of September 30, 2019;

• Declared quarterly cash dividend of $0.125 payable on November 21, 2019; and

• Received American Banker’s “Best Banks to Work For” for the sixth consecutive year.

Summary of Financial Data

    QTD   YTD
    Q3 2019   Q2 2019   Q3 2019   Q3 2018
    (Dollars in thousands)
GAAP                
Net income   $ 27,405     $ 26,876     $ 61,688     $ 29,516  
Diluted EPS   0.51     0.49     1.13     1.20  
Return on average assets2   1.36 %   1.36 %   1.04 %   1.28 %
Efficiency ratio   43.67     51.49     59.42     55.15  
Book value per common share   $ 23.02     $ 22.55     $ 23.02     $ 21.38  
Non-GAAP1                
Operating net income   $ 28,629     $ 32,234     $ 93,542     $ 33,794  
Diluted operating EPS   0.53     0.59     1.71     1.37  
Pre-tax, pre-provision operating return on average assets   2.26 %   2.22 %   2.30 %   2.05 %
Operating return on average assets2   1.42     1.63     1.58     1.46  
Operating efficiency ratio   42.36     43.66     43.19     49.45  
Return on average tangible common equity2   15.15     15.26     11.93     12.36  
Operating return on average tangible common equity2   15.78     18.09     17.57     14.09  
Tangible book value per common share   $ 14.61     $ 14.27     $ 14.61     $ 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.


Results of Operations for the Three Months Ended September 30, 2019

Net Interest Income

For the three months ended September 30, 2019, net interest income before provision for loan losses was $70.9 million and net interest margin was 3.90% compared to $71.4 million and 4.00%, respectively, for the three months ended June 30, 2019. The $568 thousand decrease in net interest income was primarily due to a $1.0 million decrease in interest income on loans and a $894 thousand increase in interest expense on advances from the Federal Home Loan Bank (“FHLB”), and was partially offset by a $1.0 million decrease in interest expense on transaction and savings deposits. Net interest margin decreased 10 basis points from the three months ended June 30, 2019 primarily due to a decrease in yields earned on loan balances and an increase in the average rates paid on certificate and other time deposits, partially offset by a decrease in the average rate paid on interest-bearing demand and savings deposits during the three months ended September 30, 2019. As a result, the average cost of interest-bearing deposits was unchanged at 1.79% for the three months ended September 30, 2019 and June 30, 2019.

Net interest income before provision for loan losses increased by $41.6 million from $29.3 million to $70.9 million and net interest margin decreased by 9 basis points from 3.99% to 3.90% for the three months ended September 30, 2019 as compared to the same period in 2018. The increase in net interest income before provision for loan losses was primarily driven by higher loan balances and interest income resulting from loans acquired from Green Bancorp, Inc. (“Green”) and organic loan growth during the three months ended September 30, 2019 compared to the three months ended September 30, 2018. For the three months ended September 30, 2019, average loan balance increased by $3.3 billion compared to the three months ended September 30, 2018, which contributed to a $57.7 million increase in interest income. This was partially offset by an increase in the average rate paid on interest-bearing liabilities, which resulted in a $12.9 million increase in interest on deposit accounts. Net interest margin decreased 9 basis points from the three months ended September 30, 2018 primarily due to an increase in the average rate paid on interest-bearing liabilities for the three months ended September 30, 2019 compared to the three months ended September 30, 2018. As a result, the average cost of interest-bearing deposits increased to 1.79% for the three months ended September 30, 2019 from 1.59% for the three months ended September 30, 2018.


Noninterest Income

Noninterest income for the three months ended September 30, 2019 was $8.4 million, an increase of $2.4 million, or 39.7%, compared to the three months ended June 30, 2019. The increase was primarily due to a $594 thousand increase in derivative income and a $245 thousand increase in service charges and fees on deposit accounts earned during the three months ended September 30, 2019. Further, the increase was due to a $642 thousand loss on sales of investment securities as a result of the Company’s repositioning strategy and a $434 thousand decrease in the value of investments in community development-oriented private equity funds used for Community Reinvestment Act purposes recorded for the three months ended June 30, 2019 with no corresponding loss or decrease in value for the three months ended September 30, 2019.

Compared to the three months ended September 30, 2018, noninterest income for the three months ended September 30, 2019 grew by $6.0 million, or 250.1%. The increase was primarily due to a $2.9 million increase in service charges and fees on acquired deposit accounts resulting from our acquisition of Green deposit accounts and the associated income from these accounts, a $1.8 million increase in loan fees, a $723 thousand increase in the gain on sale of Small Business Administration loans and a $578 thousand increase in derivative income earned during the three months ended September 30, 2019.


Noninterest Expense

Noninterest expense was $34.6 million for the three months ended September 30, 2019, compared to $39.9 million for the three months ended June 30, 2019, a decrease of $5.3 million, or 13.2%. The decrease was primarily driven by a $4.8 million decrease in merger and acquisition expenses related to our acquisition of Green, which were recorded in the second quarter of 2019. Merger and acquisition expenses recognized during the three months ended September 30, 2019 were primarily related to continued data processing expenses as a result of our system conversion, which was completed in the second quarter of 2019, conversion of our mobile banking platform and severance payments following our acquisition of Green.

Compared to the three months ended September 30, 2018, noninterest expense for the three months ended September 30, 2019 increased by $16.4 million, or 89.8%. The increase was primarily driven by a $10.1 million increase in salaries and employee benefits due to the addition of new Green employees, and a $1.9 million, $1.6 million, $1.2 million and  $857 thousand increase in amortization of intangibles, data processing and software expenses, occupancy and equipment expenses and professional fees, respectively, related to our acquisition of Green.


Financial Condition

Total loans were $5.9 billion at September 30, 2019, a decrease of $41.1 million, or 0.7%, compared to June 30, 2019 due to normal loan activity and paydowns.

Total deposits were $5.9 billion at September 30, 2019, a decrease of $287.2 million, or 4.7%, compared to June 30, 2019. The decrease was primarily the result of a decrease of $165.8 million in certificates and other time deposits, and decreases of $117.9 million and $3.5 million in interest-bearing accounts and noninterest-bearing demand deposits, respectively, due to normal course of business.


Asset Quality

Allowance for loan losses as a percentage of loans held for investment, including mortgage warehouse, was 0.45%, 0.42% and 0.73% of total loans at September 30, 2019, June 30, 2019 and September 30, 2018, respectively. The allowance for loan losses as a percentage of total loans for each of the three quarters was determined by evaluating the qualitative factors around the nature, volume and mix of the loan portfolio. The increase in the allowance for loan losses as a percentage of loans held for investment from June 30, 2019 was primarily attributable to the general provision required from an increase of loans acquired from Green that were re-underwritten in the third quarter of 2019. Once an acquired loan undergoes new underwriting and meets the criteria for a new loan, any remaining fair value adjustments become interest income and the loan becomes fully subject to our allowance for loan loss methodology. The decrease in the allowance for loan losses as a percentage of loans held for investment from September 30, 2018 was attributable to our acquisition of Green, as acquired loans are recorded at fair value. Our allowance for loan losses and remaining purchase discount on acquired loans as a percentage of loans held for investment, including mortgage warehouse, was 1.44%, 1.77% and 1.28% of total loans at September 30, 2019, June 30, 2019 and September 30, 2018, respectively.

We recorded a provision for loan losses for the three months ended September 30, 2019 of $9.7 million compared to $3.3 million and $3.1 million for the three months ended June 30, 2019 and September 30, 2018, respectively. The increase in the recorded provision for loan losses for the three months ended September 30, 2019 was primarily attributable to a $6.1 million charge-off related to a commercial loan relationship acquired from Sovereign Bancshares, Inc. in 2017. The acquired commercial loan relationship consists of a $7.8 million loan to an independent oil and gas exploration company that filed for bankruptcy protection in 2018 and recently entered into a sales process pursuant to Section 363 of the Bankruptcy Code. Additionally, the increase in the recorded provision for loan losses for the three months ended September 30, 2019 was caused by a $937 thousand increase in specific reserves on certain non-performing loans and an increase in acquired loans that were re-underwritten (as discussed above) during the three months ended September 30, 2019.

Nonperforming assets totaled $17.0 million, or 0.21%, of total assets at September 30, 2019 compared to $43.3 million, or 0.54%, of total assets at June 30, 2019 and $26.1 million, or 0.80%, of total assets at September 30, 2018. The decrease of $26.3 million compared to June 30, 2019 was driven by a $11.9 million and $11.7 million decrease in originated accruing loans 90 days or more past due and acquired accruing loans 90 days or more past due, respectively, as well as $5.9 million decrease in acquired nonaccrual loans primarily driven by the $6.1 million charge-off discussed above. This decrease was partially offset by a $2.9 million increase in other real estate owned. For the quarter ended September 30, 2019, no purchased credit impaired loans were on non-accrual status.


Dividend Information

On October 21, 2019, Veritex’s Board of Directors declared a quarterly cash dividend of $0.125 per share on its outstanding shares of common stock. The dividend will be paid on or after November 21, 2019 to stockholders of record as of the close of business on November 7, 2019.


Non-GAAP Financial Measures

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

Business Combinations Measurement Period

The measurement period for the Company to determine the fair values of acquired identifiable assets and assumed liabilities for Green will end at the earlier of (i) twelve months from the date of the acquisition or (ii) as soon as the Company receives the information it was seeking about facts and circumstances that existed as of the acquisition date or learns that more information is not obtainable. Provisional estimates have been recorded for the Green acquisition as independent valuations have not been finalized. The Company does not expect any significant differences from estimated values upon completion of the valuations.

Conference Call

The Company will host an investor conference call to review the results on Tuesday, October 22, 2019 at 8:30 a.m. Central Time. Participants may pre-register for the call by visiting https://edge.media-server.com/mmc/p/9ewhfxdv and will receive a unique PIN, which can be used when dialing in for the call. This will allow attendees to enter the call immediately. Alternatively, participants may call toll-free at (877) 703-9880.

The call and corresponding presentation slides will be webcast live on the home page of the Company's website, https://veritexholdingsinc.gcs-web.com. An audio replay will be available one hour after the conclusion of the call at (855) 859-2056, Conference #3966936. This replay, as well as the webcast, will be available until October 29, 2019.

About Veritex Holdings, Inc.

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

Media Contact:
LaVonda Renfro
972-349-6200

Investor Relations:
Susan Caudle
972-349-6132

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 impact Veritex expects its acquisition of Green to have on its operations, financial condition and financial results and Veritex’s expectations about its ability to successfully integrate the combined businesses of Veritex and Green and the amount of cost savings and overall operational efficiencies Veritex expects to realize as a result of the acquisition of Green.  The forward-looking statements in this earnings release also include statements about the expected payment date of Veritex’s quarterly cash dividend, Veritex’s future financial performance, business and growth strategy, projected plans and objectives, as well as other projections based on macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact broader economic and industry trends, and any such variations may be material.  Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing words.  Further, certain factors that could affect future results and cause actual results to differ materially from those expressed in the forward-looking statements include, but are not limited to, the possibility that the businesses of Veritex and Green will not be integrated successfully, that the cost savings and any synergies from the acquisition may not be fully realized or may take longer to realize than expected, disruption from the acquisition making it more difficult to maintain relationships with employees, customers or other parties with whom Veritex has (or Green had) business relationships, diversion of management time on integration-related issues, the reaction to the acquisition by Veritex’s and Green’s customers, employees and counterparties and other factors, many of which are beyond the control of Veritex.  We refer you to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Veritex’s Annual Report on Form 10-K for the year ended December 31, 2018 and any updates to those risk factors set forth in Veritex’s Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings with the Securities and Exchange Commission (“SEC”), which are available on the SEC’s website at www.sec.gov.  If one or more events related to these or other risks or uncertainties materialize, or if Veritex’s underlying assumptions prove to be incorrect, actual results may differ materially from what Veritex anticipates.  Accordingly, you should not place undue reliance on any such forward-looking statements.  Any forward-looking statement speaks only as of the date on which it is made.  Veritex does not undertake any obligation, and specifically declines any obligation, to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise. All forward-looking statements, expressed or implied, included in this earnings release are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that Veritex or persons acting on Veritex’s behalf may issue.


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

    For the Three Months Ended   Nine Months Ended
    Sep 30,
2019
  Jun 30,
2019
  Mar 31,
2019
  Dec 31,
2018
  Sep 30,
2018
  Sep 30,
2019
  Sep 30,
2018
    (Dollars and shares in thousands)        
Per Share Data (Common Stock):                            
Basic EPS   $ 0.52     $ 0.50     $ 0.14     $ 0.41     $ 0.37     $ 1.15     $ 1.22  
Diluted EPS   0.51     0.49     0.13     0.40     0.36     1.13     1.20  
Book value per common share   23.02     22.55     21.88     21.88     21.38     23.02     21.38  
Tangible book value per common share1   14.61     14.27     13.76     14.74     14.21     14.61     14.21  
                             
Common Stock Data:                            
Shares outstanding at period end   52,373     53,457     54,236     24,254     24,192     52,373     24,192  
Weighted average basic shares outstanding for the period   52,915     53,969     54,293     24,224     24,176     53,721     24,151  
Weighted average diluted shares outstanding for the period   53,873     54,929     55,439     24,532     24,613     54,633     24,587  
                             
Summary Performance Ratios:                            
Return on average assets2   1.36 %   1.36 %   0.38 %   1.20 %   1.10 %   1.04 %   1.28 %
Return on average equity2   8.98     8.98     2.52     7.44     6.88     6.88     7.83  
Return on average tangible common equity1, 2   15.15     15.26     5.09     11.52     10.79     11.93     12.36  
Efficiency ratio   43.67     51.49     82.30     54.27     57.58     59.42     55.15  
                             
Selected Performance Metrics - Operating:                            
Diluted operating EPS1   0.53     0.59     0.59     0.47     0.42     1.71     1.37  
Pre-tax, pre-provision operating return on average assets1, 2   2.26     2.22     2.40     1.95     1.98     2.30     2.05  
Operating return on average assets1, 2   1.42 %   1.63 %   1.69 %   1.40 %   1.28 %   1.58 %   1.46 %
Operating return on average tangible common equity1, 2   15.78     18.09     18.81     13.37     12.49     17.57     14.09  
Operating efficiency ratio1   42.36     43.66     43.54     50.65     49.09     43.19     49.45  
                             
Veritex Holdings, Inc. Capital Ratios:                            
Average stockholders' equity to average total assets   15.11 %   15.13 %   15.18 %   16.14 %   15.92 %   15.13 %   16.29 %
Tier 1 capital to average assets (leverage)   10.33     10.47     10.57     12.04     11.74     10.35     11.74  
Common equity tier 1 capital   10.82     11.32     11.07     11.80     12.02     10.83     12.02  
Tier 1 capital to risk-weighted assets   11.26     11.77     11.50     12.18     12.43     11.28     12.43  
Total capital to risk-weighted assets   12.26     12.80     12.45     12.98     13.22     12.28     13.22  
Tangible common equity to tangible assets1   10.17     10.08     10.02     11.78     11.08     10.17     11.08  
                             
Veritex Bank Capital Ratios:                            
Tier 1 capital to average assets (leverage)   10.64 %   10.80 %   10.65 %   10.87 %   10.53 %   10.65 %   10.53 %
Common equity tier 1 capital   11.61 %   12.16 %   11.61 %   11.01 %   11.13 %   11.63 %   11.13 %
Tier 1 capital to risk-weighted assets   11.61 %   12.16 %   11.61 %   11.01 %   11.13 %   11.63 %   11.13 %
Total capital to risk-weighted assets   12.00 %   12.54 %   11.93 %   11.64 %   11.75 %   12.02 %   11.75 %

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


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

    Sep 30, 2019   Jun 30, 2019   Mar 31, 2019   Dec 31, 2018   Sep 30, 2018
    (unaudited)   (unaudited)   (unaudited)       (unaudited)
ASSETS                    
Cash and cash equivalents   $ 252,592     $ 265,822     $ 339,473     $ 84,449     $ 261,790  
Securities   1,023,393     1,020,279     950,671     262,695     256,237  
Other investments   89,795     81,088     75,920     23,174     27,769  
                     
Loans held for sale   10,715     7,524     8,002     1,258     1,425  
Loans held for investment, mortgage warehouse   233,577     200,017     114,158          
Loans held for investment   5,654,027     5,731,833     5,663,721     2,555,494     2,444,499  
Total loans   5,898,319     5,939,374     5,785,881     2,556,752     2,445,924  
Allowance for loan losses   (26,243 )   (24,712 )   (21,603 )   (19,255 )   (17,909 )
Bank-owned life insurance   80,411     79,899     79,397     22,064     21,915  
Bank premises, furniture and equipment, net   118,449     115,373     119,354     78,409     77,346  
Other real estate owned   4,625     1,748     151          
Intangible assets, net   75,363     78,347     81,245     15,896     16,603  
Goodwill   370,463     370,221     368,268     161,447     161,447  
Other assets   75,716     82,667     69,474     22,919     24,724  
Branch assets held for sale           83,516          
Total assets   $ 7,962,883     $ 8,010,106     $ 7,931,747     $ 3,208,550     $ 3,275,846  
LIABILITIES AND STOCKHOLDERS’ EQUITY                    
Deposits:                    
Noninterest-bearing   $ 1,473,126     $ 1,476,668     $ 1,439,630     $ 626,283     $ 661,754  
Interest-bearing   2,528,293     2,646,154     2,617,117     1,313,161     1,346,264  
Certificates and other time deposits   1,876,427     2,042,266     2,240,968     682,984     648,236  
Total deposits   5,877,846     6,165,088     6,297,715     2,622,428     2,656,254  
Accounts payable and accrued expenses   45,475     44,414     42,621     5,413     6,875  
Accrued interest payable and other liabilities   6,054     7,069     6,846     5,361     5,759  
Advances from FHLB   752,907     512,945     252,982     28,019     73,055  
Subordinated debentures and subordinated notes   72,284     72,486     72,719     16,691     16,691  
Securities sold under agreements to repurchase   2,787     2,811     2,778          
Branch liabilities held for sale           62,381          
Total liabilities   6,757,353     6,804,813     6,738,042     2,677,912     2,758,634  
Commitments and contingencies                    
Stockholders’ equity:                    
Common stock   524     535     546     243     242  
Additional paid-in capital   1,114,659     1,112,238     1,109,386     449,427     448,117  
Retained earnings   125,344     104,652     84,559     83,968     74,143  
Unallocated Employee Stock Ownership Plan shares                   (106 )
Accumulated other comprehensive income (loss)   23,837     17,741     7,016     (2,930 )   (5,114 )
Treasury stock   (58,834 )   (29,873 )   (7,802 )   (70 )   (70 )
Total stockholders’ equity   1,205,530     1,205,293     1,193,705     530,638     517,212  
Total liabilities and stockholders’ equity   $ 7,962,883     $ 8,010,106     $ 7,931,747     $ 3,208,550     $ 3,275,846  


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,
2019
  Jun 30,
2019
  Mar 31,
2019
  Dec 31,
2018
  Sep 30,
2018
  Sep 30,
2019
  Sep 30,
2018
Interest income:                            
Loans, including fees   $ 85,811     $ 86,786     $ 85,747     $ 35,028     $ 35,074     $ 258,344     $ 99,432  
Securities   7,687     7,397     7,232     1,908     1,722     22,316     4,697  
Deposits in financial institutions and Fed Funds sold   1,329     1,372     1,554     833     1,016     4,255     2,316  
Other investments   816     622     691     413     108     2,129     442  
Total interest income   95,643     96,177     95,224     38,182     37,920     287,044     106,887  
Interest expense:                            
Transaction and savings deposits   10,381     11,405     10,366     5,412     4,694     32,152     12,187  
Certificates and other time deposits   10,283     10,145     8,792     3,394     3,068     29,220     6,320  
Advances from FHLB   3,081     2,187     2,055     377     630     7,323     1,324  
Subordinated debentures and subordinated notes   1,024     998     1,094     304     250     3,116     727  
Total interest expense   24,769     24,735     22,307     9,487     8,642     71,811     20,558  
Net interest income   70,874     71,442     72,917     28,695     29,278     215,233     86,329  
Provision for loan losses   9,674     3,335     5,012     1,364     3,057     18,021     5,239  
Net interest income after provision for loan losses   61,200     68,107     67,905     27,331     26,221     197,212     81,090  
Noninterest income:                            
Service charges and fees on deposit accounts   3,667     3,422     3,517     832     809     10,606     2,588  
Loan fees   2,252     1,932     1,677     387     410     5,861     945  
Loss on sales of investment securities       (642 )   (772 )   (42 )   (34 )   (1,414 )   (22 )
Gain on sales of loans   853     1,104     2,370     1,789     270     4,327     1,267  
Rental income   369     373     368     310     414     1,110     1,343  
Other   1,289     (155 )   1,324     343     539     2,458     1,335  
Total noninterest income   8,430     6,034     8,484     3,619     2,408     22,948     7,456  
Noninterest expense:                            
Salaries and employee benefits   17,530     17,459     18,885     8,278     7,394     53,874     22,981  
Occupancy and equipment   4,044     4,014     4,129     2,412     2,890     12,187     8,267  
Professional and regulatory fees   2,750     2,814     3,418     1,889     1,893     8,982     5,525  
Data processing and software expense   2,252     2,309     1,924     888     697     6,485     2,214  
Marketing   708     961     619     570     306     2,288     1,213  
Amortization of intangibles   2,712     2,719     2,760     835     798     8,191     2,632  
Telephone and communications   361     625     395     223     236     1,381     1,076  
Merger and acquisition expense   1,035     5,790     31,217     1,150     2,692     38,042     4,070  
Other   3,238     3,205     3,646     1,293     1,340     10,089     3,743  
Total noninterest expense   34,630     39,896     66,993     17,538     18,246     141,519     51,721  
Net income from operations   35,000     34,245     9,396     13,412     10,383     78,641     36,825  
Income tax expense   7,595     7,369     1,989     3,587     1,448     16,953     7,309  
Net income   $ 27,405     $ 26,876     $ 7,407     $ 9,825     $ 8,935     $ 61,688     $ 29,516  
                             
Basic EPS   $ 0.52     $ 0.50     $ 0.14     $ 0.41     $ 0.37     $ 1.15     $ 1.22  
Diluted EPS   $ 0.51     $ 0.49     $ 0.13     $ 0.40     $ 0.36     $ 1.13     $ 1.20  
Weighted average basic shares outstanding   52,915     53,969     54,293     24,224     24,176     53,721     24,151  
Weighted average diluted shares outstanding   53,873     54,929     55,439     24,532     24,613     54,633     24,587  



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

    For the Three Months Ended
    September 30, 2019   June 30, 2019   September 30, 2018
    Average
Outstanding
Balance
  Interest
Earned/
Interest
Paid
  Average
Yield/
Rate
  Average
Outstanding
Balance
  Interest
Earned/
Interest
Paid
  Average
Yield/
Rate
  Average
Outstanding
Balance
  Interest
Earned/
Interest
Paid
  Average
Yield/
Rate
Assets                                    
Interest-earning assets:                                    
Loans1   $ 5,702,696     $ 84,022     5.85 %   $ 5,762,257     $ 85,030     5.92 %   $ 2,432,095     $ 35,074     5.72 %
Loans held for investment, mortgage warehouse   182,793     1,789     3.88     154,586     1,756     4.56              
Securities   1,022,289     7,687     2.98     956,160     7,397     3.10     254,242     1,722     2.69  
Interest-bearing deposits in other banks   234,087     1,329     2.25     228,461     1,372     2.41     203,750     1,016     1.98  
Other investments2   71,901     816     4.50     59,508     622     4.19     20,044     108     2.14  
Total interest-earning assets   7,213,766     95,643     5.26     7,160,972     96,177     5.39     2,910,131     37,920     5.17  
Allowance for loan losses   (22,539 )           (23,891 )           (16,160 )        
Noninterest-earning assets   818,150             800,238             331,826          
Total assets   $ 8,009,377             $ 7,937,319             $ 3,225,797          
                                     
Liabilities and Stockholders’ Equity                                    
Interest-bearing liabilities:                                    
Interest-bearing demand and savings deposits   $ 2,621,701     $ 10,381     1.57 %   $ 2,713,735     $ 11,405     1.69 %   $ 1,278,797     $ 4,694     1.46 %
Certificates and other time deposits   1,953,084     10,283     2.09     2,107,567     10,145     1.93     655,035     3,068     1.86  
Advances from FHLB   632,754     3,081     1.93     334,926     2,187     2.62     120,114     630     2.08  
Subordinated debentures and subordinated notes   74,869     1,024     5.43     75,252     998     5.32     16,690     250     5.94  
Total interest-bearing liabilities   5,282,408     24,769     1.86     5,231,480     24,735     1.90     2,070,636     8,642     1.66  
                                     
Noninterest-bearing liabilities:                                    
Noninterest-bearing deposits   1,467,127             1,456,538             635,952          
Other liabilities   49,695             48,669             11,750          
Total liabilities   6,799,230             6,736,687             2,718,338          
Stockholders’ equity   1,210,147             1,200,632             514,876          
Total liabilities and stockholders’ equity   $ 8,009,377             $ 7,937,319             $ 3,233,214          
                                     
Net interest rate spread3           3.40 %           3.49 %           3.51 %
Net interest income       $ 70,874             $ 71,442             $ 29,278      
Net interest margin4           3.90 %           4.00 %           3.99 %

1 Includes average outstanding balances of loans held for sale of $8,525, $8,140 and $1,091 for the three months ended September 30, 2019, June 30, 2019, and September 30, 2018, 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 $102 of dividend income into other investments as of September 30, 2018 in order to align with industry peers for comparability purposes.
3 Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
4 Net interest margin is equal to net interest income divided by average interest-earning assets.

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

    For the Nine Months Ended
 
  September 30, 2019   September 30, 2018
 
  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   $ 5,731,902     $ 253,247     5.91 %   $ 2,342,797     $ 99,432     5.67 %
Loans held for investment, mortgage warehouse   152,617     5,097     4.47              
Securities   968,616     22,316     3.08     241,764     4,697     2.60  
Interest-bearing deposits in other banks   242,119     4,255     2.40     168,329     2,316     1.84  
Other investments2   56,438     2,129     5.04     16,390     442     3.61  
Total interest-earning assets   7,151,692     287,044     5.37     2,769,280     106,887     5.16  
Allowance for loan losses   (22,173 )           (14,309 )        
Noninterest-earning assets   799,509             340,136          
Total assets   $ 7,929,028             $ 3,095,107          
                         
Liabilities and Stockholders’ Equity                        
Interest-bearing liabilities:                        
Interest-bearing demand and savings deposits   $ 2,657,195     $ 32,152     1.62 %   $ 1,256,726     $ 12,187     1.30 %
Certificates and other time deposits   2,067,032     29,220     1.89     591,953     6,320     1.43  
Advances from FHLB   427,306     7,323     2.29     99,138     1,324     1.79  
Subordinated debentures and subordinated notes   75,298     3,116     5.53     16,768     727     5.80  
Total interest-bearing liabilities   5,226,831     71,811     1.84     1,964,585     20,558     1.40  
                         
Noninterest-bearing liabilities:                        
Noninterest-bearing deposits   1,459,904             614,107          
Other liabilities   42,853             12,310          
Total liabilities   6,729,588             2,591,002          
Stockholders’ equity   1,199,440             504,105          
Total liabilities and stockholders’ equity   $ 7,929,028             $ 3,095,107          
                         
Net interest rate spread3           3.53 %           3.76 %
Net interest income       $ 215,233             $ 86,329      
Net interest margin4           4.02 %           4.17 %

1 Includes average outstanding balances of loans held for sale of $8,127 and $1,258 for the nine months ended September 30, 2019 and September 30, 2018, 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 $427 of dividend income into other investments as of September 30, 2018 in order to align with industry peers for comparability purposes.
3 Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
4 Net interest margin is equal to net interest income divided by average interest-earning assets.


VERITEX HOLDINGS, INC. AND SUBSIDIARY
Financial Highlights

Yield Trend

...
    For the Three Months Ended
    September 30,
 2019
  June 30,
2019
  March 31,
2019
  December 31,
2018
  September 30,
 2018
Average yield on interest-earning assets:                    
Loans1   5.85 %   5.92 %   5.96 %   5.55 %   5.72 %
Loans held for investment, mortgage warehouse   3.88     4.56     5.26          
Securities   2.98     3.10     3.17     2.88     2.69  
Interest-bearing deposits in other banks   2.25     2.41     2.39     2.41     1.98  
Other investments   4.50     4.19     4.92     6.36     2.14  
Total interest-earning assets   5.26 %   5.39 %   5.44 %   5.17