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Veritex Holdings, Inc. Reports Third Quarter Operating Results
Source: Nasdaq GlobeNewswire / 25 Oct 2022 16:30:02 America/New_York
DALLAS, Oct. 25, 2022 (GLOBE NEWSWIRE) -- Veritex Holdings, Inc. (“Veritex”, the “Company”, “we” or “our”) (Nasdaq: VBTX), the holding company for Veritex Community Bank, today announced the results for the quarter ended September 30, 2022.
“The third quarter of 2022 resulted in record dollar earnings for our Company in a resilient Texas market” said President and CEO, C. Malcolm C. Holland, III. “We reported historical financial metrics with 2.2% in pre-tax, pre-provision operating return, 1.5% in return on average assets, return on average tangible common equity of 18% and an efficiency ratio of 44% coupled with continuing improved credit metrics noted by a 14 bp decrease in nonperforming assets. We remain focused on this positive momentum and deposit growth but more importantly our customers, the strong markets we serve and our shareholders”
Quarter to Date Year to Date Financial Highlights Q3 2022 Q2 2022 Q3 2022 Q3 2021 (Dollars in thousands, except per share data)
(unaudited)GAAP Net income $ 43,322 $ 29,626 $ 106,418 $ 98,078 Diluted EPS 0.79 0.54 1.98 1.95 Book value per common share 26.15 26.50 26.15 26.09 Return on average assets2 1.50 % 1.11 % 1.33 % 1.42 % Efficiency ratio 44.71 50.76 49.05 49.79 Return on average equity2 11.82 8.21 10.02 10.43 Non-GAAP1 Operating earnings $ 43,625 $ 29,855 $ 107,494 $ 97,237 Diluted operating EPS 0.80 0.55 2.00 1.94 Tangible book value per common share 17.91 18.20 17.91 17.53 Pre-tax, pre-provision operating earnings 63,454 47,000 152,719 122,565 Pre-tax, pre-provision operating return on average assets2 2.20 % 1.76 % 1.90 % 1.78 % Operating return on average assets2 1.51 1.12 1.34 1.41 Operating efficiency ratio 44.37 50.45 48.59 49.89 Return on average tangible common equity2 17.82 12.68 15.40 16.70 Operating return on average tangible common equity2 17.94 12.77 15.55 16.57 1 Refer to the section titled “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of these non-generally accepted accounting principles (“”GAAP”) financial measures to their most directly comparable GAAP measures.
2 Annualized ratio.Other Third Quarter Highlights
- Pre-tax, pre-provision operating return on average assets increased 44 bps from the second quarter of 2022 to 2.20%;
- Net interest margin increased to 3.77%, up 35 basis points from the second quarter of 2022;
- Non-performing assets (“NPAs”) to total assets decreased to 0.26%, or 14 bps from June 30, 2022 and 51 bps from September 30, 2021, respectively;
- Net charge-offs to average loans outstanding was 3 basis points for the third quarter of 2022;
- Total loans held for investment (“LHI”), excluding mortgage warehouse (“MW”) and paycheck protection program (“PPP”) loans, grew $594.6 million, or 30.0% annualized, during the three months ended September 30, 2022 from $8.5 billion at the end of the second quarter of 2022;
- Total deposits grew $230.7 million, or 10.8% annualized, during the three months ended September 30, 2022 from $8.5 billion at the end of the second quarter of 2022; and
- Declared quarterly cash dividend of $0.20 per share of outstanding common stock payable on November 25, 2022.
Results of Operations for the Three Months Ended September 30, 2022
Net Interest Income
For the three months ended September 30, 2022, net interest income before provision for credit losses was $101.0 million and net interest margin was 3.77% compared to $84.5 million and 3.42%, respectively, for the three months ended June 30, 2022. The $16.6 million increase in net interest income before provision for credit losses was primarily due to a $27.0 million increase in interest income on loans driven by an increase in average balances and loan yields during the three months ended September 30, 2022. Net interest margin increased 35 basis points compared to the three months ended June 30, 2022, primarily due to the increase in yields earned on loans during three months ended September 30, 2022, partially offset by an increase in funding costs.
Compared to the three months ended September 30, 2021, net interest income before provision for credit losses for the three months ended September 30, 2022 increased by $29.8 million, or 41.8%. The increase was primarily due to a $38.1 million increase in interest income on loans driven by an increase in average balances and loan yields. Net interest margin increased 51 basis points to 3.77% for the three months ended September 30, 2022 from 3.26% for the three months ended September 30, 2021. The increase was primarily due to the increase in average balances and loan yields during the three months ended September 30, 2022, partially offset by an increase in funding costs.
Noninterest Income
Noninterest income for the three months ended September 30, 2022 was $13.0 million, an increase of $2.6 million, or 25.5%, compared to the three months ended June 30, 2022. The increase was primarily due to a $2.0 million increase in customer swap income and a $2.2 million increase in the fair value of the servicing asset, partially offset by a $2.0 million decrease in equity method investment income.
Compared to the three months ended September 30, 2021, noninterest income for the three months ended September 30, 2022 decreased by $2.6 million, or 16.7%. The decrease was primarily due to a $5.6 million decrease in equity method investment income, partially offset by a $2.3 million increase in customer swap income and a $1.0 million increase in loan fees.
Noninterest Expense
Noninterest expense was $51.0 million for the three months ended September 30, 2022, compared to $48.2 million for the three months ended June 30, 2022, an increase of $2.8 million, or 5.9%. This increase was primarily due to a $2.7 million increase in salaries and employee benefits from continued investment in talent.
Compared to the three months ended September 30, 2021, noninterest expense for the three months ended September 30, 2022 increased by $9.7 million, or 23.4%. The increase was primarily driven by a $6.8 million increase in salaries and employee benefits as a result of a $4.1 million increase in salaries and employee benefits from continued investment in talent.
Financial Condition
Total LHI, excluding MW and PPP loans, were $8.5 billion at September 30, 2022, an increase of $594.6 million, or 30.0% annualized, compared to June 30, 2022. The increase was the result of the continued execution, and success of our loan growth strategy, including our continued investment in talent.
Total deposits were $8.7 billion at September 30, 2022, an increase of $230.7 million, or 10.8% annualized, compared to June 30, 2022. The increase was primarily the result of an increase of $262.4 million in interest-bearing transaction and savings deposits and an increase of $104.7 million in certificates and other time deposits, partially offset by a $136.4 million decrease in non-interest bearing deposits.
Credit Quality
Nonperforming assets totaled $30.6 million, or 0.26% of total assets at September 30, 2022, compared to $45.0 million, or 0.40% of total assets, at June 30, 2022. The Company had net charge-offs of $2.2 million for the quarter, which were fully reserved against in prior quarters under our allowance for credit loss (“ACL”) model.
The Company recorded a provision for credit losses of $6.7 million for the three months ended September 30, 2022, a $9.0 million provision for credit losses for the three months ended June 30, 2022 and no provision for credit losses for the three months ended September 30, 2021. The recorded provision for credit losses for the three months ended September 30, 2022, compared to the three months ended June 30, 2022, was primarily attributable to an increase in general reserves as a result of changes in economic factors and loan growth. For the three months ended September 30, 2022, we recorded an $850 thousand provision for unfunded commitments, which was attributable to changes in economic factors and an increase of unfunded balances. ACL as a percentage of LHI, excluding MW and PPP loans, was 1.00%, 1.02% and 1.42% at September 30, 2022, June 30, 2022 and September 30, 2021, respectively.
Dividend Information
After the close of the market on Tuesday, October 25, 2022, Veritex’s Board of Directors declared a quarterly cash dividend of $0.20 per share on its outstanding shares of common stock. The dividend will be paid on or after November 25, 2022 to stockholders of record as of the close of business on November 11, 2022.
Non-GAAP Financial Measures
Veritex’s management uses certain non-GAAP (U.S. generally accepted accounting principles) financial measures to evaluate its operating performance and provide information that is important to investors. However, non-GAAP financial measures are supplemental and should be viewed in addition to, and not as an alternative for, Veritex’s reported results prepared in accordance with GAAP. Specifically, Veritex reviews and reports tangible book value per common share, operating earnings, tangible common equity to tangible assets, return on average tangible common equity, pre-tax, pre-provision operating earnings, pre-tax, pre-provision operating return on average assets, diluted operating earnings per share, operating return on average assets, operating return on average tangible common equity and operating efficiency ratio. Veritex has included in this earnings release information related to these non-GAAP financial measures for the applicable periods presented. Please refer to “Reconciliation of Non-GAAP Financial Measures” after the financial highlights at the end of this earnings release for a reconciliation of these non-GAAP financial measures.
Conference Call
The Company will host an investor conference call and webcast to review the results on Wednesday, October 26, 2022, at 8:30 a.m. Central Time. Participants may pre-register for the call by visiting https://edge.media-server.com/mmc/p/w5hrkf8v and will receive a unique PIN, which can be used when dialing in for the call.
Participants may also register via teleconference at:
https://register.vevent.com/register/BIcf08415eefb54948a6cdbc60349b8e55. Once registration is completed, participants will be provided with a dial-in number containing a personalized conference code to access the call. All participants are instructed to dial-in 15 minutes prior to the start time.A replay will be available within approximately two hours after the completion of the call, and made accessible for one week. You may access the replay via webcast through the investor relations section of Veritex’s website.
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 includes “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, which change over time and are beyond our control, 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 of Veritex Holdings, Inc.’s (“Veritex”) quarterly cash dividend; the impact of certain changes in Veritex’s accounting policies, standards and interpretations; the effects of the COVID-19 pandemic and actions taken in response thereto; and 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,” “seeks,” “targets,” “outlooks,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing words. We refer you to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Veritex’s Annual Report on Form 10-K for the year ended December 31, 2021 and any updates to those risk factors set forth in Veritex’s Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings with the Securities and Exchange Commission (“SEC”), which are available on the SEC’s website at www.sec.gov. If one or more events related to these or other risks or uncertainties materialize, or if Veritex’s underlying assumptions prove to be incorrect, actual results may differ materially from what Veritex anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made. Veritex does not undertake any obligation, and specifically declines any obligation, to supplement, update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by law. All forward-looking statements, expressed or implied, included in this earnings release are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that Veritex or persons acting on Veritex’s behalf may issue.
VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(Unaudited)For the Quarter Ended For the Nine Months Ended Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Sep 30, 2022 Sep 30, 2021 (Dollars and shares in thousands) Per Share Data (Common Stock): Basic EPS $ 0.80 $ 0.55 $ 0.66 $ 0.84 $ 0.75 $ 2.01 $ 1.98 Diluted EPS 0.79 0.54 0.65 0.82 0.73 1.98 1.95 Book value per common share 26.15 26.50 26.86 26.64 26.09 26.15 26.09 Tangible book value per common share1 17.91 18.20 18.51 17.49 17.53 17.91 17.53 Dividends paid per common share outstanding2 0.20 0.20 0.20 0.20 0.20 0.60 0.57 Common Stock Data: Shares outstanding at period end 53,988 53,951 53,907 49,372 49,229 53,988 49,229 Weighted average basic shares outstanding for the period 53,979 53,949 50,695 49,329 49,423 52,886 49,431 Weighted average diluted shares outstanding for the period 54,633 54,646 51,571 50,441 50,306 53,655 50,230 Summary of Credit Ratios: ACL to total LHI, excluding MW and PPP loans 1.00 % 1.02 % 1.02 % 1.15 % 1.42 % 1.00 % 1.42 % NPAs to total assets 0.26 0.40 0.46 0.51 0.77 0.26 0.77 Net charge-offs to average loans outstanding 0.03 0.01 0.07 0.19 0.09 0.10 0.18 Summary Performance Ratios: Return on average assets3 1.50 1.11 1.36 1.68 1.56 1.33 1.42 Return on average equity3 11.82 8.21 10.00 12.65 11.32 10.02 10.43 Return on average tangible common equity1, 3 17.82 12.68 15.84 20.06 17.72 15.40 16.70 Efficiency ratio 44.71 50.76 52.84 48.53 47.55 49.05 49.79 Net interest margin 3.77 3.42 3.22 3.37 3.26 3.48 3.20 Selected Performance Metrics - Operating: Diluted operating EPS1 $ 0.80 $ 0.55 $ 0.66 $ 0.84 $ 0.70 $ 2.00 $ 1.94 Pre-tax, pre-provision operating return on average assets1, 2 2.20 % 1.76 % 1.71 % 1.97 % 1.85 % 1.90 % 1.78 % Operating return on average assets1, 3 1.51 1.12 1.38 1.72 1.48 1.34 1.41 Operating return on average tangible common equity1, 3 17.94 12.77 16.08 20.48 16.92 15.55 16.57 Operating efficiency ratio1 44.37 50.45 52.05 47.64 48.51 48.59 49.89 Veritex Holdings, Inc. Capital Ratios: Average stockholders' equity to average total assets 12.69 % 13.51 % 13.58 % 13.30 % 13.75 % 13.23 % 13.63 % Tangible common equity to tangible assets1 8.58 9.04 9.98 9.28 9.43 8.58 9.43 Tier 1 capital to average assets (leverage) 9.79 10.14 10.66 9.05 9.54 9.79 9.54 Common equity tier 1 capital 9.09 9.25 9.84 8.58 8.75 9.09 8.75 Tier 1 capital to risk-weighted assets 9.35 9.52 10.14 8.89 9.06 9.35 9.06 Total capital to risk-weighted assets 11.68 11.95 12.73 11.60 12.31 11.68 12.31 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.
2Dividend amount represents dividend paid per common share subsequent to each respective quarter end.
3Annualized ratio for quarterly metrics.VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(In thousands)Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 (unaudited) (unaudited) (unaudited) (unaudited) ASSETS Cash and cash equivalents $ 433,897 $ 410,716 $ 551,573 $ 379,784 $ 229,712 Debt securities 1,303,004 1,354,403 1,244,514 1,052,494 1,103,745 Other investments 115,551 202,685 188,699 190,591 191,786 Loans held for sale 17,644 14,210 18,721 26,007 18,896 LHI, PPP loans, carried at fair value 2,821 7,339 18,512 53,369 135,842 LHI, MW 523,805 629,291 542,877 565,645 615,045 LHI, excluding MW and PPP 8,510,433 7,915,792 7,125,429 6,766,009 6,615,905 Total loans 9,054,703 8,566,632 7,705,539 7,411,030 7,385,688 ACL (85,037 ) (80,576 ) (72,485 ) (77,754 ) (93,771 ) Bank-owned life insurance 84,030 84,097 83,641 83,194 83,781 Bank premises, furniture and equipment, net 108,720 108,769 109,138 109,271 116,063 Other real estate owned (“OREO”) — 1,032 1,062 — — Intangible assets, net of accumulated amortization 56,238 59,011 63,986 66,017 54,682 Goodwill 404,452 404,452 404,452 403,771 370,840 Other assets 238,896 193,590 173,561 138,851 129,774 Total assets $ 11,714,454 $ 11,304,811 $ 10,453,680 $ 9,757,249 $ 9,572,300 LIABILITIES AND STOCKHOLDERS’ EQUITY Deposits: Noninterest-bearing deposits $ 2,811,412 $ 2,947,830 $ 2,765,895 $ 2,510,723 $ 2,302,925 Interest-bearing transaction and savings deposits 4,269,668 4,007,250 3,688,292 3,276,312 3,228,306 Certificates and other time deposits 1,667,364 1,562,626 1,435,409 1,576,580 1,647,521 Total deposits 8,748,444 8,517,706 7,889,596 7,363,615 7,178,752 Accounts payable and other liabilities 173,198 126,116 105,552 69,160 66,571 Advances from Federal Home Loan Bank (“FHLB”) 1,150,000 1,000,000 777,522 777,562 777,601 Subordinated debentures and subordinated notes 228,524 228,272 228,018 227,764 262,761 Securities sold under agreements to repurchase 2,389 3,275 4,996 4,069 2,455 Total liabilities 10,302,555 9,875,369 9,005,684 8,442,170 8,288,140 Commitments and contingencies Stockholders’ equity: Common stock 606 606 605 560 559 Additional paid-in capital 1,303,171 1,300,170 1,297,161 1,142,758 1,137,889 Retained earnings 350,195 317,664 298,830 275,273 243,633 Accumulated other comprehensive (loss) income (74,491 ) (21,416 ) 18,982 64,070 69,661 Treasury stock (167,582 ) (167,582 ) (167,582 ) (167,582 ) (167,582 ) Total stockholders’ equity 1,411,899 1,429,442 1,447,996 1,315,079 1,284,160 Total liabilities and stockholders’ equity $ 11,714,454 $ 11,304,811 $ 10,453,680 $ 9,757,249 $ 9,572,300 VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(In thousands, except per share data)For the Quarter Ended For the Nine Months Ended Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Sep 30, 2022 Sep 30, 2021 Interest income: Loans, including fees $ 109,199 $ 82,191 $ 71,443 $ 74,174 $ 71,139 $ 262,833 $ 206,352 Debt securities 10,462 9,632 7,762 9,553 7,613 27,856 22,579 Deposits in financial institutions and Fed Funds sold 1,898 714 262 165 130 2,874 424 Equity securities and other investments 1,666 1,057 910 1,004 898 3,633 2,233 Total interest income 123,225 93,594 80,377 84,896 79,780 297,196 231,588 Interest expense: Transaction and savings deposits 12,897 4,094 1,751 1,629 1,588 18,742 5,229 Certificates and other time deposits 3,919 1,465 1,380 1,661 1,934 6,764 7,418 Advances from FHLB 2,543 834 1,547 1,847 1,848 4,924 5,489 Subordinated debentures and subordinated notes 2,826 2,721 2,659 3,018 3,134 8,206 9,410 Total interest expense 22,185 9,114 7,337 8,155 8,504 38,636 27,546 Net interest income 101,040 84,480 73,040 76,741 71,276 258,560 204,042 Provision (benefit) for credit losses 6,650 9,000 (500 ) (3,349 ) — 15,150 — Provision (benefit) for unfunded commitments 850 — 493 (1,040 ) (448 ) 1,343 (441 ) Net interest income after provisions 93,540 75,480 73,047 81,130 71,724 242,067 204,483 Noninterest income: Service charges and fees on deposit accounts 5,217 5,039 4,710 4,782 4,484 14,966 11,960 Loan fees 2,786 2,385 2,794 2,697 1,746 7,965 4,910 Loss on sales of investment securities — — — — (188 ) — (188 ) Gain on sales of mortgage loans held for sale 16 223 307 293 407 546 1,299 Government guaranteed loan income, net 572 789 4,891 3,423 2,341 6,252 12,337 Equity method investment (loss) income (1,058 ) 966 367 1,238 4,522 275 4,522 Customer swap income 3,358 1,321 946 796 1,093 5,625 1,694 Other income (loss) 2,130 (345 ) 1,082 2,921 1,222 2,867 5,721 Total noninterest income 13,021 10,378 15,097 16,150 15,627 38,496 42,255 Noninterest expense: Salaries and employee benefits 29,714 26,924 27,513 25,401 22,964 84,151 69,347 Occupancy and equipment 4,615 4,496 4,517 4,398 4,536 13,628 12,865 Professional and regulatory fees 3,718 2,865 3,158 3,017 3,401 9,741 9,928 Data processing and software expense 3,509 3,386 2,921 2,597 2,494 9,816 7,349 Marketing 1,845 2,306 1,187 1,443 1,151 5,338 3,901 Amortization of intangibles 2,494 2,495 2,495 2,494 2,509 7,484 7,563 Telephone and communications 389 352 385 380 380 1,126 1,054 Merger and acquisition (“M&A”) expense 384 295 700 826 — 1,379 — Other 4,323 5,034 3,696 4,521 3,886 13,053 10,628 Total noninterest expense 50,991 48,153 46,572 45,077 41,321 145,716 122,635 Income before income tax expense 55,570 37,705 41,572 52,203 46,030 134,847 124,103 Income tax expense 12,248 8,079 8,102 10,697 9,195 28,429 26,025 Net income $ 43,322 $ 29,626 $ 33,470 $ 41,506 $ 36,835 $ 106,418 $ 98,078 Net income available to common stockholders $ 43,322 $ 29,626 $ 33,470 $ 41,506 $ 36,835 $ 106,418 $ 98,078 Basic EPS $ 0.80 $ 0.55 $ 0.66 $ 0.84 $ 0.75 $ 2.01 $ 1.98 Diluted EPS $ 0.79 $ 0.54 $ 0.65 $ 0.82 $ 0.73 $ 1.98 $ 1.95 Weighted average basic shares outstanding 53,979 53,949 50,695 49,329 49,423 52,886 49,431 Weighted average diluted shares outstanding 54,633 54,646 51,571 50,441 50,306 53,655 50,230 VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(Unaudited)For the Quarter Ended September 30, 2022 June 30, 2022 September 30, 2021 Average
Outstanding
BalanceInterest
Earned/
Interest
PaidAverage
Yield/
RateAverage
Outstanding
BalanceInterest
Earned/
Interest
PaidAverage
Yield/
RateAverage
Outstanding
BalanceInterest
Earned/
Interest
PaidAverage
Yield/
Rate(In thousands, except percentages) Assets Interest-earning assets: Loans1 $ 8,277,762 $ 104,543 5.01 % $ 7,547,564 $ 78,234 4.16 % $ 6,384,856 $ 66,911 4.16 % LHI, MW 448,556 4,649 4.11 479,187 3,929 3.29 465,945 3,697 3.15 PPP loans 2,775 7 1.00 11,402 28 1.00 210,092 531 1.00 Debt securities 1,362,365 10,462 3.05 1,318,502 9,632 2.93 1,119,952 7,613 2.70 Interest-bearing deposits in other banks 346,296 1,898 2.17 369,847 714 0.77 336,289 130 0.15 Equity securities and other investments 203,528 1,666 3.25 167,327 1,057 2.53 167,242 898 2.13 Total interest-earning assets 10,641,282 123,225 4.59 9,893,829 93,594 3.79 8,684,376 79,780 3.64 ACL (81,888 ) (74,268 ) (99,482 ) Noninterest-earning assets 901,463 892,102 800,576 Total assets $ 11,460,857 $ 10,711,663 $ 9,385,470 Liabilities and Stockholders’ Equity Interest-bearing liabilities: Interest-bearing demand and savings deposits $ 4,164,164 $ 12,897 1.23 % $ 3,770,098 $ 4,094 0.44 % $ 3,201,409 $ 1,588 0.20 % Certificates and other time deposits 1,656,347 3,919 0.94 1,459,690 1,465 0.40 1,519,824 1,934 0.50 Advances from FHLB 904,065 2,543 1.12 828,769 834 0.40 777,617 1,848 0.94 Subordinated debentures and subordinated notes 231,012 2,826 4.85 232,043 2,721 4.70 264,714 3,134 4.70 Total interest-bearing liabilities 6,955,588 22,185 1.27 6,290,600 9,114 0.58 5,763,564 8,504 0.59 Noninterest-bearing liabilities: Noninterest-bearing deposits 2,925,462 2,870,692 2,271,197 Other liabilities 125,991 102,994 60,181 Total liabilities 10,007,041 9,264,286 8,094,942 Stockholders’ equity 1,453,816 1,447,377 1,290,528 Total liabilities and stockholders’ equity $ 11,460,857 $ 10,711,663 $ 9,385,470 Net interest rate spread2 3.32 % 3.21 % 3.05 % Net interest income and margin3 101,040 3.77 % 84,480 3.42 % 71,276 3.26 % 1 Includes average outstanding balances of loans held for sale of $14,023, $12,112 and $8,542 for the three months ended September 30, 2022, June 30, 2022, and September 30, 2021, respectively, and average balances of LHI, excluding MW and PPP loans.
2 Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
3 Net interest margin is equal to net interest income divided by average interest-earning assets.VERITEX HOLDINGS, INC. AND SUBSIDIARY
Financial Highlights
(In thousands except percentages)Nine Months Ended September 30, 2022 September 30, 2021 Average
Outstanding
BalanceInterest
Earned/
Interest PaidAverage
Yield/ RateAverage
Outstanding
BalanceInterest
Earned/
Interest PaidAverage
Yield/ RateAssets Interest-earning assets: Loans1 $ 7,558,825 $ 255,630 4.52 % $ 6,118,880 $ 193,040 4.22 % LHI, WH 449,906 6,998 2.08 477,319 10,988 3.08 PPP loans 27,477 205 1.00 309,620 2,324 1.00 Debt securities 1,274,712 27,856 2.92 1,093,263 22,579 2.76 Interest-bearing deposits in other banks 422,905 2,874 0.91 408,601 424 0.14 Equity securities and other investments 187,002 3,633 2.60 114,237 2,233 2.61 Total interest-earning assets 9,920,827 297,196 4.01 8,521,920 231,588 3.63 ACL (78,015 ) (103,478 ) Noninterest-earning assets 886,357 799,207 Total assets $ 10,729,169 $ 9,217,649 Liabilities and Stockholders’ Equity Interest-bearing liabilities: Interest-bearing demand and savings deposits $ 3,804,506 $ 18,742 0.66 % $ 3,144,395 $ 5,229 0.22 % Certificates and other time deposits 1,539,861 6,764 0.59 1,514,954 7,418 0.65 Advances from FHLB 837,254 4,924 0.79 777,655 5,489 0.94 Subordinated debentures and subordinated notes 231,640 8,206 4.74 264,998 9,410 4.75 Total interest-bearing liabilities 6,413,261 38,636 0.81 5,702,002 27,546 0.65 Noninterest-bearing liabilities: Noninterest-bearing deposits 2,797,110 2,198,551 Other liabilities 98,898 60,456 Total liabilities 9,309,269 7,961,009 Stockholders’ equity 1,419,900 1,256,640 Total liabilities and stockholders’ equity $ 10,729,169 $ 9,217,649 Net interest rate spread2 3.20 % 2.98 % Net interest income and margin3 $ 258,560 3.48 % $ 204,042 3.20 % 1 Includes average outstanding balances of loans held for sale of $12,973 and $13,140 for the nine months ended September 30, 2022 and 2021, respectively, and average balances of LHI, excluding MW and PPP loans.
2 Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
3 Net interest margin is equal to net interest income divided by average interest-earning assets.VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial HighlightsYield Trend
For the Quarter Ended Sep 30,
2022Jun 30,
2022Mar 31,
2022Dec 31,
2021Sep 30,
2021Average yield on interest-earning assets: Loans1 5.01 % 4.16 % 4.03 % 4.12 % 4.16 % LHI, MW 4.11 3.29 2.95 2.98 3.15 PPP loans 1.00 1.00 1.00 1.00 1.00 Debt securities 3.05 2.93 2.76 3.47 2.70 Interest-bearing deposits in other banks 2.17 0.77 0.19 0.16 0.15 Equity securities and other investments 3.25 2.53 1.94 2.09 2.13 Total interest-earning assets 4.59 % 3.79 % 3.54 % 3.72 % 3.64 % Average rate on interest-bearing liabilities: Interest-bearing demand and savings deposits 1.23 % 0.44 % 0.20 % 0.19 % 0.20 % Certificates and other time deposits 0.94 0.40 0.37 0.41 0.50 Advances from FHLB 1.12 0.40 0.81 0.94 0.94 Subordinated debentures and subordinated notes 4.85 4.70 4.65 4.62 4.70 Total interest-bearing liabilities 1.27 % 0.58 % 0.50 % 0.54 % 0.59 % Net interest rate spread2 3.32 % 3.21 % 3.04 % 3.18 % 3.05 % Net interest margin3 3.77 % 3.42 % 3.22 % 3.37 % 3.26 %
1Includes average outstanding balances of loans held for sale of $14,023, $12,112, $12,769, $8,987 and $8,542 for the three months ended September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021 and September 30, 2021, respectively, and average balances of LHI, excluding MW and PPP loans.2 Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
3 Net interest margin is equal to net interest income divided by average interest-earning assets.Supplemental Yield Trend
For the Quarter Ended Sep 30,
2022Jun 30,
2022Mar 31,
2022Dec 31,
2021Sep 30,
2021Average cost of interest-bearing deposits 1.15 % 0.43 % 0.26 % 0.26 % 0.30 % Average costs of total deposits, including noninterest-bearing 0.76 0.28 0.17 0.18 0.20 VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(Unaudited)LHI and Deposit Portfolio Composition
Sep 30,
2022Jun 30,
2022Mar 31,
2022Dec 31,
2021Sep 30,
2021(In thousands, except percentages) LHI1 Commercial $ 2,740,948 32.1 % $ 2,450,403 30.9 % $ 2,125,900 29.8 % $ 2,006,876 29.6 % $ 1,793,740 27.1 % Real Estate: Owner occupied commercial (“OOCRE”) 677,705 7.9 646,723 8.2 633,615 8.9 665,537 9.8 711,476 10.7 Non-owner occupied commercial (“NOOCRE”) 2,273,305 26.7 2,203,970 27.8 2,145,826 30.0 2,120,309 31.3 2,194,438 33.1 Construction and land 1,673,997 19.6 1,532,997 19.3 1,297,338 18.2 1,062,144 15.7 936,174 14.1 Farmland 43,569 0.5 47,319 0.6 48,095 0.7 55,827 0.8 73,550 1.1 1-4 family residential 858,693 10.1 765,260 9.6 604,408 8.5 542,566 8.0 543,518 8.2 Multi-family residential 252,244 3.0 276,632 3.5 272,250 3.8 310,241 4.6 356,885 5.4 Consumer 7,465 0.1 7,520 0.1 9,533 0.1 11,998 0.2 14,266 0.3 Total LHI $ 8,527,926 100 % $ 7,930,824 100 % $ 7,136,965 100 % $ 6,775,498 100 % $ 6,624,047 100 % MW 523,805 629,291 542,877 565,645 615,045 PPP loans 2,821 7,339 18,512 53,369 135,842 Total LHI1 $ 9,054,552 $ 8,567,454 $ 7,698,354 $ 7,394,512 $ 7,374,934 Deposits Noninterest-bearing $ 2,811,412 32.1 % $ 2,947,830 34.6 % $ 2,765,895 35.1 % $ 2,510,723 34.1 % $ 2,302,925 32.1 % Interest-bearing transaction 603,729 6.9 660,557 7.8 599,580 7.6 579,408 7.9 514,537 7.2 Money market 3,533,532 40.4 3,217,195 37.8 2,958,790 37.5 2,568,843 34.9 2,585,926 36.0 Savings 132,407 1.5 129,498 1.5 129,922 1.6 128,061 1.7 127,843 1.8 Certificates and other time deposits 1,667,364 19.1 1,562,626 18.3 1,435,409 18.2 1,576,580 21.4 1,647,521 22.9 Total deposits $ 8,748,444 100 % $ 8,517,706 100 % $ 7,889,596 100 % $ 7,363,615 100 % $ 7,178,752 100 % Loan to Deposit Ratio 103.5 % 100.6 % 97.6 % 100.4 % 102.7 % Loan to Deposit Ratio, excluding MW and PPP loans 97.5 % 93.1 % 90.5 % 92.0 % 92.3 % 1 Total LHI does not include deferred fees of $17.5 million, $15.0 million, $11.5 million, $9.5 million and $8.1 million at September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021 and September 30, 2021, respectively.
VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(Unaudited)
Asset QualityFor the Quarter Ended For the Nine Months Ended Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Sep 30, 2022 Sep 30, 2021 (In thousands, except percentages) NPAs: Nonaccrual loans $ 30,592 $ 42,242 $ 46,680 $ 49,687 $ 72,317 $ 30,592 $ 72,317 Accruing loans 90 or more days past due1 — 1,753 264 441 1,711 — 1,711 Total nonperforming loans held for investment (“NPLs”) 30,592 43,995 46,944 50,128 74,028 30,592 74,028 OREO — 1,032 1,062 — — — — Total NPAs $ 30,592 $ 45,027 $ 48,006 $ 50,128 $ 74,028 $ 30,592 $ 74,028 Charge-offs: 1-4 family residential $ — $ — $ — $ — $ (64 ) $ — $ (379 ) OOCRE (1,061 ) (244 ) (1,341 ) (898 ) (813 ) (2,646 ) (1,502 ) NOOCRE (838 ) — (553 ) (7,936 ) — (1,391 ) — Commercial (460 ) (528 ) (3,294 ) (4,114 ) (5,508 ) (4,282 ) (11,462 ) Consumer (19 ) (1,091 ) (134 ) (44 ) (17 ) (1,244 ) (55 ) Total charge-offs (2,378 ) (1,863 ) (5,322 ) (12,992 ) (6,402 ) (9,563 ) (13,398 ) Recoveries: 1-4 family residential 4 3 — 6 26 7 58 OOCRE — 245 — — — 245 500 NOOCRE 3 93 400 — — 496 — Commercial 177 572 144 61 596 893 1,481 Consumer 5 41 9 257 8 55 46 Total recoveries 189 954 553 324 630 1,696 2,085 Net charge-offs $ (2,189 ) $ (909 ) $ (4,769 ) $ (12,668 ) $ (5,772 ) $ (7,867 ) $ (11,313 ) ACL $ 85,037 $ 80,576 $ 72,485 $ 77,754 $ 93,771 $ 85,037 $ 93,771 Asset Quality Ratios: NPAs to total assets 0.26 % 0.40 % 0.46 % 0.51 % 0.77 % 0.26 % 0.77 % NPLs to total LHI, excluding MW and PPP loans 0.36 0.55 0.66 0.74 1.12 0.36 1.12 ACL to total LHI, excluding MW and PPP loans 1.00 1.02 1.02 1.15 1.42 1.00 1.42 Net charge-offs to average loans outstanding 0.03 0.01 0.07 0.19 0.09 0.10 0.18 1 Accruing loans greater than 90 days past due exclude purchase credit deteriorated loans greater than 90 days past due that are accounted for on a pooled basis.
VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)We identify certain financial measures discussed in this earnings release as being “non-GAAP financial measures.” In accordance with SEC rules, we classify a financial measure as being a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles as in effect from time to time in the United States (“GAAP”), in our statements of income, balance sheets or statements of cash flows. Non-GAAP financial measures do not include operating and other statistical measures or ratios calculated using exclusively either one or both of (i) financial measures calculated in accordance with GAAP and (ii) operating measures or other measures that are not non-GAAP financial measures.
The non-GAAP financial measures that we present in this earnings release should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which we calculate the non-GAAP financial measures that we present in this earnings release may differ from that of other companies reporting measures with similar names. You should understand how such other financial institutions calculate their financial measures that appear to be similar or have similar names to the non-GAAP financial measures we have discussed in this earnings release when comparing such non-GAAP financial measures.
Tangible Book Value Per Common Share. Tangible book value is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) tangible common equity as total stockholders’ equity less goodwill and core deposit intangibles, net of accumulated amortization; and (b) tangible book value per common share as tangible common equity (as described in clause (a)) divided by number of common shares outstanding. For tangible book value per common share, the most directly comparable financial measure calculated in accordance with GAAP is book value per common share.
We believe that this measure is important to many investors in the marketplace who are interested in changes from period to period in book value per common share exclusive of changes in core deposit intangibles. Goodwill and other intangible assets have the effect of increasing total book value while not increasing our tangible book value.
The following table reconciles, as of the dates set forth below, total stockholders’ equity to tangible common equity and presents our tangible book value per common share compared with our book value per common share:
As of Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 (Dollars in thousands, except per share data) Tangible Common Equity Total stockholders' equity $ 1,411,899 $ 1,429,442 $ 1,447,996 $ 1,315,079 $ 1,284,160 Adjustments: Goodwill (404,452 ) (404,452 ) (404,452 ) (403,771 ) (370,840 ) Core deposit intangibles (40,684 ) (43,122 ) (45,560 ) (47,998 ) (50,436 ) Tangible common equity $ 966,763 $ 981,868 $ 997,984 $ 863,310 $ 862,884 Common shares outstanding 53,988 53,951 53,907 49,372 49,229 Book value per common share $ 26.15 $ 26.50 $ 26.86 $ 26.64 $ 26.09 Tangible book value per common share $ 17.91 $ 18.20 $ 18.51 $ 17.49 $ 17.53 VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)Tangible Common Equity to Tangible Assets. Tangible common equity to tangible assets is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) tangible common equity as total stockholders’ equity, less goodwill and core deposit intangibles, net of accumulated amortization; (b) tangible assets as total assets less goodwill and core deposit intangibles, net of accumulated amortization; and (c) tangible common equity to tangible assets as tangible common equity (as described in clause (a)) divided by tangible assets (as described in clause (b)). For tangible common equity to tangible assets, the most directly comparable financial measure calculated in accordance with GAAP is total stockholders’ equity to total assets.
We believe that this measure is important to many investors in the marketplace who are interested in the relative changes from period to period in common equity and total assets, in each case, exclusive of changes in core deposit intangibles. Goodwill and other intangible assets have the effect of increasing both total stockholders’ equity and assets while not increasing our tangible common equity or tangible assets.
The following table reconciles, as of the dates set forth below, total stockholders’ equity to tangible common equity and total assets to tangible assets and presents our tangible common equity to tangible assets:
As of Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 (Dollars in thousands) Tangible Common Equity Total stockholders' equity $ 1,411,899 $ 1,429,442 $ 1,447,996 $ 1,315,079 $ 1,284,160 Adjustments: Goodwill (404,452 ) (404,452 ) (404,452 ) (403,771 ) (370,840 ) Core deposit intangibles (40,684 ) (43,122 ) (45,560 ) (47,998 ) (50,436 ) Tangible common equity $ 966,763 $ 981,868 $ 997,984 $ 863,310 $ 862,884 Tangible Assets Total assets $ 11,714,454 $ 11,304,811 $ 10,453,680 $ 9,757,249 $ 9,572,300 Adjustments: Goodwill (404,452 ) (404,452 ) (404,452 ) (403,771 ) (370,840 ) Core deposit intangibles (40,684 ) (43,122 ) (45,560 ) (47,998 ) (50,436 ) Tangible Assets $ 11,269,318 $ 10,857,237 $ 10,003,668 $ 9,305,480 $ 9,151,024 Tangible Common Equity to Tangible Assets 8.58 % 9.04 % 9.98 % 9.28 % 9.43 % VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)Return on Average Tangible Common Equity. Return on average tangible common equity is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) net income available for common stockholders adjusted for amortization of core deposit intangibles (which we refer to as “return”) as net income, plus amortization of core deposit intangibles, less tax benefit at the statutory rate; (b) average tangible common equity as total average stockholders’ equity less average goodwill and average core deposit intangibles, net of accumulated amortization; and (c) return (as described in clause (a)) divided by average tangible common equity (as described in clause (b)). For return on average tangible common equity, the most directly comparable financial measure calculated in accordance with GAAP is return on average equity.
We believe that this measure is important to many investors in the marketplace who are interested in the return on common equity, exclusive of the impact of core deposit intangibles. Goodwill and core deposit intangibles have the effect of increasing total stockholders’ equity while not increasing our tangible common equity. This measure is particularly relevant to acquisitive institutions that may have higher balances in goodwill and core deposit intangibles than non-acquisitive institutions.
The following table reconciles, as of the dates set forth below, average tangible common equity to average common equity and net income available for common stockholders adjusted for amortization of core deposit intangibles, net of taxes to net income and presents our return on average tangible common equity:
For the Quarter Ended For the Nine Months Ended Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Sep 30, 2022 Sep 30, 2021 (Dollars in thousands) Net income available for common stockholders adjusted for amortization of core deposit intangibles Net income $ 43,322 $ 29,626 $ 33,470 $ 41,506 $ 36,835 $ 106,418 $ 98,078 Adjustments: Plus: Amortization of core deposit intangibles 2,438 2,438 2,438 2,438 2,438 7,314 7,323 Less: Tax benefit at the statutory rate 512 512 512 512 512 1,536 1,538 Net income available for common stockholders adjusted for amortization of core deposit intangibles $ 45,248 $ 31,552 $ 35,396 $ 43,432 $ 38,761 $ 112,196 $ 103,863 Average Tangible Common Equity Total average stockholders' equity $ 1,453,816 $ 1,447,377 $ 1,357,448 $ 1,301,676 $ 1,290,528 $ 1,419,900 $ 1,256,640 Adjustments: Average goodwill (404,452 ) (404,452 ) (404,014 ) (393,220 ) (370,840 ) (404,308 ) (370,840 ) Average core deposit intangibles (42,230 ) (44,720 ) (47,158 ) (49,596 ) (52,043 ) (41,470 ) (54,458 ) Average tangible common equity $ 1,007,134 $ 998,205 $ 906,276 $ 858,860 $ 867,645 $ 974,122 $ 831,342 Return on Average Tangible Common Equity (Annualized) 17.82 % 12.68 % 15.84 % 20.06 % 17.72 % 15.40 % 16.70 % VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)Operating Earnings, Pre-tax, Pre-provision Operating Earnings and performance metrics calculated using Operating Earnings and Pre-tax, Pre-provision Operating Earnings, including Diluted Operating Earnings per Share, Operating Return on Average Assets, Pre-tax, Pre-Provision Operating Return on Average Assets, Operating Return on Average Tangible Common Equity and Operating Efficiency Ratio. Operating earnings, pre-tax, pre-provision operating earnings and the performance metrics calculated using these metrics, listed below, are non-GAAP measures used by management to evaluate the Company’s financial performance. We calculate (a) operating earnings as net income plus severance payments, plus loss on sale of debt securities AFS, net, less Thrive PPP loan forgiveness income, plus M&A expenses, less tax impact of adjustments, plus nonrecurring tax adjustments. We calculate (b) diluted operating earnings per share as operating earnings as described in clause (a) divided by weighted average diluted shares outstanding. We calculate (c) pre-tax, pre-provision operating earnings as operating earnings as described in clause (a) plus provision for income taxes, plus provision (benefit) for credit losses and unfunded commitments. We calculate (d) pre-tax, pre-provision operating return on average assets as pre-tax, pre-provision operating earnings as described in clause (a) divided by total average assets. We calculate (e) operating return on average assets as operating earnings as described in clause (a) divided by total average assets. We calculate (f) operating return on average tangible common equity as operating earnings as described in clause (a), adjusted for the amortization of intangibles and tax benefit at the statutory rate, divided by total average tangible common equity (average stockholders’ equity less average goodwill and average core deposit intangibles, net of accumulated amortization). We calculate (g) operating efficiency ratio as noninterest expense plus adjustments to operating noninterest expense divided by noninterest income plus adjustments to operating noninterest income, plus net interest income.
We believe that these measures and the operating metrics calculated utilizing these measures are important to management and many investors in the marketplace who are interested in understanding the ongoing operating performance of the Company and provide meaningful comparisons to its peers.
The following tables reconcile, as of the dates set forth below, operating net income and pre-tax, pre-provision operating earnings and related metrics:
For the Quarter Ended For the Nine Months Ended Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Sep 30, 2022 Sep 30, 2021 (Dollars in thousands, except per share data) Operating Earnings Net income $ 43,322 $ 29,626 $ 33,470 $ 41,506 $ 36,835 $ 106,418 $ 98,078 Plus: Severance payments1 — — — — — — 627 Plus: Loss on sale of debt securities AFS, net — — — — 188 — 188 Less: Thrive PPP loan forgiveness income2 — — — — 1,912 — 1,912 Plus: M&A expenses 384 295 700 826 — 1,379 — Operating pre-tax income 43,706 29,921 34,170 42,332 35,111 107,797 96,981 Less: Tax impact of adjustments 81 66 156 (78 ) 39 303 170 Plus: Nonrecurring tax adjustments3 — — — — — — 426 Operating earnings $ 43,625 $ 29,855 $ 34,014 $ 42,410 $ 35,072 $ 107,494 $ 97,237 Weighted average diluted shares outstanding 54,633 54,646 51,571 50,441 50,306 53,655 50,230 Diluted EPS $ 0.79 $ 0.54 $ 0.65 $ 0.82 $ 0.73 $ 1.98 $ 1.95 Diluted operating EPS $ 0.80 $ 0.55 $ 0.66 $ 0.84 $ 0.70 $ 2.00 $ 1.94 1 Severance payments relate to branch restructurings made during the three months ended June 30, 2021.
2 During the third quarter of 2021, Thrive’s PPP loan with another bank was 100% forgiven by the Small Business Administration. As a result of our 49% investment in Thrive, the $1.9 million represents our portion of the PPP loan forgiveness. PPP fee income is not taxable and as such has no tax impact.
3 A nonrecurring tax adjustment of $426 thousand recorded in the first quarter of 2021 was due to a true-up of a deferred tax liability.For the Quarter Ended For the Nine Months Ended Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Sep 30, 2022 Sep 30, 2021 (Dollars in thousands) Pre-Tax, Pre-Provision Operating Earnings Net income $ 43,322 $ 29,626 $ 33,470 $ 41,506 $ 36,835 $ 106,418 $ 98,078 Plus: Provision for income taxes 12,248 8,079 8,102 10,697 9,195 28,429 26,025 Plus: Provision (benefit) for credit losses and unfunded commitments 7,500 9,000 (7 ) (4,389 ) (448 ) 16,493 (441 ) Plus: Severance payments — — — — — — 627 Plus: Loss on sale of debt securities AFS, net — — — — 188 — 188 Less: Thrive PPP loan forgiveness income — — — — 1,912 1,912 Plus: M&A expenses 384 295 700 826 — 1,379 — Pre-tax, pre-provision operating earnings $ 63,454 $ 47,000 $ 42,265 $ 48,640 $ 43,858 $ 152,719 $ 122,565 Average total assets $ 11,460,857 $ 10,711,663 $ 9,998,922 $ 9,788,671 $ 9,385,470 $ 10,729,169 $ 9,217,649 Pre-tax, pre-provision operating return on average assets1 2.20 % 1.76 % 1.71 % 1.97 % 1.85 % 1.90 % 1.78 % Average total assets $ 11,460,857 $ 10,711,663 $ 9,998,922 $ 9,788,671 $ 9,385,470 $ 10,729,169 $ 9,217,649 Return on average assets1 1.50 % 1.11 % 1.36 % 1.68 % 1.56 % 1.33 % 1.42 % Operating return on average assets1 1.51 1.12 1.38 1.72 1.48 1.34 1.41 Operating earnings adjusted for amortization of core deposit intangibles Operating earnings $ 43,625 $ 29,855 $ 34,014 $ 42,410 $ 35,072 $ 107,494 $ 97,237 Adjustments: Plus: Amortization of core deposit intangibles 2,438 2,438 2,438 2,438 2,438 7,314 7,323 Less: Tax benefit at the statutory rate 512 512 512 512 512 1,536 1,538 Operating earnings adjusted for amortization of core deposit intangibles $ 45,551 $ 31,781 $ 35,940 $ 44,336 $ 36,998 $ 113,272 $ 103,022 Average Tangible Common Equity Total average stockholders' equity $ 1,453,816 $ 1,447,377 $ 1,357,448 $ 1,301,676 $ 1,290,528 $ 1,419,900 $ 1,256,640 Adjustments: Less: Average goodwill (404,452 ) (404,452 ) (404,014 ) (393,220 ) (370,840 ) (404,308 ) (370,840 ) Less: Average core deposit intangibles (42,230 ) (44,720 ) (47,158 ) (49,596 ) (52,043 ) (41,470 ) (54,458 ) Average tangible common equity $ 1,007,134 $ 998,205 $ 906,276 $ 858,860 $ 867,645 $ 974,122 $ 831,342 Operating return on average tangible common equity1 17.94 % 12.77 % 16.08 % 20.48 % 16.92 % 15.55 % 16.57 % Efficiency ratio 44.71 % 50.76 % 52.84 % 48.53 % 47.55 % 49.05 % 49.79 % Net interest income $ 101,040 $ 84,480 $ 73,040 $ 76,741 $ 71,276 $ 258,560 $ 204,042 Noninterest income 13,021 10,378 15,097 16,150 15,627 38,496 42,255 Plus: Loss on sale of AFS securities, net — — — — 188 — 188 Less: Thrive PPP loan forgiveness income — — — — 1,912 — 1,912 Operating noninterest income 13,021 10,378 15,097 16,150 13,903 38,496 40,531 Noninterest expense 50,991 48,153 46,572 45,077 41,321 145,716 122,635 Less: Severance payments — — — — — — 627 Less: M&A expenses 384 295 700 826 — 1,379 — Operating noninterest expense $ 50,607 $ 47,858 $ 45,872 $ 44,251 $ 41,321 $ 144,337 $ 122,008 Operating efficiency ratio 44.37 % 50.45 % 52.05 % 47.64 % 48.51 % 48.59 % 49.89 % 1 Annualized ratio for quarterly metrics.
Media and Investor Relations: investorrelations@veritexbank.com
