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Veritex Holdings, Inc. Reports Fourth Quarter And Full Year 2023 Results

DALLAS, Jan. 23, 2024 (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 fourth quarter and full year of 2023.

"Looking back at 2023, I am extremely proud of the ability of our team, in a volatile economic environment, to remain disciplined on our strategic plan and strengthen our balance sheet", said C. Malcolm Holland, III. "This team achieved deposit growth of $1.2 billion in 2023, increased CET1 to 10.3% and decreased our LDR below 94%. Market volatility brings many challenges and opportunities that this Company has navigated with great precision."

2023 Highlights:

  • Total deposits grew $141.7 million for the fourth quarter of 2023, or 5.6% annualized. Total deposits grew $1.2 billion, or 13.3%, year-over-year;
  • Loan to deposit ratio decreased to 93.6% as of December 31, 2023 compared to 104.4% as of December 31, 2022;
  • Common equity tier 1 capital increased 120 bps to 10.29% as of December 31, 2023 compared to 9.09% as of December 31, 2022;
  • Tangible book value per common share increased 8.4%, or $1.57, during 2023 compared to 2022, and including dividends increased 12.7%, or $2.37;
  • Allowance for credit losses (“ACL”) to total loans increased to 1.14%, or 18 bps from 0.96% compared to December 31, 2022;
  • Non-owner office book decreased $78 million, or 12.1%, during 2023 and represents 5.8% of total assets;
  • Pre-tax, pre-provision operating return on average assets was 1.81% for 2023;
  • Total unfunded Acquisition, Development, and Construction (“ADC”) decreased to $900.0 million, or approximately 57%, as of December 31, 2023 compared to $2.1 billion as of December 31, 2022, and risk-weighted assets decreased $612.2 million, or 5.1%, during 2023 compared to 2022;
  • Declared quarterly cash dividend of $0.20 per share of outstanding common stock payable on February 23, 2024;.and
  • Named one of the “Best Companies to Work For” by the 2023 Inaugural U.S. News & World Report which evaluates companies based on quality of pay, work/life balance, and opportunities for professional development and advancement.
Financial Highlights Fourth Quarter
2023
 Third Quarter
2023
 Fourth Quarter
2022
  Full Year
2023
 Full Year
2022
  (Dollars in thousands, except per share data)
(unaudited)
GAAP     
Net income $3,499  $32,621  $39,897   $108,261  $146,315 
Diluted EPS  0.06   0.60   0.73    1.98   2.71 
Book value per common share  28.18   27.46   26.83    28.18   26.83 
Return on average assets2  0.11%  1.06%  1.35%   0.88%  1.33%
Efficiency ratio  77.49   54.49   47.63    55.82   48.64 
Return on average equity2  0.92   8.58   11.03    7.21   10.28 
Non-GAAP1           
Operating earnings $31,625  $32,621  $40,395   $142,114  $147,889 
Diluted operating EPS  0.58   0.60   0.74    2.60   2.74 
Tangible book value per common share  20.21   19.44   18.64    20.21   18.64 
Pre-tax, pre-provision operating earnings  47,688   49,621   63,694    222,211   216,413 
Pre-tax, pre-provision operating return on average assets2  1.54%  1.61%  2.15%   1.81%  1.97%
Pre-tax, pre-provision operating return on average loans2  1.97   2.05   2.78    2.32   2.60 
Operating return on average assets2  1.02   1.06   1.36    1.16   1.35 
Operating efficiency ratio  55.50   54.49   47.11    50.94   48.16 
Return on average tangible common equity2  2.00   12.80   16.75    10.91   15.78 
Operating return on average tangible common equity2  12.37   12.80   16.95    14.09   15.94 

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 December 31, 2023

Net Interest Income

For the three months ended December 31, 2023, net interest income before provision for credit losses was $95.5 million and net interest margin was 3.31%, compared to $99.4 million and 3.46%, respectively, for the three months ended September 30, 2023. The $3.8 million decrease, or 3.9%, in net interest income before provision for credit losses was primarily due to a $6.3 million increase in interest expense on transaction and savings deposits, a $4.0 million increase in interest expense on certificates and other time deposits and a $1.9 million decrease in interest income on loans primarily driven by interest reversals on loans placed on nonaccrual status during the three months ended December 31, 2023. The decrease was offset by a $5.9 million decrease in advances from the Federal Home Loan Bank (“FHLB”), a $1.4 million increase in interest income on debt securities and a $1.0 million increase in interest income on deposits in financial institutions and fed funds sold driven by an increase in average balances and rates during three months ended December 31, 2023. Net interest margin decreased 15 bps from the three months ended September 30, 2023, primarily due to the increase in funding costs on deposits during the three months ended December 31, 2023, partially offset by an increase in yields on debt securities and other investments.

Compared to the three months ended December 31, 2022, net interest income before provision for credit losses for the three months ended December 31, 2023 decreased by $10.6 million, or 10.0%. The decrease was primarily due to a $31.6 million increase in interest expense certificates and other time deposits and a $22.2 million increase in transaction and savings deposits driven by an increase in funding costs. The decrease in net interest income was partially offset by a $28.6 million increase in interest income on loans driven by an increase in loan yields and average balances, an $8.0 million decrease in interest expense on advances from FHLB, a $4.8 million increase in interest income in deposits in financial institutions and fed funds sold and a $1.4 million increase in interest income on debt securities. Net interest margin decreased 56 bps to 3.31% for the three months ended December 31, 2023 from 3.87% for the three months ended December 31, 2022. The decrease was primarily due to the increase in funding costs on deposits during the three months ended December 31, 2023, partially offset by an increase in loan yields and debt securities.

Noninterest (Loss) Income

Noninterest (loss) income for the three months ended December 31, 2023 was a loss of $17.8 million, a decrease of $27.5 million, or 283.9%, compared to noninterest income of $9.7 million for the three months ended September 30, 2023. The decrease in noninterest income was primarily due to a $29.3 million decrease in equity method investment income related to a write down of our equity method investment in Thrive Mortgage, LLC ("Thrive") related to Thrive’s entry into a definitive agreement in December 2023 to be acquired by Lower Holding Company. The decrease was partially offset by a $665 thousand increase in government guaranteed loan income, primarily driven by an increase in U.S. Department of Agriculture (“USDA”) loans sold through our wholly owned subsidiary North Avenue Capital, LLC ("NAC").

Compared to the three months ended December 31, 2022, noninterest income for the three months ended December 31, 2023   decreased $32.1 million, or 224.2%. The decrease was primarily due to a $24.0 million decrease in equity method investment income related to the write down of our equity method investment in Thrive. In addition, the decrease was partially due to $946 thousand increase in gain on sale of USDA loans through NAC, a $2.0 million decrease in customer swap income, a $1.3 million decrease in loan fees and a $1.0 million decrease in other income.

Noninterest Expense

Noninterest expense was $60.2 million for the three months ended December 31, 2023, compared to $59.4 million for the three months ended September 30, 2023, an increase of $824 thousand, or 1.4%. The increase was primarily driven by a $1.4 million increase in other expenses and a $768 thousand FDIC special assessment expense recorded in the fourth quarter 2023, partially offset by a decrease of $408 thousand in marketing expenses and a decrease of $343 thousand in salaries and employee benefits.

Noninterest expense was $60.2 million for the three months ended December 31, 2023, compared to $57.4 million for the three months ended December 31, 2022, an increase of $2.9 million, or 5.0%. The increase was primarily driven by a $3.2 million increase in professional and regulatory fees driven by FDIC insurance assessment expense, which includes the $768 thousand FDIC special assessment expense recorded in the fourth quarter 2023, and a $2.8 million increase in other expenses. The increase was partially offset by a $3.1 million decrease in salary and employee benefits.

Financial Condition

Total loans held for investment (“LHI”) was $9.2 billion at December 31, 2023, a decrease of $30.9 million, compared to September 30, 2023, and an increase of $170.1 million, or 1.9%, compared to December 31, 2022.

Total deposits were $10.34 billion at December 31, 2023, an increase of $141.7 million, or 5.5% annualized, compared to September 30, 2023, and an increase of $1.21 billion, or 13.3%, compared to December 31, 2022. The increase from September 30, 2023 was primarily the result of an increase of $412.3 million in interest-bearing transaction, money market and savings deposits accounts. The increase was partially offset by a decrease of $211.7 million in certificates and other time deposits and a decrease of $145.3 million of noninterest bearing deposits. The increase from December 31, 2022 was primarily the result of increases of $1.11 billion and $833.7 million in certificates and other time deposits and interest-bearing transaction, money market, and savings deposits, respectively. The increase was partially offset by a $422.6 million decrease in non-interest bearing deposits and a $301.2 million decrease in correspondent money market accounts.

Credit Quality

Nonperforming assets (“NPAs”) increased to $95.8 million, or 0.77% of total assets, at December 31, 2023, compared to $79.9 million, or 0.65% of total assets, at September 30, 2023. The Company had net charge-offs of $9.5 million for the fourth quarter of 2023. Net charge-offs compared to average loans outstanding were 25 bps for the year ended December 31, 2023, compared to 16 bps for year ended December 31, 2022.

ACL as a percentage of LHI was 1.14%, 1.14%, and 0.96% at December 31, 2023, September 30, 2023, and December 31, 2022, respectively. The Company recorded a provision for credit losses of $9.5 million for the three months ended December 31, 2023, compared to a provision for credit losses of $8.6 million and $11.8 million for the three months ended September 30, 2023 and December 31, 2022, respectively. The recorded provision for credit losses reported for the three months ended December 31, 2023, compared to the three months ended December 31, 2022 was primarily attributable to an increase in general reserves as a result of changes in economic factors and individually analyzed loans receiving specific reserves. The Company recorded a benefit for unfunded commitments of $1.5 million, $909 thousand and $523 thousand during the three months ended December 31, 2023, September 30, 2023 and December 31, 2022, respectively. The increase in the recorded benefit for unfunded commitments during the three months ended December 31, 2023, compared to the three months ended September 30, 2023, was attributable to a decrease in unfunded commitment balances partially offset by changes in economic factors.

Income Tax

Income tax expense for the twelve months ended December 31, 2023 totaled $36.0 million, a decrease of $4.3 million, or 10.7%, compared to the twelve months ended December 31, 2022. The Company’s effective tax rate was approximately 25.0% and 21.6% for the twelve months December 31, 2023 and December 31, 2022, respectively. The change in the effective tax rate for the twelve months ended December 31, 2023, compared to the twelve months ended December 31, 2022, was primarily due to a $4.2 million valuation allowance relating to our impairment on our investment in Thrive and its relative relation to less pre-tax income.

Dividend Information

On January 23, 2024, 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 February 23, 2024 to stockholders of record as of the close of business on February 9, 2024.

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, pre-tax, pre-provision operating return on average loans, diluted operating earnings per share, operating return on average assets, operating return on average tangible common equity and operating efficiency ratio. Veritex has included in this earnings release information related to these non-GAAP financial measures for the applicable periods presented. Please refer to “Reconciliation of Non-GAAP Financial Measures” after the financial highlights at the end of this earnings release for a reconciliation of these non-GAAP financial measures.

Conference Call

The Company will host an investor conference call to review the results on Wednesday, January 24, 2024 at 8:30 a.m. Central Time. Participants may pre-register for the call by visiting https://edge.media-server.com/mmc/p/9o9pd6vj/ 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/BI07dad5089afd439ebad10a33915b98b6. 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.

Media and Investor Relations:
investorrelations@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’s quarterly cash dividend; expected loss on Veritex’s current equity method investment in Thrive; the transaction between Thrive and Lower Holding Company, including the expected timing of the completion of such transaction, the ability of the parties thereto to complete such transaction, the ability of the parties thereto to obtain any required regulatory or other approvals, authorizations or consents in connection with such transaction, and diversion of management time on issues related to such transaction; the impact of certain changes in Veritex’s accounting policies, standards and interpretations; a continuation of recent turmoil in the banking industry, responsive measures to mitigate and manage it and related supervisory and regulatory actions and costs 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, 2022 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 Year Ended
  Dec 31,
2023
 Sep 30,
2023
 Jun 30,
2023
 Mar 31,
2023
 Dec 31,
2022
 Dec 31,
2023
 Dec 31,
2022
  (Dollars and shares in thousands, except per-share data)
Per Share Data (Common Stock):              
Basic EPS $0.06  $0.60  $0.62  $0.71  $0.74  $2.00  $2.75 
Diluted EPS  0.06   0.60   0.62   0.70   0.73   1.98   2.71 
Book value per common share  28.18   27.46   27.48   27.54   26.83   28.18   26.83 
Tangible book value per common share1  20.21   19.44   19.41   19.43   18.64   20.21   18.64 
Dividends paid per common share outstanding2  0.20   0.20   0.20   0.20   0.20   0.80   0.80 
               
Common Stock Data:              
Shares outstanding at period end  54,338   54,305   54,261   54,229   54,030   54,338   54,030 
Weighted average basic shares outstanding for the period  54,327   54,300   54,247   54,149   54,011   54,256   53,170 
Weighted average diluted shares outstanding for the period  54,691   54,597   54,486   54,606   54,780   54,596   53,952 
               
Summary of Credit Ratios:              
ACL to total LHI  1.14%  1.14%  1.05%  1.02%  0.96%  1.14%  0.96%
NPAs to total assets  0.77   0.65   0.55   0.35   0.36   0.77   0.36 
NPAs, excluding nonaccrual purchase credit deteriorated ("PCD") loans, to total assets3  0.66   0.54   0.44   0.25   0.25   0.66   0.25 
Net charge-offs to average loans outstanding4  0.40   0.08   0.48   0.04   0.24   0.25   0.16 
               
Summary Performance Ratios:              
Return on average assets4  0.11%  1.06%  1.10%  1.28%  1.35%  0.88%  1.33%
Return on average equity4  0.92   8.58   8.96   10.55   11.03   7.21   10.28 
Return on average tangible common equity1, 4  2.00   12.80   13.35   15.81   16.75   10.91   15.78 
Efficiency ratio  77.49   54.49   49.94   48.42   47.63   55.82   48.64 
Net interest margin  3.31   3.46   3.51   3.69   3.87   3.49   3.59 
               
Selected Performance Metrics - Operating:              
Diluted operating EPS1 $0.58  $0.60  $0.64  $0.79  $0.74  $2.60  $2.74 
Pre-tax, pre-provision operating return on average assets1, 2  1.54%  1.61%  1.90%  2.20%  2.15%  1.81%  1.97%
Pre-tax, pre-provision operating return on average loans1, 4  1.97   2.05   2.43   2.83   2.78   2.32   2.60 
Operating return on average assets1,4  1.02   1.06   1.13   1.43   1.36   1.16   1.35 
Operating return on average tangible common equity1,3  12.37   12.80   13.70   17.68   16.95   14.09   15.94 
Operating efficiency ratio1  55.50   54.49   48.90   45.70   47.11   50.94   48.16 
               
Veritex Holdings, Inc. Capital Ratios:              
Average stockholders' equity to average total assets  12.27%  12.30%  12.23%  12.09%  12.20%  12.22%  12.96%
Tangible common equity to tangible assets1  9.18   8.86   8.76   8.66   8.60   9.18   8.60 
Tier 1 capital to average assets (leverage)  10.03   10.10   9.80   9.67   9.82   10.03   9.82 
Common equity tier 1 capital  10.29   10.11   9.76   9.32   9.09   10.29   9.09 
Tier 1 capital to risk-weighted assets  10.56   10.37   10.01   9.56   9.34   10.56   9.34 
Total capital to risk-weighted assets  13.18   12.95   12.51   11.99   11.63   13.18   11.63 

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.
2 Dividend amount represents dividend paid per common share subsequent to each respective quarter end.
3 Nonaccrual PCD loans consist of PCD loans that transitioned upon adoption of ASC 326 Financial Instruments-Credit Losses and were accounted for on a pooled basis that have subsequently been placed on nonaccrual status.
4Annualized ratio for quarterly metrics.


VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(in thousands)
           
  Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022
  (unaudited) (unaudited) (unaudited) (unaudited)  
ASSETS          
Cash and cash equivalents $629,063  $713,408  $663,921  $808,395  $436,077 
Debt securities, net  1,257,042   1,060,629   1,144,020   1,150,959   1,282,460 
Other investments  76,238   80,869   138,894   137,621   122,450 
           
Loans held for sale ("LHFS")  79,072   41,313   29,876   42,816   20,641 
LHI, mortgage warehouse ("MW")  377,796   390,767   436,255   437,501   446,227 
LHI, excluding MW  9,206,544   9,237,447   9,257,183   9,237,159   9,036,424 
Total loans  9,663,412   9,669,527   9,723,314   9,717,476   9,503,292 
ACL  (109,816)  (109,831)  (102,150)  (98,694)  (91,052)
Bank-owned life insurance  84,833   84,867   84,375   84,962   84,496 
Bank premises, furniture and equipment, net  105,727   106,118   105,986   107,540   108,824 
Intangible assets, net of accumulated amortization  41,753   44,294   48,293   51,086   53,213 
Goodwill  404,452   404,452   404,452   404,452   404,452 
Other assets  241,633   291,998   259,263   245,690   250,149 
Total assets $12,394,337  $12,346,331  $12,470,368  $12,609,487  $12,154,361 
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Deposits:          
Noninterest-bearing deposits $2,218,036  $2,363,340  $2,234,109  $2,212,389  $2,640,617 
Interest-bearing transaction and savings deposits  4,348,385   3,936,070   3,590,253   3,492,011   3,514,729 
Certificates and other time deposits  3,191,737   3,403,427   2,928,949   2,896,870   2,086,642 
Correspondent money market deposits  580,037   493,681   480,598   433,468   881,246 
Total deposits  10,338,195   10,196,518   9,233,909   9,034,738   9,123,234 
Accounts payable and other liabilities  195,036   229,116   190,900   171,985   177,579 
Advances from FHLB  100,000   200,000   1,325,000   1,680,000   1,175,000 
Subordinated debentures and subordinated notes  229,783   229,531   229,279   229,027   228,775 
Total liabilities  10,863,014   10,855,165   10,979,088   11,115,750   10,704,588 
Commitments and contingencies          
Stockholders’ equity:          
Common stock  610   609   609   609   607 
Additional paid-in capital  1,317,516   1,314,459   1,311,687   1,308,345   1,306,852 
Retained earnings  444,242   451,513   429,753   406,873   379,299 
Accumulated other comprehensive loss  (63,463)  (107,833)  (83,187)  (54,508)  (69,403)
Treasury stock  (167,582)  (167,582)  (167,582)  (167,582)  (167,582)
Total stockholders’ equity  1,531,323   1,491,166   1,491,280   1,493,737   1,449,773 
Total liabilities and stockholders’ equity $12,394,337  $12,346,331  $12,470,368  $12,609,487  $12,154,361 


VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(in thousands, except per share data)
 
  For the Quarter Ended For the Year Ended
  Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Dec 31, 2023 Dec 31, 2022
  (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)  
Interest income:              
Loans, including fees $165,443  $167,368  $163,727  $151,707  $136,846  $648,245  $399,679 
Debt securities  12,282   10,928   10,166   10,988   10,880   44,364   38,736 
Deposits in financial institutions and Fed Funds sold  8,162   7,128   7,507   5,534   3,401   28,331   6,275 
Equity securities and other investments  1,717   1,691   1,118   1,408   1,087   5,934   4,720 
Total interest income  187,604   187,115   182,518   169,637   152,214   726,874   449,410 
Interest expense:              
Transaction and savings deposits  46,225   39,936   32,957   29,857   24,043   148,975   42,785 
Certificates and other time deposits  40,165   36,177   28,100   20,967   8,543   125,409   15,307 
Advances from FHLB  2,581   8,523   17,562   12,358   10,577   41,024   15,501 
Subordinated debentures and subordinated notes  3,100   3,118   3,068   3,066   2,954   12,352   11,160 
Total interest expense  92,071   87,754   81,687   66,248   46,117   327,760   84,753 
Net interest income  95,533   99,361   100,831   103,389   106,097   399,114   364,657 
Provision for credit losses1  9,500   8,627   15,000   9,385   11,800   42,512   26,950 
(Benefit) provision for unfunded commitments  (1,500)  (909)  (1,129)  1,497   (523)  (2,041)  820 
Net interest income after provisions  87,533   91,643   86,960   92,507   94,820   358,643   336,887 
Noninterest income:              
Service charges and fees on deposit accounts  4,800   5,159   5,272   5,017   5,173   20,248   20,139 
Loan fees  1,200   1,564   1,520   2,064   2,477   6,348   10,442 
Loss on sales of debt securities           (5,321)     (5,321)   
Gain on sales of mortgage LHFS  10   21   40   6   4   77   550 
U.S. Small Business Administration loan income  1,240   575   574   322   294   2,711   2,838 
USDA loan income  3,138   1,197   3,570   9,366   7,514   17,271   11,222 
Equity method investment (loss) income  (29,417)  (136)  485   (1,521)  (5,416)  (30,589)  (5,141)
Customer swap income  238   202   961   217   2,273   1,618   7,898 
Other income  999   1,092   1,270   3,381   2,007   6,742   4,874 
Total noninterest (loss) income  (17,792)  9,674   13,692   13,531   14,326   19,105   52,822 
Noninterest expense:              
Salaries and employee benefits  30,606   30,949   28,650   31,865   33,690   122,070   117,841 
Occupancy and equipment  4,670   4,881   4,827   4,973   5,116   19,351   18,744 
Professional and regulatory fees  7,626   7,283   6,868   4,389   4,401   26,166   14,142 
Data processing and software expense  4,569   4,541   4,709   4,720   4,197   18,539   14,013 
Marketing  1,945   2,353   2,627   1,779   1,841   8,704   7,179 
Amortization of intangibles  2,438   2,437   2,468   2,495   2,495   9,838   9,979 
Telephone and communications  356   362   355   478   358   1,551   1,484 
Merger and acquisition ("M&A") expense                    1,379 
Other  8,028   6,608   6,693   5,916   5,261   27,245   18,314 
Total noninterest expense  60,238   59,414   57,197   56,615   57,359   233,464   203,075 
Income before income tax expense  9,503   41,903   43,455   49,423   51,787   144,284   186,634 
Income tax expense  6,004   9,282   9,725   11,012   11,890   36,023   40,319 
Net income $3,499  $32,621  $33,730  $38,411  $39,897  $108,261  $146,315 
Net income available to common stockholders $3,499  $32,621  $33,730  $38,411  $39,897  $108,261  $146,315 
               
Basic EPS $0.06  $0.60  $0.62  $0.71  $0.74  $2.00  $2.75 
Diluted EPS $0.06  $0.60  $0.62  $0.70  $0.73  $1.98  $2.71 
Weighted average basic shares outstanding  54,327   54,300   54,247   54,149   54,011   54,256   53,170 
Weighted average diluted shares outstanding  54,691   54,597   54,486   54,606   54,780   54,596   53,952 

1 Includes provision for credit losses on available for sale (“AFS”) securities of $885 thousand for the three months ended March 31, 2023.


VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(Unaudited)
 
  For the Quarter Ended
  December 31, 2023 September 30, 2023 December 31, 2022
  Average
Outstanding
Balance
 Interest
Earned/
Interest
Paid
 Average
Yield/
Rate
 Average
Outstanding
Balance
 Interest
Earned/
Interest
Paid
 Average
Yield/
Rate
 Average
Outstanding
Balance
 Interest
Earned/
Interest
Paid
 Average
Yield/
Rate
  (Dollars in thousands)
Assets                  
Interest-earning assets:                  
Loans1 $9,280,439  $161,021 6.88% $9,267,366  $161,615 6.92% $8,743,380  $131,823 5.98%
LHI, MW  301,345   4,422 5.82   357,639   5,753 6.38   383,080   5,024 5.20 
Debt securities  1,188,776   12,282 4.10   1,121,716   10,928 3.87   1,286,342   10,880 3.36 
Interest-earning deposits in other banks  587,929   8,162 5.51   520,785   7,128 5.43   353,737   3,401 3.81 
Equity securities and other investments  82,271   1,717 8.28   135,714   1,691 4.94   119,054   1,087 3.62 
Total interest-earning assets  11,440,760   187,604 6.51   11,403,220   187,115 6.51   10,885,593   152,215 5.55 
ACL  (111,937)      (105,320)      (85,275)    
Noninterest-earning assets  977,811       961,162       960,726     
Total assets $12,306,634      $12,259,062      $11,761,044     
                   
Liabilities and Stockholders’ Equity                  
Interest-bearing liabilities:                  
Interest-bearing demand and savings deposits $4,547,911   46,225 4.03% $4,168,876  $39,936 3.80% $4,321,936   24,043 2.21%
Certificates and other time deposits  3,285,164   40,165 4.85   3,151,704   36,177 4.55   1,785,152   8,543 1.90 
Advances from FHLB and Other  182,935   2,581 5.60   725,543   8,523 4.66   1,073,049   10,577 3.91 
Subordinated debentures and subordinated notes  229,648   3,100 5.36   229,389   3,118 5.39   229,037   2,954 5.12 
Total interest-bearing liabilities  8,245,658   92,071 4.43   8,275,512   87,754 4.21   7,409,174   46,117 2.47 
                   
Noninterest-bearing liabilities:                  
Noninterest-bearing deposits  2,322,555       2,272,207       2,737,468     
Other liabilities  228,135       203,173       179,584     
Total liabilities  10,796,348       10,750,892       10,326,226     
Stockholders’ equity  1,510,286       1,508,170       1,434,818     
Total liabilities and stockholders’ equity $12,306,634      $12,259,062      $11,761,044     
                   
Net interest rate spread2     2.08%     2.30%     3.08%
Net interest income and margin3   $95,533 3.31%   $99,361 3.46%   $106,097 3.87%

1 Includes average outstanding balances of LHFS of $31,242, $28,284 and $15,296 for the three months ended December 31, 2023, September 30, 2023 and December 31, 2022, respectively, and average balances of LHI, excluding MW.
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 Highlights
(Unaudited)
 
  For the Year Ended December 31,
   2023   2022 
  Average
Outstanding
Balance
 Interest
Earned/
Interest
Paid
 Average
Yield/
Rate
 Average
Outstanding
Balance
 Interest
Earned/
Interest
Paid
 Average
Yield/
Rate
  (Dollars in thousands)
Assets            
Interest-earning assets:            
Loans1 $9,244,070  $628,122 6.79% $7,877,949  $383,008 4.86%
LHI, MW  347,596   20,123 5.79   433,062   16,671 3.85 
Debt securities  1,173,880   44,364 3.78   1,277,643   38,736 3.03 
Interest-earning deposits in other banks  542,959   28,331 5.22   405,471   6,275 1.55 
Equity securities and other investments  120,135   5,934 4.94   169,875   4,720 2.78 
Total interest-earning assets  11,428,640   726,874 6.36   10,164,000   449,410 4.42 
ACL  (103,179)      (79,845)    
Noninterest-earning assets  957,286       905,103     
Total assets $12,282,747      $10,989,258     
             
Liabilities and Stockholders’ Equity            
Interest-bearing liabilities:            
Interest-bearing demand and savings deposits $4,197,517   148,975 3.55  $3,934,926   42,785 1.09 
Certificates and other time deposits  2,977,178   125,409 4.21   1,601,687   15,307 0.96 
Advances from FHLB and Other  873,617   41,024 4.70   896,687   15,501 1.73 
Subordinated debentures and subordinated notes  229,268   12,352 5.39   230,984   11,160 4.83 
Total interest-bearing liabilities  8,277,580   327,760 3.96   6,664,284   84,753 1.27 
             
Noninterest-bearing liabilities:            
Noninterest-bearing deposits  2,309,983       2,782,077     
Other liabilities  193,659       119,237     
Total liabilities  10,781,222       9,565,598     
Stockholders’ equity  1,501,525       1,423,660     
Total liabilities and stockholders’ equity $12,282,747      $10,989,258     
             
Net interest rate spread2     2.40%     3.15%
Net interest income and margin3   $399,114 3.49%   $364,657 3.59%

1Includes average outstanding balances of LHFS of $25,684 and $13,558 for the twelve months ended December 31, 2023 and 2022, respectively, and average balances of LHI, excluding MW.
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 Highlights
(Unaudited)

Yield Trend

  For the Quarter Ended
  Dec 31,
2023
 Sep 30,
2023
 Jun 30,
2023
 Mar 31,
2023
 Dec 31,
2022
Average yield on interest-earning assets:          
Loans1 6.88% 6.92% 6.85% 6.51% 5.98%
LHI, MW 5.82  6.38  5.44  5.52  5.20 
Debt securities 4.10  3.87  3.60  3.56  3.36 
Interest-bearing deposits in other banks 5.51  5.43  5.16  4.69  3.81 
Equity securities and other investments 8.28  4.94  3.25  4.57  3.62 
Total interest-earning assets 6.51% 6.51% 6.36% 6.06% 5.55%
           
Average rate on interest-bearing liabilities:          
Interest-bearing demand and savings deposits 4.03% 3.80% 3.37% 2.92% 2.21%
Certificates and other time deposits 4.85  4.55  3.92  3.28  1.90 
Advances from FHLB and Other 5.60  4.66  4.78  4.46  3.91 
Subordinated debentures and subordinated notes 5.36  5.39  5.37  5.38  5.12 
Total interest-bearing liabilities 4.43% 4.21% 3.86% 3.32% 2.47%
           
Net interest rate spread2 2.08% 2.30% 2.50% 2.74% 3.08%
Net interest margin3 3.31% 3.46% 3.51% 3.69% 3.87%

  
1 Includes average outstanding balances of LHFS of $31,242, $28,284, $23,374, $19,679 and $15,296 for the three months ended December 31, 2023, September 30, 2023, June 30, 2023, March 31, 2023 and December 31, 2022, respectively, and average balances of LHI, excluding MW.
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
  Dec 31,
2023
 Sep 30,
2023
 Jun 30,
2023
 Mar 31,
2023
 Dec 31,
2022
Average cost of interest-bearing deposits 4.38% 4.12% 3.61% 3.06% 2.12%
Average costs of total deposits, including noninterest-bearing 3.37  3.15  2.73  2.24  1.46 

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

LHI and Deposit Portfolio Composition

  Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022
  (In thousands, except percentages)
LHI1                    
Commercial and Industrial ("C&I") $2,752,063  29.9% $2,841,024  30.7% $2,850,084  30.7% $2,895,957  31.3% $2,942,348  32.4%
Real Estate:                    
Owner occupied commercial ("OOCRE")  794,088  8.6   697,299  7.5   671,602  7.2   631,563  6.8   715,829  7.9 
Non-owner occupied commercial ("NOOCRE")  2,350,725  25.5   2,398,060  26.1   2,509,731  27.1   2,505,344  27.1   2,341,379  25.9 
Construction and land  1,734,254  18.8   1,705,053  18.4   1,659,700  17.9   1,831,349  19.8   1,787,400  19.7 
Farmland  31,114  0.3   59,684  0.6   51,663  0.6   51,680  0.6   43,500  0.5 
1-4 family residential  937,119  10.2   933,225  10.1   923,442  10.0   896,252  9.7   894,456  9.9 
Multi-family residential  605,817  6.6   603,395  6.5   592,473  6.4   432,209  4.6   322,679  3.6 
Consumer  10,149  0.1   9,845  0.1   11,189  0.1   8,316  0.1   7,806  0.1 
Total LHI $9,215,329  100% $9,247,585  100% $9,269,884  100% $9,252,670  100% $9,055,397  100%
                     
MW  377,796     390,767     436,255     437,501     446,227   
                     
Total LHI1 $9,593,125    $9,638,352    $9,706,139    $9,690,171    $9,501,624   
                     
Total LHFS  79,072     41,313     29,876     42,816     20,641   
                     
Total Loans $9,672,197    $9,679,665    $9,736,015    $9,732,987    $9,522,265   
                     
Deposits                    
Noninterest-bearing $2,218,036  21.5% $2,363,340  23.2% $2,234,109  24.2% $2,212,389  24.5% $2,640,617  28.9%
Interest-bearing transaction  347,156  3.4   739,098  7.2   676,653  7.3   866,609  9.6   622,814  6.8 
Money market  3,864,361  37.3   3,096,498  30.4   2,816,769  30.5   2,518,922  27.9   2,773,622  30.4 
Savings  136,868  1.3   100,474  1.0   96,831  1.0   106,480  1.2   118,293  1.3 
Certificates and other time deposits  3,191,737  30.9   3,403,427  33.4   2,928,949  31.7   2,896,870  32.0   2,086,642  22.9 
Correspondent money market account  580,037  5.6   493,681  4.8   480,598  5.3   433,468  4.8   881,246  9.7 
Total deposits $10,338,195  100% $10,196,518  100% $9,233,909  100% $9,034,738  100% $9,123,234  100%
                     
Total loans to total deposits ratio  93.6%    94.9%    105.4%    107.7%    104.4%  
                     
LHI to Deposit Ratio, excluding MW  89.1%    90.7%    100.4%    102.4%    99.3%  

1 Total LHI does not include deferred costs of $8.8 million, $10.1 million, $12.7 million, $15.5 million and $19.0 million at December 31, 2023, September 30, 2023, June 30, 2023, March 31, 2023 and December 31, 2022, respectively.


VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(Unaudited)
Asset Quality
 
 For the Quarter Ended For the Year Ended
 Dec 31,
2023
 Sep 30,
2023
 Jun 30,
2023
 Mar 31,
2023
 Dec 31,
2022
 Dec 31,
2023
 Dec 31,
2022
 (In thousands, except percentages)
NPAs:             
Nonaccrual loans$79,133  $65,676  $54,055  $31,452  $30,364  $79,133  $30,364 
Nonaccrual PCD loans1 13,715   13,718   13,721   12,784   13,178   13,715   13,178 
Accruing loans 90 or more days past due2 2,975   474   528   296   125   2,975   125 
Total nonperforming loans held for investment ("NPLs") 95,823   79,868   68,304   44,532   43,667   95,823   43,667 
Other real estate owned                    
Total NPAs$95,823  $79,868  $68,304  $44,532  $43,667  $95,823  $43,667 
              
Charge-offs:             
1-4 family residential$(21) $  $  $  $  $(21) $ 
Multifamily (192)              (192)   
OOCRE (364)  (375)     (116)     (855)  (2,646)
NOOCRE (5,434)     (8,215)     (1,019)  (13,649)  (2,410)
C&I (3,893)  (1,929)  (3,540)  (1,051)  (5,449)  (10,413)  (9,731)
Consumer (33)  (49)  (92)  (62)  (41)  (236)  (1,285)
Total charge-offs (9,937)  (2,353)  (11,847)  (1,229)  (6,509)  (25,366)  (16,072)
              
Recoveries:             
1-4 family residential 1      1   1   24   3   31 
OOCRE             26      271 
NOOCRE    200   150      229   350   725 
C&I 387   308   106   364   415   1,165   1,308 
Consumer 34   14   46   6   30   100   85 
Total recoveries 422   522   303   371   724   1,618   2,420 
              
Net charge-offs$(9,515) $(1,831) $(11,544) $(858) $(5,785) $(23,748) $(13,652)
              
Provision for credit losses$9,500  $8,627  $15,000  $9,385  $11,800  $42,512  $26,950 
              
ACL$109,816  $109,831  $102,150  $98,694  $91,052  $109,816  $91,052 
              
Asset Quality Ratios:             
NPAs to total assets 0.77%  0.65%  0.55%  0.35%  0.36%  0.77%  0.36%
NPAs, excluding nonaccrual PCD loans, to total assets 0.66   0.54   0.44   0.25   0.25   0.66   0.25 
NPLs to total LHI 1.00   0.83   0.70   0.46   0.46   1.00   0.46 
NPLs, excluding nonaccrual PCD loans, to total LHI 0.86   0.69   0.56   0.33   0.32   0.86   0.32 
ACL to total LHI 1.14   1.14   1.05   1.02   0.96   1.14   0.96 
Net charge-offs to average loans outstanding3 0.40   0.08   0.48   0.04   0.24   0.25   0.16 

1 Nonaccrual PCD loans consist of PCD loans that transitioned upon adoption of ASC 326 Financial Instruments - Credit Losses and were accounted for on a pooled basis that have subsequently been placed on nonaccrual status.
2 Accruing loans greater than 90 days past due exclude PCD loans greater than 90 days past due that are accounted for on a pooled basis.
3Annualized ratio for quarterly metrics.

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 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 per common share 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
  Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022
  (Dollars in thousands, except per share data)
Tangible Common Equity          
Total stockholders' equity $1,531,323  $1,491,166  $1,491,280  $1,493,737  $1,449,773 
Adjustments:          
Goodwill  (404,452)  (404,452)  (404,452)  (404,452)  (404,452)
Core deposit intangibles  (28,495)  (30,933)  (33,371)  (35,808)  (38,247)
Tangible common equity $1,098,376  $1,055,781  $1,053,457  $1,053,477  $1,007,074 
Common shares outstanding  54,338   54,305   54,261   54,229   54,030 
           
Book value per common share $28.18  $27.46  $27.48  $27.54  $26.83 
Tangible book value per common share $20.21  $19.44  $19.41  $19.43  $18.64 

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
  Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022
  (Dollars in thousands)
Tangible Common Equity          
Total stockholders' equity $1,531,323  $1,491,166  $1,491,280  $1,493,737  $1,449,773 
Adjustments:          
Goodwill  (404,452)  (404,452)  (404,452)  (404,452)  (404,452)
Core deposit intangibles  (28,495)  (30,933)  (33,371)  (35,808)  (38,247)
Tangible common equity $1,098,376  $1,055,781  $1,053,457  $1,053,477  $1,007,074 
Tangible Assets          
Total assets $12,394,337  $12,346,331  $12,470,368  $12,609,487  $12,154,361 
Adjustments:          
Goodwill  (404,452)  (404,452)  (404,452)  (404,452)  (404,452)
Core deposit intangibles  (28,495)  (30,933)  (33,371)  (35,808)  (38,247)
Tangible Assets $11,961,390  $11,910,946  $12,032,545  $12,169,227  $11,711,662 
Tangible Common Equity to Tangible Assets  9.18%  8.86%  8.76%  8.66%  8.60%

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 Year Ended
  Dec 31,
2023
 Sep 30,
2023
 Jun 30,
2023
 Mar 31,
2023
 Dec 31,
2022
 Dec 31,
2023
 Dec 31,
2022
  (Dollars in thousands)
Net (loss) income available for common stockholders adjusted for amortization of core deposit intangibles              
Net (loss) income $3,499  $32,621  $33,730  $38,411  $39,897  $108,261  $146,315 
Adjustments:              
Plus: Amortization of core deposit intangibles  2,438   2,438   2,438   2,438   2,438   9,752   9,752 
Less: Tax benefit at the statutory rate  512   512   512   512   512   2,048   2,048 
Net (loss) income available for common stockholders adjusted for amortization of core deposit intangibles $5,425  $34,547  $35,656  $40,337  $41,823  $115,965  $154,019 
               
Average Tangible Common Equity              
Total average stockholders' equity $1,510,286  $1,508,170  $1,510,625  $1,476,576  $1,434,818  $1,501,525  $1,423,660 
Adjustments:              
Average goodwill  (404,452)  (404,452)  (404,452)  (404,452)  (404,452)  (404,452)  (404,344)
Average core deposit intangibles  (30,093)  (32,540)  (34,969)  (37,361)  (39,792)  (33,718)  (43,451)
Average tangible common equity $1,075,741  $1,071,178  $1,071,204  $1,034,763  $990,574  $1,063,355  $975,865 
Return on Average Tangible Common Equity (Annualized)  2.00%  12.80%  13.35%  15.81%  16.75%  10.91%  15.78%

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 Assets, Pre-tax, Pre-Provision Operating Return on Average Assets, Pre-tax, Pre-Provision Operating Return on Average Loans, 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 equity method investment write-down, plus FDIC special assessment, plus severance payments, plus loss on sale of debt securities AFS, net, 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 benefit (provision) 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 Year Ended
  Dec 31,
2023
 Sep 30,
2023
 Jun 30,
2023
 Mar 31,
2023
 Dec 31,
2022
 Dec 31,
2023
 Dec 31,
2022
  (Dollars in thousands, except per share data)
Operating Earnings              
Net income $3,499 $32,621 $33,730 $38,411 $39,897 $108,261 $146,315
Plus: Equity method investment write-down  29,417          29,417  
Plus: FDIC special assessment  768          768  
Plus: Severance payments1      1,194  756  630  1,950  630
Plus: Loss on sale of debt securities AFS, net        5,321    5,321  
Plus: M&A expenses              1,379
Operating pre-tax income  33,684  32,621  34,924  44,488  40,527  145,717  148,324
Less: Tax impact of adjustments  2,059    251  1,293  132  3,603  435
Operating earnings $31,625 $32,621 $34,673 $43,195 $40,395 $142,114 $147,889
               
Weighted average diluted shares outstanding  54,691  54,597  54,486  54,606  54,780  54,596  53,952
Diluted EPS $0.06 $0.60 $0.62 $0.70 $0.73 $1.98 $2.71
Diluted operating EPS $0.58 $0.60 $0.64 $0.79 $0.74 $2.60 $2.74

1 Severance payments relate to restructurings made during the periods disclosed.

  For the Quarter Ended For the Year Ended
(Dollars in thousands) Dec 31,
2023
 Sep 30,
2023
 Jun 30,
2023
 Mar 31,
2023
 Dec 31,
2022
 Dec 31,
2023
 Dec 31,
2022
Pre-Tax, Pre-Provision Operating Earnings              
Net Income $3,499  $32,621  $33,730  $38,411  $39,897  $108,261  $146,315 
Plus: Provision for income taxes  6,004   9,282   9,725   11,012   11,890   36,023   40,319 
Plus: Provision for credit losses and unfunded commitments  8,000   7,718   13,871   10,882   11,277   40,471   27,770 
Plus: Severance payments        1,194   756   630   1,950   630 
Plus: Loss on sale of debt securities AFS, net           5,321      5,321    
Plus: Equity method investment write-down  29,417               29,417    
Plus: FDIC special assessment  768               768    
Plus: M&A expenses                    1,379 
Net pre-tax, pre-provision operating earnings $47,688  $49,621  $58,520  $66,382  $63,694  $222,211  $216,413 
               
Average total assets $12,306,634  $12,259,062  $12,350,223  $12,214,313  $11,761,044  $12,282,747  $10,989,258 
Pre-tax, pre-provision operating return on average assets1  1.54%  1.61%  1.90%  2.20%  2.15%  1.81%  1.97%
               
Average Total Assets $12,306,634  $12,259,062  $12,350,223  $12,214,313  $11,761,044  $12,282,747  $10,989,258 
Return on average assets1  0.11%  1.06%  1.10%  1.28%  1.35%  0.88%  1.33%
Operating return on average assets1  1.02   1.06   1.13   1.43   1.36   1.16   1.35 
               
Average loans $9,581,784  $9,625,005  $9,657,313  $9,501,309  $9,103,552  $9,591,666  $8,311,011 
Pre-tax, pre-provision operating return on average loans1  1.97%  2.05%  2.43%  2.83%  2.78%  2.32%  2.60%
               
Operating earnings adjusted for amortization of core deposit intangibles              
Operating earnings $31,625  $32,621  $34,673  $43,195  $40,395  $142,114  $147,889 
Adjustments:              
Plus: Amortization of core deposit intangibles  2,438   2,438   2,438   2,438   2,438   9,752   9,752 
Less: Tax benefit at the statutory rate  512   512   512   512   512   2,048   2,048 
Operating earnings adjusted for amortization of core deposit intangibles $33,551  $34,547  $36,599  $45,121  $42,321  $149,818  $155,593 
               
Average Tangible Common Equity              
Total average stockholders' equity $1,510,286  $1,508,170  $1,510,625  $1,476,576  $1,434,818  $1,501,525  $1,423,660 
Adjustments:              
Less: Average goodwill  (404,452)  (404,452)  (404,452)  (404,452)  (404,452)  (404,452)  (404,344)
Less: Average core deposit intangibles  (30,093)  (32,540)  (34,969)  (37,361)  (39,792)  (33,718)  (43,451)
Average tangible common equity $1,075,741  $1,071,178  $1,071,204  $1,034,763  $990,574  $1,063,355  $975,865 
Operating return on average tangible common equity1  12.37%  12.80%  13.70%  17.68%  16.95%  14.09%  15.94%
               
Efficiency ratio  77.49%  54.49%  49.94%  48.42%  47.63%  55.82%  48.64%
Net interest income $95,533  $99,361  $100,831  $103,389  $106,097  $399,114  $364,657 
Noninterest (loss) income  (17,792)  9,674   13,692   13,531   14,326   19,105   52,822 
Plus: Loss on sale of debt securities AFS, net           5,321      5,321    
Plus: Equity method investment write-down  29,417               29,417    
Operating noninterest income  11,625   9,674   13,692   18,852   14,326   53,843   52,822 
Noninterest expense  60,238   59,414   57,197   56,615   57,359   233,464   203,075 
Less: FDIC special assessment  768               768    
Less: Severance payments        1,194   756   630   1,950   630 
Less: M&A expenses                    1,379 
Operating noninterest expense $59,470  $59,414  $56,003  $55,859  $56,729  $230,746  $201,066 
Operating efficiency ratio