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Veritex Holdings, Inc. Reports Record Third Quarter Earnings and Strong Organic Growth

DALLAS, Nov. 4, 2014 (GLOBE NEWSWIRE) -- Veritex Holdings, Inc. (Nasdaq:VBTX), the holding company for Veritex Community Bank, announced the results today for the quarter ended September 30, 2014. The Company reported net income of $1.4 million or $0.21 per diluted common share for the quarter ended September 30, 2014 compared to net income of $952,000 or $0.16 per diluted common share, an increase of $407,000 or 42.7% for the same period in 2013.

2014 Third Quarter Highlights

  • Third quarter 2014 earnings per share (diluted) increased 31.2% to $0.21 compared with the third quarter 2013
  • Net income was $1.4 million, a $407,000 or 42.7% increase compared with third quarter 2013
  • Total loans increased $131.8 million or 29.1% to $584.8 million compared with September 30, 2013
  • Deposits increased $129.4 million or 25.1% to $644.5 million compared with September 30, 2013
  • Nonperforming assets declined to 0.25% of September 30, 2014 total assets compared to 0.42% June 30, 2014 total assets

"I am very pleased about our record third quarter earnings and continued organic growth of loans and deposits," said C. Malcolm Holland, Chairman and CEO of Veritex Holdings, Inc. He added, "Our recently completed initial public offering (IPO) of 3.1 million shares in October of 2014 raised approximately $40 million in new capital that will assist us in executing our organic growth and acquisition strategy."

Results of operations for the three months ended September 30, 2014

For the three months ended September 30, 2014, net income was $1.4 million and net income available to common stockholders was $1.3 million, compared with $952,000 for net income and net income available to common stockholders for the three months ended September 30, 2013. Net income and net income available to common stockholders was $1.2 million for the three months ended June 30, 2014. Earnings per diluted common share was $0.21 for the three months ended September 30, 2014, compared with $0.18 and $0.16 for the three months ended June 30, 2014 and September 30, 2013, respectively.

Returns on average assets ("ROA") and return on average common equity ("ROE") for the three months ended September 30, 2014 were 0.74% and 7.16%, respectively compared to ROAs of 0.71% and 0.64% and ROEs of 6.49% and 5.81% for the three months ended June 30, 2014 and September 30, 2013, respectively. The increases were the result of continued growth in net income from operations as a result of gains in efficiencies from our operating platform. The efficiency ratio defined as noninterest expense divided by the sum of net interest income and noninterest income, was 65.87% for the three months ended September 30, 2014 compared to 65.98% and 69.00% over the three months ended June 30, 2014 and September 30, 2013, respectively.

Revenues (net interest income plus noninterest income) for the three months ended September 30, 2014 were $7.3 million, an increase of 24.9% and 8.5% compared to the same period last year and the three months ended June 30, 2014. The increase in revenues compared to these periods was primarily due to increased interest income resulting from growth in loans and gains on loans held for sale. These increases were partially offset by increases in interest on borrowings resulting from the December 23, 2013 private offering of $5 million in aggregate principal amount of subordinated promissory notes and growth in interest expense related to interest-bearing deposits.

Net interest income before provision for loan losses for the three months ended September 30, 2014 was $6.7 million compared $5.3 million for the same period in 2013 and $6.1 million for the three months ended June 30, 2014. The net interest margin for the three months ended September 30, 2014 increased to 3.95%, compared with 3.92% for the same period in 2013 and from 3.92% for the three months ended June 30, 2014. The increase was primarily due to change in earning asset mix with a greater percentage of earning assets held in loans versus low yielding bank deposits and a reduction in interest bearing deposit expense. Interest paid on interest bearing deposits declined to 0.63% from 0.72% due to a change in mix between time deposits with interest paid at 0.96% and brokered money market accounts with interest paid at 0.19%. Partially offsetting this increase in net interest margin is a 16 basis point decrease in the yield of loans due to market yields on new loan originations below the average yield of amortizing or paid-off loans.

Noninterest expense increased $781,000, or 19.3%, to $4.8 million for the three months ended September 30, 2014, compared with $4.0 million for the same period in 2013 and increased $370,000 or 8.3% compared with $4.5 million for the three months ended June 30, 2014. The increase compared to the three months ended September 30, 2013 was primarily due to an increase in employee expense from additional staff positions, a reduction in deferred employee expense related to the volume of loan originations, and increased professional expenses related to IPO activities. Expense increases compared to the three months ended June 30, 2014 were primarily due to a reduction in deferred employee expense related to the volume of loan originations.

Financial Condition

Loans at September 30, 2014 were $584.8 million, an increase of $131.8 million, or 29.0%, compared with $453.0 million at September 30, 2013 and increased $37.5 million, or 6.9%, from June 30, 2014, primarily due to strong organic growth and successful execution of our relationship banking strategy.

Deposits at September 30, 2014 were $644.5 million, an increase of $129.4 million, or 25.1%, compared to September 30, 2013 and increased $33.4 million or 5.5% from June 30, 2014 due to growth in our noninterest bearing deposits and money market accounts.

Asset Quality

Nonperforming assets totaled $1.9 million or 0.25% of total assets at September 30, 2014, compared with $3.8 million or 0.42% of total assets at September 30, 2013, and $3.0 million or 0.42% of total assets at June 30, 2014. The allowance for loan losses was 1.01% of total loans at September 30, 2014, compared with 1.00% of total loans at September 30, 2013 and 1.02% of total loans at June 30, 2014.

The provision for loan losses for the three months ended September 30, 2014 and for the same period last year and for the three months ended June 30, 2014 was $420,000, $375,000, and $425,000, respectively, and was primarily a result of growth in the loan portfolio.

Veritex Holdings, Inc. management uses certain non-GAAP (generally accepted accounting principles) financial measures to evaluate its performance. Specifically, Veritex Holdings, Inc. reviews tangible book value per common share and the tangible common equity to tangible assets ratio. Veritex Holdings, Inc. has included in this release information related to these non-GAAP financial measures for the applicable periods presented. Please refer to the "Consolidated Financial Highlights" at the end of this release for a reconciliation of these non-GAAP financial measures.

About Veritex Holdings, Inc.

Headquartered in Dallas, Texas, Veritex Holdings, Inc. is a bank holding company that conducts banking activities through its wholly-owned subsidiary, Veritex Community Bank, with locations throughout the Dallas 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.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This release may contain certain forward-looking statements within the meaning of the securities laws that are based on various facts and derived utilizing important assumptions, current expectations, estimates and projections about the Company and its subsidiaries. Forward-looking statements include information regarding the Company's future financial performance, business and growth strategy, projected plans and objectives, as well as projections of macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact economic trends, and any such variations may be material. Statements preceded by, followed by or that otherwise include the words "believes," "expects," "anticipates," "intends," "projects," "estimates," "plans" and similar expressions or future or conditional verbs such as "will," "should," "would," "may" and "could" are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing. Further, certain factors that could affect our future results and cause actual results to differ materially from those expressed in the forward-looking statements include, but are not limited to whether the Company can: successfully implement its growth strategy, including identifying acquisition targets and consummating suitable acquisitions; continue to sustain internal growth rate; provide competitive products and services that appeal to its customers and target market; continue to have access to debt and equity capital markets; and achieve our performance goals. These and various other factors are discussed in the Company's Final Prospectus filed pursuant to Rule 424(b)(4) and other reports and statements the Company has filed with the SEC. Copies of the SEC filings for the Company are available for download free of charge from www.veritexbank.com under the Investor Relations tab.

VERITEX HOLDINGS, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets (Unaudited)
(Dollars in thousands, except par value information)
September 30, June 30, December 31, September 30,
2014 2014 2013 2013
ASSETS
Cash and due from banks $ 9,441 $ 10,038 $ 8,484 $ 12,546
Interest bearing deposits in other banks 58,292 56,512 68,162 51,077
Total cash and cash equivalents 67,733 66,550 76,646 63,623
Investment securities 47,497 50,547 45,604 39,157
Loans held for sale 3,488 6,342 2,051 2,665
Loans, net 575,398 535,403 490,158 445,806
Accrued interest receivable 1,351 1,359 1,351 1,209
Bank-owned life insurance 10,731 10,647 10,475 10,384
Bank premises, furniture and equipment, net 11,235 11,303 9,952 10,060
Non-marketable equity securities 3,115 2,959 2,714 2,713
Investment in subsidiary 93 93 93 93
Other real estate owned 1,434 2,494 1,797 2,083
Intangible assets 1,337 1,413 1,567 1,644
Goodwill 19,148 19,148 19,148 19,148
Other assets 2,784 2,124 3,415 1,198
Total assets $ 745,344 $ 710,382 $ 664,971 $ 599,783
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing $ 242,688 $ 236,198 $ 218,990 $ 184,060
Interest-bearing 401,855 374,976 354,948 331,067
Total deposits 644,543 611,174 573,938 515,127
Accounts payable and accrued expenses 1,327 1,195 1,214 774
Accrued interest payable and other liabilities 798 696 508 629
Advances from Federal Home Loan Bank 15,000 15,000 15,000 15,000
Other borrowings 8,073 8,073 8,072 3,093
Total liabilities 669,741 636,138 598,732 534,623
Commitments and contingencies
Stockholders' equity:
Preferred stock 8,000 8,000 8,000 8,000
Common stock 64 64 58 58
Additional paid-in capital 61,513 61,419 55,303 55,140
Retained earnings 6,378 5,038 2,922 1,946
Accumulated other comprehensive income 119 194 26 86
Unallocated Employee Stock Ownership Plan shares; 36,935 shares at September 30, 2014 and June 30, 2014 (401) (401)
Less: Treasury stock, 10,000 shares at cost (70) (70) (70) (70)
Total stockholders' equity 75,603 74,244 66,239 65,160
Total liabilities and stockholders' equity $ 745,344 $ 710,382 $ 664,971 $ 599,783
VERITEX HOLDINGS, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Income (Unaudited)
(Dollars in thousands, except per share amounts)
Three Months Ended Nine Months Ended Three Months Ended
September 30, September 30, June 30,
2014 2013 2014 2013 2014 2013
Interest income:
Interest and fees on loans $ 7,183 $ 5,765 $ 19,901 $ 16,682 $ 6,566 $ 5,574
Interest on investment securities 207 150 629 430 206 149
Interest on deposits in other banks 43 36 120 96 40 34
Interest on other 1 0 2 1 1 1
Total interest income 7,434 5,951 20,652 17,209 6,813 5,758
Interest expense:
Interest on deposit accounts 609 556 1,770 1,616 570 544
Interest on borrowings 123 47 374 203 123 68
Total interest expense 732 603 2,144 1,819 693 612
Net interest income 6,702 5,348 18,508 15,390 6,120 5,146
Provision for loan losses 420 375 1,097 1,383 425 510
Net interest income after provision for loan losses 6,282 4,973 17,411 14,007 5,695 4,636
Noninterest income:
Service charges on deposit accounts 213 169 609 537 190 193
Gain on sales of investment securities 34
Gain on sales of loans held for sale 241 106 486 530 168 211
Gain on sales of other real estate owned (33) 24 4 41 24
Bank-owned life insurance 105 109 317 275 103 101
Other 104 112 391 443 155 204
Total noninterest income 630 520 1,841 1,826 640 709
Noninterest expense:
Salaries and employee benefits 2,755 2,230 7,593 6,676 2,196 2,220
Occupancy of bank premises 497 435 1,418 1,264 474 409
Depreciation and amortization 338 327 1,005 934 334 311
Data processing 213 183 639 541 210 165
FDIC assessment fees 99 100 315 286 109 92
Legal fees 50 8 109 56 26 36
Other professional fees 222 119 765 393 411 144
Advertising and promotions 41 33 134 112 37 36
Utilities and telephone 72 79 212 222 72 74
Other real estate owned expenses and writedowns 53 116 187 359 108 102
Other 490 419 1,446 1,312 483 457
Total noninterest expense 4,830 4,049 13,823 12,155 4,460 4,046
Net income from operations 2,082 1,444 5,429 3,678 1,875 1,299
Income tax expense 723 492 1,913 1,266 677 459
Net income $ 1,359 $ 952 $ 3,516 $ 2,412 $ 1,198 $ 840
Preferred stock dividends 20 60 40 20 20
Net income available to common stockholders $ 1,339 $ 952 $ 3,456 $ 2,372 $ 1,178 $ 820
Basic earnings per share $ 0.21 $ 0.16 $ 0.55 $ 0.41 $ 0.19 $ 0.14
Diluted earnings per share $ 0.21 $ 0.16 $ 0.54 $ 0.41 $ 0.18 $ 0.14
VERITEX HOLDINGS, INC. AND SUBSIDIARY
Reconciliation GAAP – NON GAAP (Unaudited)
(Dollars in thousands)
The following table reconciles, as of the dates set forth below, total stockholders' equity to tangible common equity and total assets to tangible assets:
As of
September 30,
2014
As of
June 30,
2014
As of
September 30,
2013
(Dollars in thousands)
Tangible Common Equity
Total stockholders' equity $ 75,603 $ 74,244 $ 65,160
Adjustments:
Preferred stock (8,000) (8,000) (8,000)
Goodwill (19,148) (19,148) (19,148)
Core deposit and other intangibles (1,337) (1,413) (1,644)
Total tangible common equity $ 47,118 $ 45,683 $ 36,368
Tangible Assets
Total assets $ 745,344 $ 710,382 $ 599,783
Adjustments:
Goodwill (19,148) (19,148) (19,148)
Core deposit and other intangibles (1,337) (1,413) (1,644)
Total tangible assets $ 724,859 $ 689,821 $ 578,991
Tangible Common Equity to Tangible Assets 6.50% 6.62% 6.28%
VERITEX HOLDINGS, INC. AND SUBSIDIARY
Consolidated Financial Highlights (Unaudited)
(Dollars in thousands)
Three Months Ended
September 30, June 30, September 30,
2014 2014 2013
Performance ratios:  
Return on average assets 0.74% 0.71% 0.64%
Return on average stockholders' equity 7.16% 6.49% 5.81%
Net interest margin 3.95% 3.92% 3.92%
Efficiency ratio (1) 65.87% 65.98% 69.00%
As of
September 30, June 30, September 30,
2014 2014 2013
Capital ratios:
Total Capital to Risk-Weighted Assets (2) 11.59% 11.99% 10.90%
Tier I Capital to Risk-Weighted Assets (2) 10.58% 10.98% 9.92%
Tier I Capital to Average Assets (2) 8.71% 9.11% 8.02%
Tangible common equity to tangible assets 6.50% 6.62% 6.28%
Tangible book value per common share $ 7.41 $ 7.18 $ 6.26
Asset quality:
Nonaccrual loans $ 445 $ 107 $ 1,747
Accruing loans 90 or more days past due 3 390 4
Other real estate owned 1,434 2,494 2,083
Total non-performing assets $ 1,882 $ 2,991 $ 3,834
Nonperforming loans as a % of total loans 0.08% 0.09% 0.39%
Nonperforming assets as a % of total assets 0.25% 0.42% 0.64%
Allowance for loan losses as a % of total loans 1.01% 1.02% 1.00%
(1) Efficiency ratio is defined as non-interest expenses divided by our operating revenue, which is equal to net interest income plus non-interest income excluding gains and losses on sales of securities.
(2) Represents bank ratios.
VERITEX HOLDINGS, INC. AND SUBSIDIARY
Net Interest Margin
(Dollars in thousands)
For the Three months Ended
September 30, 2014 June 30, 2014 September 30, 2013
Interest Interest Interest
Average Earned/ Average Average Earned/ Average Average Earned/ Average
Outstanding Interest Yield/ Outstanding Interest Yield/ Outstanding Interest Yield/
Balance Paid Rate Balance Paid Rate Balance Paid Rate
(Dollars in thousands) (Unaudited)
Assets
Interest-earning assets:
Total loans(1) $ 565,465 $ 7,183 5.04% $ 521,218 $ 6,566 5.05% $ 439,725 $ 5,765 5.20%
Securities available for sale 49,148 207 1.67 51,637 206 1.60 39,788 150 1.50
Investment in subsidiary 93 1 4.27 93 1 4.31 93 0 0.00
Interest-bearing deposits in other banks 58,027 43 0.29 52,610 40 0.30 61,421 36 0.23
Total interest-earning assets 672,733 7,434 4.38 625,558 6,813 4.37 541,027 5,951 4.36%
Allowance for loan losses (5,665) (5,275) (4,282)
Noninterest-earning assets 60,668 58,609 57,707
Total assets $ 727,736 $ 678,892 $ 594,452
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Interest-bearing deposits $ 384,671 $ 609 0.63% $ 356,821 $ 570 0.64% $ 308,179 $ 556 0.72%
Advances from FHLB 15,000 30 0.79 15,000 30 0.80 15,000 30 0.79
Other borrowings 8,073 93 4.57 8,072 93 4.62 3,093 17 2.18
Total interest-bearing liabilities 407,744 732 0.71 379,893 693 0.73 326,272 603 0.73
Noninterest-bearing liabilities:
Noninterest-bearing deposits 242,728 223,473 201,670
Other liabilities 1,965 1,556 1,494
Total noninterest-bearing liabilities 244,693 225,029 203,164
Stockholders' equity 75,299 73,970 65,016
Total liabilities and stockholders' equity $ 727,736 $ 678,892 $ 594,452
Net interest rate spread(2) 3.67% 3.64% 3.63%
Net interest income $ 6,702 $ 6,120 $ 5,348
Net interest margin(3) 3.95% 3.92% 3.92%
(1) Includes average outstanding balances of loans held for sale of $3,367, $3,653 and $1,242 for the three months ended September 30, 2014, June 30, 2014 and 2013, respectively.
(2) Net interest 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
Net Interest Margin
(Dollars in thousands)
For the Nine Months Ended September 30,
2014 2013
Interest Interest
Average Earned/ Average Average Earned/ Average
Outstanding Interest Yield/ Outstanding Interest Yield/
Balance Paid Rate Balance Paid Rate
(Dollars in thousands) (Unaudited)
Assets
Interest-earning assets:
Total loans(1) $ 527,920 $ 19,901 5.04% $ 419,498 $ 16,682 5.32%
Securities available for sale 49,836 629 1.69 35,483 430 1.62
Investment in subsidiary 93 2 2.88 93 1 1.44
Interest-bearing deposits in other banks 57,974 120 0.28 61,495 96 0.21
Total interest-earning assets 635,823 20,652 4.34 516,569 17,209 4.45%
Allowance for loan losses (5,360) (3,831)
Noninterest-earning assets 60,003 56,164
Total assets $ 690,466 $ 568,902
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Interest-bearing deposits $ 366,537 $ 1,770 0.65% $ 298,892 $ 1,616 0.72%
Advances from FHLB 15,000 89 0.79 14,908 156 1.40
Other borrowings 8,072 285 4.72 3,093 47 2.03
Total interest-bearing liabilities 389,609 2,144 0.74 316,893 1,819 0.77
Noninterest-bearing liabilities:
Noninterest-bearing deposits 225,485 186,100
Other liabilities 1,653 1,748
Total noninterest-bearing liabilities 227,138 187,848
Stockholders' equity 73,719 64,161
Total liabilities and stockholders' equity $ 690,466 $ 568,902
Net interest rate spread(2) 3.61% 3.69%
Net interest income $ 18,508 $ 15,390
Net interest margin(3) 3.89% 3.98%
(1) Includes average outstanding balances of loans held for sale of $3,028 and $2,277 for the nine months ended September 30, 2014 and 2013, respectively.
(2) Net interest 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.

CONTACT: Media Contact: LaVonda Renfro 972-349-6200 lrenfro@veritexbank.com Investor Relations: 972-349-6200 scaudle@veritexbank.comSource:Veritex Holdings, Inc.