×

Veritex Holdings, Inc. Reports Second Quarter Financial Results

DALLAS, July 19, 2017 (GLOBE NEWSWIRE) -- Veritex Holdings, Inc. (“Veritex” or the “Company”) (NASDAQ:VBTX), the holding company for Veritex Community Bank, announced today the results for the quarter ended June 30, 2017. The Company reported net income of $3.6 million, or $0.23 diluted earnings per share (EPS), compared to $3.1 million, or $0.20 diluted EPS, for the quarter ended March 31, 2017 and $3.2 million, or $0.29 diluted EPS, for the quarter ended June 30, 2016. Compared to the quarter ended March 31, 2017, total loans increased $101.5 million to $1.1 billion representing a 39.8% annualized growth rate. Total assets and total deposits were unchanged with balances of $1.5 billion and $1.2 billion, respectively, as of June 30, 2017.

Malcolm Holland, the Company’s Chairman and Chief Executive Officer, said, “I am excited to report a great quarter driven by record loan production exceeding $100 million. Our loan portfolio grew 10% compared to March 31, 2017, or an annualized growth rate of 40%. Our pipelines are solid and credit quality remains a core foundational focus of our bank. Our net interest margin for the quarter was up 32 basis points over the prior quarter as we deployed excess cash into loan fundings. In addition, our loan yield was up 10 basis points over the prior quarter as we push through interest rate floors to see the benefit from Federal Reserve rate increases.”

Mr. Holland continued, “We received final regulatory approval of our application to merge with Sovereign Bancorp, Inc. from the Federal Reserve on July 7, 2017 and we expect to close this transaction on or around August 1, 2017. Over the past several months we have worked diligently alongside a third party firm to organize the integration process on this transformational merger. Thanks to the hard work of both the Sovereign and Veritex teams, we will be prepared for conversion and integration in the third quarter of 2017. I look forward to officially welcoming Sovereign’s clients, shareholders, and employees as they join the Veritex family.”

Second Quarter 2017 Financial Highlights

• Total loans increased $194.5 million, or 21.0%, to $1.1 billion compared to $928.0 million as of June 30, 2016.

• Total deposits increased $183.4 million, or 17.8%, to $1.2 billion compared to $1.0 billion as of June 30, 2016.

• Net interest income was $12.4 million, an increase of $2.1 million, or 21.0%, compared to $10.2 million for the same period in 2016.

• Net income was $3.6 million, an increase of $0.4 million, or 13.9%, compared to $3.2 million for the same period in 2016.

• Pre-tax income was $5.4 million, an increase of $0.6 million, or 12.6%, compared to $4.8 million for the same period in 2016. Pre-tax, pre-provision income increased $1.0 million, or 19.1%, to $6.4 million compared to $5.3 million for the same period in 2016.

• Nonperforming assets to total assets remained low at 0.13% as of June 30, 2017, and no material charge-offs in the quarter.

Result of Operations for the Three Months Ended June 30, 2017

Net Interest Income

For the three months ended June 30, 2017, net interest income before provision for loan losses was $12.4 million and net interest margin was 3.53% compared to $11.3 million and 3.21%, respectively, for the three months ended March 31, 2017. Net interest income increased $1.1 million primarily due to an increase of $1.1 million in interest earned on total loans as average loans increased $62.8 million from March 31, 2017 to June 30, 2017. This increase was driven by success of our organic growth strategy during the three months ended June 30, 2017. The net interest margin increased 32 basis points from the three months ended March 31, 2017 primarily due to a change in mix of earning assets resulting from increases in loans, which tend to yield greater interest rates than other interest earning assets such as investment securities and interest bearing deposits in other banks, and decreases in interest-bearing deposits in other banks which traditionally provide lower average yields than other interest earning assets such as loans. Average loan balances represented 76.2% of average interest-earnings assets for the three months ended June 30, 2017 compared to 70.8% for the three months ended March 31, 2017. Average interest-bearing deposits in other banks decreased $96.6 million and represented 14.2% of average-interest earning assets for the three months ended June 30, 2017 compared to 20.8% for the three months ended March 31, 2017. In addition, the average yield on loan balances increased to 4.88% from 4.78%, investment securities increased to 2.17%, from 1.96% and interest-bearing deposits in other banks increased to 1.10% from 0.84% for the three months ended June 30, 2017 compared to the three months ended March 31, 2017. The increase in the average yields for these average interest earning assets is due to increases in the targeted Federal Funds rate and the resulting impact from increases in corresponding rates for these products.

Net interest income before provision for loan losses increased by $2.1 million from $10.2 million to $12.4 million for the three months ended June 30, 2017 as compared to the same period during 2016. The increase in net interest income before provision for loan losses was primarily due to $2.0 million in increased interest income on loans resulting from average loan balance increases of $156.3 million compared to June 30, 2016. The net interest margin declined to 3.53% during the three months ended June 30, 2017 from 3.90% for the same three-month period in 2016. The 37 basis point decrease in net interest margin was partially due to a change in mix of earning assets with increases in interest-bearing deposits in other banks to $199.1 million representing 14.2% of earning assets as of June 30, 2017 compared to interest-bearing deposits in other banks of $59.5 million representing 5.6% as of the same period in 2016. Interest-bearing deposits in other banks tend to bear lower interest rates than other earning assets such as loans and investment securities. The increase in interest-bearing deposits in other banks was primarily driven by proceeds of our public offering of common stock in December 2016 and increases in customer deposits. In addition, the average interest paid on deposits increased to 0.80% for the the three months ended June 30, 2017 from 0.68% for the same period in 2016. The 12 basis point increase was related to an increase in deposit balances related to premium priced financial institution money market accounts.

Noninterest Income

Noninterest income for the three months ended June 30, 2017 was $1.8 million, an increase of $231 thousand or 15.0% compared to the three months ended March 31, 2017. The net increase was primarily from an increase in dividend income of $104 thousand as a result of bi-annual Federal Reserve Bank stock dividends received during the three months ended June 30, 2017, increased gain on sale of mortgage loans of $42 thousand and increased analysis charges and debit card fees of $46 thousand for the three months ended June 30, 2017 compared to the three months ended March 31, 2017.

Compared to the three months ended June 30, 2016, noninterest income for the three months ended June 30, 2017 grew $354 thousand or 25.1%. The increase was primarily a result of increased gains on sale of Small Business Administration loans of $285 thousand and increased debit card fees of $71 thousand for the three months ended June 30, 2017 compared to the three months ended June 30, 2016.

Noninterest Expense

Noninterest expense was $7.8 million for the three months ended June 30, 2017, compared to $7.5 million for the three months ended March 31, 2017, an increase of $332 thousand or 4.5%. The increase was primarily due to increased professional fees of $390 thousand which included legal services associated with strategic initiatives of $135 thousand, professional recruiting expenses of $112 thousand, and Sovereign merger related expenses of $41 thousand. Noninterest expense during the three months ended June 30, 2017 also increased compared to the three months ended March 31, 2017 due to an increase in Federal Deposit Insurance Corporation (“FDIC”) assessment fees of $135 thousand which were incurred as a result of a catch-up in prior period assessments, and growth in assets, a primary driver of these expenses. These increases were partially offset by a decrease in salaries and employee benefits of $266 thousand from an increase in the deferral of direct loan origination costs.

Compared to the three months ended June 30, 2016, noninterest expense for the three months ended June 30, 2017 increased $1.5 million, or 23.5%. The increase was primarily due to increased professional fees of $685 thousand for nonrecurring legal services associated with strategic initiatives and conversion planning for the Sovereign merger. Noninterest expense during the three months ended June 30, 2017 also increased compared to the three months ended June 30, 2016 due to an increase in FDIC assessment fees of $261 thousand which were incurred as a result of a catch-up in prior period assessments, and growth in assets, a primary driver of the expenses. Other noninterest expense also increased $281 thousand primarily due to an increase in dues and membership fees, insurance expense, and card transaction expense.

Income Taxes

Income tax expense for the three months ended June 30, 2017 totaled $1.8 million, an increase of $452 thousand, or 33.5%, compared to the three months ended March 31, 2017. The Company’s effective tax rate, before reporting the net impact of discrete items, was approximately 34.8% and 34.2% for the three months ended June 30, 2017 and the three months ended March 31, 2017, respectively. The change in income tax expense from the three months ended March 31, 2017 was primarily due to the $970 thousand increase in net operating income and decrease in net discrete tax benefit from $172 thousand for the three months ended March 31, 2017 to $83 thousand for the three months ended June 30, 2017. The net discrete tax benefit for the three months ended June 30, 2017 was primarily associated with the recognition of excess tax benefit realized on share-based payment awards. The Company’s effective tax rate, after including the net impact of discrete tax items, was approximately 33.3% and 30.4%, respectively for the three months ended June 30, 2017 and the three months ended March 31, 2017.

Compared to the three months ended June 30, 2016, income tax expense increased $163 thousand, or 9.9%, to $1.8 million for the three months ended June 30, 2017. The Company’s effective tax rate, before reporting the net impact of discrete items, was approximately 34.8% for the three months ended June 30, 2017 compared to 34.1% for the three months ended June 30, 2016. There were no discrete tax items during the three months ended June 30, 2016. The change in income tax expense from the three months ended June 30, 2016 was primarily due to the increase in net operating income of $606 thousand offset by the impact of the net discrete tax benefit of $83 thousand during the three months ended June 30, 2017. The Company’s effective tax rate, after including the net impact of discrete tax items, was approximately 33.3% and 34.1% for the three months ended June 30, 2017 and 2016, respectively.

Financial Condition

Loans (excluding loans held for sale and deferred loan fees) at June 30, 2017 were $1.1 billion, an increase of $101.5 million or 9.9% compared to $1.0 billion at March 31, 2017. The net increase from March 31, 2017 was primarily the result of the continued execution and success of our organic growth strategy.

Loans (excluding loans held for sale and deferred loan fees) at June 30, 2017 increased $194.5 million, or 21.0%, compared to $928.0 million at June 30, 2016. The growth over June 30, 2016 is due to the continued execution and success of our organic growth strategy.

Deposits at June 30, 2017 were $1.2 billion, a decrease of $10.6 million, or 0.9%, compared to March 31, 2017. The decrease from March 31, 2017 was primarily due to the maturity of $17.5 million in certificates of deposits and $5.0 million of wholesale deposits, a decrease in interest bearing checking of $3.8 million and a decrease in money market accounts of $3.2 million which was partially offset by an increase in savings accounts of $20.0 million.

Deposits increased $183.4 million, or 17.8%, compared to $1.0 billion at June 30, 2016. The increase from June 30, 2016 was primarily due to an increase in financial institution money market accounts of $105.0 million resulting from the launch of a correspondent banking group, organic growth in retail and business money market accounts of $60.3 million, growth in savings deposits of $102.0 million, and an increase of $4.1 million in interest bearing checking. This growth was partially offset by a decrease in wholesale deposits of $53.5 million, a decrease in CDs of $17.0 million and a decrease in non-interest bearing deposits of $17.5 million.

Advances from the Federal Home Loan Bank were $38.2 million at June 30, 2017 compared to $38.3 million at March 31, 2017 and $38.4 million at June 30, 2016.

Asset Quality

The allowance for loan losses was 0.87%, 0.86%, and 0.85% of total loans at June 30, 2017, March 31, 2017, and June 30, 2016, respectively. The allowance for loan losses as a percentage of total loans over the three quarter periods was determined by the qualitative factors around the nature, volume and mix of the loan portfolio.

The provision for loan losses for the three months ended June 30, 2017 totaled $943 thousand compared to $890 thousand for three months ended March 31, 2017. The increase in provision for loan losses for the three months ended June 30, 2017 compared to March 31, 2017 was due to the general provision required from an increase in loan growth compared to the prior period. The increase of $416 thousand in provision for loan losses from June 30, 2016 to June 30, 2017 was due to the general provision required from an increase in loan growth compared to the same period in 2016.

Non-accrual loans were $1.5 million at June 30, 2017 compared to $1.7 million at March 31, 2017 and $1.0 million at June 30, 2016. At June 30, 2017 and March 31, 2017, non-accrual loans to our total loans held for investment was minimal at 0.13% and 0.17%, respectively.

Nonperforming assets totaled $2.0 million, or 0.13%, of total assets at June 30, 2017 compared to $2.9 million, or 0.19%, of total assets at March 31, 2017. Nonperforming assets were $7.2 million, or 0.59%, of total assets at June 30, 2016. The decrease of $874 thousand in nonperforming assets compared to March 31, 2017 was primarily due to decrease in other real estate owned of $505 thousand from the sale of a property in the period as well as a decrease of $369 thousand in nonperforming loans. The decrease of $5.2 million in nonperforming assets compared to June 30, 2016 was primarily related to the payoff of a single $5.4 million loan which was classified as an accruing loan 90 or more days past due as of June 30, 2016.

Non-GAAP Financial Measures

The Company’s management uses certain non-GAAP (generally accepted accounting principles) financial measures to evaluate its performance. Specifically, the Company reviews and reports tangible book value per common share, the tangible common equity to tangible assets ratio and pre-tax, pre-provision income. The Company has included in this release information related to these non-GAAP financial measures for the applicable periods presented. Please refer to “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 eleven branch locations throughout the Dallas metropolitan area and one mortgage office. 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, and related transactions, integration of the acquired businesses, ability to recognize anticipated operational efficiencies, and other projections based on 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 its performance goals. Other risks include, but are not limited to: difficulties and delays in integrating the Company’s and Sovereign’s businesses or fully realizing cost savings and benefits; the possibility that credit quality could deteriorate; actions of competitors; changes in laws and regulations (including changes in governmental interpretations of regulations and changes in accounting standards); business description following the Sovereign acquisition; economic conditions, including currency rate fluctuations and interest rate fluctuations; and weather. These and various other factors are discussed in the Company’s Final Prospectus Supplement, dated December 15, 2016, filed pursuant to Rule 424(b)(5), the Company’s joint proxy statement/prospectus filed on February 17, 2017, the Company’s Annual Report on Form 10-K filed on March 10, 2017, and other reports and statements the Company has filed with the Securities and Exchange Commission. Copies of such filings are available for download free of charge from the Investor Relations section on the Company’s website, www.veritexbank.com, under the “About Us” tab.


VERITEX HOLDINGS, INC. AND SUBSIDIARY
Consolidated Financial Highlights - (Unaudited)
(In thousands, except percentages)
At and For the Three Months Ended
June 30,
2017
March 31,
2017
December 31,
2016
September 30,
2016
June 30,
2016
Selected Financial Data:
Net income $3,615 $3,098 $3,190 $3,375 $3,173
Total assets 1,508,589 1,522,015 1,408,507 1,269,194 1,215,451
Total loans(1) 1,122,468 1,020,970 991,897 926,712 928,000
Provision for loan losses 943 890 440 238 527
Allowance for loan losses 9,740 8,816 8,524 8,102 7,910
Noninterest-bearing deposits 337,057 338,226 327,614 304,972 354,570
Total deposits 1,211,107 1,221,696 1,119,630 1,077,217 1,027,729
Total stockholders’ equity 247,602 242,725 239,088 142,423 138,850
Summary Performance Ratios:
Return on average assets(2) 0.97% 0.83% 0.97% 1.10% 1.12%
Return on average equity(2) 5.89 5.20 8.11 9.50 9.26
Net interest margin(3) 3.53 3.21 3.44 3.70 3.90
Efficiency ratio(4) 55.03 58.26 57.39 56.64 54.13
Noninterest expense to average assets(2) 2.08 1.99 2.16 2.29 2.23
Summary Credit Quality Data:
Nonaccrual loans $1,514 $1,686 $941 $1,087 $1,028
Accruing loans 90 or more days past due 15 212 835 357 5,634
Other real estate owned 493 998 662 662 493
Nonperforming assets to total assets 0.13% 0.19% 0.17% 0.17% 0.59%
Nonperforming loans to total loans 0.14 0.19 0.18 0.16 0.72
Allowance for loan losses to total loans 0.87 0.86 0.86 0.87 0.85
Net charge-offs to average loans outstanding 0.06 0.03 0.03 0.03
Capital Ratios:
Total stockholders’ equity to total assets 16.41% 15.95% 16.97% 11.22% 11.42%
Tangible common equity to tangible assets(5) 14.77 14.31 15.23 9.14 9.25
Tier 1 capital to average assets 15.09 14.65 16.82 9.82 10.21
Tier 1 capital to risk-weighted assets 18.17 19.94 20.72 12.04 11.88
Common equity tier 1 (to risk weighted assets) 17.92 19.66 20.42 11.72 11.56
Total capital to risk-weighted assets 19.37 21.20 22.02 13.38 13.23

___________________________

  1. Total loans does not include loans held for sale and deferred fees. Loans held for sale were $4.1 million at June 30, 2017, $1.9 million at March 31, 2017, $5.2 million at December 31, 2016, $4.9 million at September 30, 2016 and $4.8 million at June 30, 2016. Deferred fees were $40 thousand at June 30, 2017, $48 thousand at March 31, 2017, $55 thousand at December 31, 2016, $51 thousand at September 30, 2016, and $52 thousand at June 30, 2016.
  2. We calculate our average assets and average equity for a period by dividing the sum of our total assets or total stockholders’ equity, as the case may be, at the close of business on each day in the relevant period, by the number of days in the period. We have calculated our return on average assets and return on average equity for a period by dividing net income for that period by our average assets and average equity, as the case may be, for that period.
  3. Net interest margin represents net interest income, annualized on a fully tax equivalent basis, divided by average interest-earning assets.
  4. Efficiency ratio represents noninterest expense divided by the sum of net interest income and noninterest income.
  5. We calculate tangible common equity as total stockholders’ equity less preferred stock, goodwill, core deposit intangibles and other intangible assets, net of accumulated amortization, and we calculate tangible assets as total assets less goodwill, and core deposit intangibles and other intangible assets, net of accumulated amortization. Tangible common equity to tangible assets is a non-GAAP financial measure, and, as we calculate tangible common equity to tangible assets, the most directly comparable GAAP financial measure is total stockholders’ equity to total assets. Our management believe that this measure is important to many investors in the market place who are interested in relative changes from period to period in common equity and total assets, each exclusive of changes in intangible assets. 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. See our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures in the table captioned “Reconciliation GAAP —NON-GAAP–(Unaudited).”


VERITEX HOLDINGS, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets - (Unaudited)
(In thousands)
June 30,
2017
March 31,
2017
December 31,
2016
September 30,
2016
June 30,
2016
ASSETS
Cash and due from banks $28,687 $23,021 $15,631 $15,837 $12,951
Interest bearing deposits in other banks 144,459 262,714 219,160 162,750 114,293
Total cash and cash equivalents 173,146 285,735 234,791 178,587 127,244
Investment securities 134,708 138,698 102,559 86,772 83,677
Loans held for sale 4,118 1,925 5,208 4,856 4,793
Loans, net 1,112,688 1,012,106 983,318 918,559 920,039
Accrued interest receivable 3,333 2,845 2,907 2,414 2,259
Bank-owned life insurance 20,369 20,224 20,077 19,922 19,767
Bank premises, furniture and equipment, net 17,978 17,521 17,413 17,501 17,243
Non-marketable equity securities 7,407 7,375 7,366 7,358 7,035
Investment in unconsolidated subsidiary 93 93 93 93 93
Other real estate owned 493 998 662 662 493
Intangible assets, net 2,171 2,161 2,181 2,257 2,264
Goodwill 26,865 26,865 26,865 26,865 26,865
Other assets 5,220 5,469 5,067 3,348 3,679
Total assets $1,508,589 $1,522,015 $1,408,507 $1,269,194 $1,215,451
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Noninterest-bearing $337,057 $338,226 $327,614 $304,972 $354,570
Interest-bearing 874,050 883,470 792,016 772,245 673,159
Total deposits 1,211,107 1,221,696 1,119,630 1,077,217 1,027,729
Accounts payable and accrued expenses 2,574 1,631 2,914 2,082 1,611
Accrued interest payable and other liabilities 1,032 9,655 534 1,098 855
Advances from Federal Home Loan Bank 38,235 38,271 38,306 38,341 38,375
Junior subordinated debentures 3,093 3,093 3,093 3,093 3,093
Subordinated notes 4,946 4,944 4,942 4,940 4,938
Total liabilities 1,260,987 1,279,290 1,169,419 1,126,771 1,076,601
Commitments and contingencies
Stockholders’ equity:
Common stock 152 152 152 107 107
Additional paid-in capital 211,901 211,512 211,173 116,315 116,111
Retained earnings 36,003 32,388 29,290 26,101 22,725
Unallocated Employee Stock Ownership Plan shares (209) (209) (209) (309) (309)
Accumulated other comprehensive (loss) income (175) (1,048) (1,248) 279 286
Treasury stock (70) (70) (70) (70) (70)
Total stockholders’ equity 247,602 242,725 239,088 142,423 138,850
Total liabilities and stockholders’ equity $1,508,589 $1,522,015 $1,408,507 $1,269,194 $1,215,451


VERITEX HOLDINGS, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Income - (Unaudited)
(In thousands, except per share data)
Six Months Ended
June 30, 2017 June 30, 2016
Interest income:
Interest and fees on loans $24,907 $21,407
Interest on investment securities 1,310 679
Interest on deposits in other banks 1,158 173
Interest on other 1 2
Total interest income 27,376 22,261
Interest expense:
Interest on deposit accounts 3,389 2,007
Interest on borrowings 358 335
Total interest expense 3,747 2,342
Net interest income 23,629 19,919
Provision for loan losses 1,833 1,372
Net interest income after provision for loan losses 21,796 18,547
Noninterest income:
Service charges and fees on deposit accounts 1,064 877
Gain on sales of investment securities 15
Gain on sales of loans 1,554 1,282
Bank-owned life insurance 373 384
Other 310 227
Total noninterest income 3,301 2,785
Noninterest expense:
Salaries and employee benefits 7,550 6,763
Occupancy and equipment 2,026 1,795
Professional fees 1,986 1,076
Data processing and software expense 732 554
FDIC assessment fees 651 269
Marketing 469 411
Other assets owned expenses and write-downs 38 130
Amortization of intangibles 190 190
Telephone and communications 208 197
Other 1,382 892
Total noninterest expense 15,232 12,277
Net income from operations 9,865 9,055
Income tax expense 3,152 3,069
Net income $6,713 $5,986
Basic earnings per share $0.44 $0.56
Diluted earnings per share $0.43 $0.55
Weighted average basic shares outstanding 15,205 10,695
Weighted average diluted shares outstanding 15,633 10,978


VERITEX HOLDINGS, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Income - (Unaudited)
(In thousands, except per share data)
For the Three Months Ended
June 30,
2017
March 31,
2017
December 31,
2016
September 30,
2016
June 30,
2016
Interest income:
Interest and fees on loans $13,024 $11,883 $11,684 $11,589 $11,052
Interest on investment securities 735 575 396 335 344
Interest on deposits in other banks 548 610 200 129 80
Interest on other 1 1 1 1
Total interest income 14,307 13,069 12,281 12,054 11,477
Interest expense:
Interest on deposit accounts 1,742 1,647 1,600 1,381 1,072
Interest on borrowings 189 169 161 156 177
Total interest expense 1,931 1,816 1,761 1,537 1,249
Net interest income 12,376 11,253 10,520 10,517 10,228
Provision for loan losses 943 890 440 238 527
Net interest income after provision for loan losses 11,433 10,363 10,080 10,279 9,701
Noninterest income:
Service charges and fees on deposit accounts 555 509 537 433 443
Gain on sales of loans 807 747 970 1,036 620
Bank-owned life insurance 186 187 194 193 191
Other 218 92 123 231 158
Total noninterest income 1,766 1,535 1,824 1,893 1,412
Noninterest expense:
Salaries and employee benefits 3,642 3,908 3,650 3,920 3,589
Occupancy and equipment 1,015 1,011 949 923 894
Professional fees 1,188 798 943 785 503
Data processing and software expense 372 360 308 296 270
FDIC assessment fees 393 258 213 179 132
Marketing 225 244 279 293 211
Other assets owned expenses and write-downs 13 25 24 9 55
Amortization of intangibles 95 95 95 95 95
Telephone and communications 106 102 107 98 100
Other 733 649 516 431 452
Total noninterest expense 7,782 7,450 7,084 7,029 6,301
Net income from operations 5,417 4,448 4,820 5,143 4,812
Income tax expense 1,802 1,350 1,630 1,768 1,639
Net income $3,615 $3,098 $3,190 $3,375 $3,173
Basic earnings per share $0.24 $0.20 $0.28 $0.32 $0.30
Diluted earnings per share $0.23 $0.20 $0.27 $0.31 $0.29
Weighted average basic shares outstanding 15,211 15,200 11,299 10,705 10,696
Weighted average diluted shares outstanding 15,637 15,632 11,653 11,025 10,994


VERITEX HOLDINGS, INC. AND SUBSIDIARY
Reconciliation GAAP — NON-GAAP - (Unaudited)
(In thousands except per share data and percentages)
The following table reconciles, at the dates set forth below, total stockholders’ equity to tangible common equity and total assets
to tangible assets and presents our book value per common share to our tangible book value per share:
June 30,
2017
March 31,
2017
December 31,
2016
September 30,
2016
June 30,
2016
Tangible Common Equity
Total stockholders’ equity $247,602 $242,725 $239,088 $142,423 $138,850
Adjustments:
Goodwill (26,865) (26,865) (26,865) (26,865) (26,865)
Intangible assets, net (2,171) (2,161) (2,181) (2,257) (2,264)
Total tangible common equity $218,566 $213,699 $210,042 $113,301 $109,721
Tangible Assets
Total assets $1,508,589 $1,522,015 $1,408,507 $1,269,194 $1,215,451
Adjustments:
Goodwill (26,865) (26,865) (26,865) (26,865) (26,865)
Intangible assets (2,171) (2,161) (2,181) (2,257) (2,264)
Total tangible assets $1,479,553 $1,492,989 $1,379,461 $1,240,072 $1,186,322
Tangible Common Equity to Tangible Assets 14.77% 14.31% 15.23% 9.14% 9.25%
Common shares outstanding 15,233 15,229 15,195 10,736 10,728
Book value per common share(1) $16.25 $15.94 $15.73 $13.27 $12.94
Tangible book value per common share(2) $14.35 $14.03 $13.82 $10.55 $10.23

___________________________

  1. We calculate book value per common share as stockholders’ equity at the end of the relevant period divided by the outstanding number of shares of our common stock at the end of the relevant period.
  2. We calculate tangible book value per common share as total tangible common equity, divided by the outstanding number of shares of our common stock at the end of the relevant period. Tangible book value per common share is a non-GAAP financial measure, and, as we calculate tangible book value per common share, the most directly comparable GAAP financial measure is book value per common share. Our management believes that this measure is important to many investors in the market place who are interested in changes from period to period on book value per common share exclusive of changes in intangible assets. Goodwill and other intangible assets have the effect of increasing total book value while not increasing our tangible book value.


VERITEX HOLDINGS, INC. AND SUBSIDIARY
Reconciliation GAAP — NON-GAAP - (Unaudited)
(In thousands)
The following table reconciles net income from operations to pre-tax, pre-provision income:
For the Three Months Ended
June 30,
2017
March 31,
2017
December 31,
2016
September 30,
2016
June 30,
2016
Pre-Tax, Pre-Provision Income
Net income from operations $5,417 $4,448 $4,820 $5,143 $4,812
Provision for loan losses 943 890 440 238 527
Total pre-tax, pre-provision income(1) $6,360 $5,338 $5,260 $5,381 $5,339

___________________________

  1. We calculate pre-tax, pre-provision income by adding the total provision for loan losses to net income from operations for the relevant period. Pre-tax pre-provision income is a non-GAAP financial measure and as we calculate pre-tax, pre-provision income, the most directly comparable GAAP financial measure is net income. Our management believe that this measure is important to many investors in the market place who are interested in understanding our operating performance before provision for loan losses, which can vary from quarter to quarter, and income taxes.


VERITEX HOLDINGS, INC. AND SUBSIDIARY
Net Interest Margin - (Unaudited)
(In thousands except percentages)
For the Three Months Ended
June 30, 2017 March 31, 2017 June 30, 2016
Average
Outstanding
Balance
Interest
Earned/
Interest
Paid
Average
Yield/
Rate
Average
Outstanding
Balance
Interest
Earned/
Interest
Paid
Average
Yield/
Rate
Average
Outstanding
Balance
Interest
Earned/
Interest
Paid
Average
Yield/
Rate
Assets
Interest-earning assets:
Total loans(1) $1,070,436 $13,024 4.88% $1,007,622 $11,883 4.78% $914,121 $11,052 4.86%
Securities available for sale 135,795 735 2.17 119,226 575 1.96 80,498 344 1.72
Investment in unconsolidated subsidiary 93 93 1 4.36 93 1 4.32
Interest-bearing deposits in other banks 199,050 548 1.10 295,637 610 0.84 59,506 80 0.54
Total interest-earning assets 1,405,374 14,307 4.08 1,422,578 13,069 3.73 1,054,218 11,477 4.38
Allowance for loan losses (9,117) (8,558) (7,604)
Noninterest-earning assets 104,819 103,692 92,179
Total assets $1,501,076 $1,517,712 $1,138,793
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Interest-bearing deposits $870,542 $1,742 0.80% $858,420 $1,647 0.78% $636,875 $1,072 0.68%
Advances from FHLB 38,258 89 0.93 38,293 70 0.74 54,425 80 0.59
Other borrowings 8,067 100 4.97 8,064 99 4.98 8,077 97 4.83
Total interest-bearing liabilities 916,867 1,931 0.84 904,777 1,816 0.81 699,377 1,249 0.72
Noninterest-bearing liabilities:
Noninterest-bearing deposits 334,813 368,117 298,887
Other liabilities 3,156 3,209 2,687
Total noninterest-bearing liabilities 337,969 371,326 301,574
Stockholders’ equity 246,240 241,609 137,842
Total liabilities and stockholders’ equity $1,501,076 $1,517,712 $1,138,793
Net interest rate spread(2) 3.24% 2.92% 3.66%
Net interest income $12,376 $11,253 $10,228
Net interest margin(3) 3.53% 3.21% 3.90%

­_______________________

  1. Includes average outstanding balances of loans held for sale of $3,169, $2,094 and $5,192 for the three months ended June 30, 2017, March 31, 2017, and June 30, 2016, respectively.
  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.


Media Contact: lrenfro@veritexbank.com Investor Relations: scaudle@veritexbank.com

Source:Veritex Holdings, Inc.