Veritex Holdings, Inc. Reports Record First Quarter Financial Results
Strong Organic Loan Growth Continues Into 2018
DALLAS, April 23, 2018 (GLOBE NEWSWIRE) -- Veritex Holdings, Inc. (“Veritex” or the “Company”) (Nasdaq:VBTX), the holding company for Veritex Community Bank, today announced the results for the quarter ended March 31, 2018. The Company reported net income available to common stockholders of $10.4 million, or $0.42 diluted earnings per share (“EPS”), compared to $3.3 million, or $0.14 diluted EPS, for the quarter ended December 31, 2017 and $3.1 million, or $0.20 diluted EPS, for the quarter ended March 31, 2017.
C. Malcolm Holland, the Company’s Chairman and Chief Executive Officer, said, “I am excited to report record quarterly results. Our earnings reflect significant benefits achieved from the financially attractive acquisitions of Sovereign Bancshares, Inc. and Liberty Bancshares, Inc. completed over the prior two quarters. Integration of these acquisitions have gone well, and we completed the Liberty acquisition’s core system conversion earlier this month. We are currently on track for another good year with strong capital, exceptional credit quality and strong growth in both loans and deposits.”
2018 First Quarter Highlights
- Net income available for common stockholders for the quarter ended March 31, 2018 was $10.4 million, or $0.42 diluted EPS, compared to $3.1 million, or $0.20 diluted EPS, for the quarter ended March 31, 2017.
- Core (non-GAAP) net income available for common stockholders totaled $9.0 million, or $0.37 core diluted EPS, for the quarter ended March 31, 2018, compared to $3.1 million, or $0.20 core diluted EPS, for the quarter ended March 31, 2017.
- Total loans, excluding $26.3 million in loans that were sold in connection with the sale of two branch locations discussed below, increased $82.6 million, or 14.8% annualized, to 2.3 billion compared to the quarter ended December 31, 2017.
- Total deposits, excluding $64.3 million in deposits that were sold in connection with the sale of two branch locations discussed below, increased $215.2 million, or 37.6% annualized, to $2.5 billion compared to the quarter ended December 31, 2017.
- We completed the previously announced sale of certain assets and liabilities associated with two branches in the Austin metropolitan market to Horizon Bank, SSB resulting in a $355 thousand gain on sale reported in other non-interest income. The completion of the sale results in us exiting the Austin metropolitan market.
Net income for the quarter ended March 31, 2018 was negatively impacted by an $820 thousand re-measurement of our deferred tax assets and deferred tax liabilities due to our new effective tax rate under the Tax Cuts and Jobs Act (the “Tax Act”), compared to a negative impact of $3.1 million for the quarter ended December 31, 2017.
The measurement period for Veritex to determine the fair values of acquired identifiable assets and assumed liabilities is the earlier of (i) twelve months from the date of the acquisition or (ii) as soon as Veritex receives the information it was seeking about facts and circumstances that existed as of the acquisition date or learns that more information is not obtainable. As Veritex had only recorded provisional estimates for the acquisition of Sovereign Bancshares, Inc. (“Sovereign”) and Liberty Bancshares, Inc. (“Liberty”) with respect to loans, bank premises, furniture and equipment, goodwill, intangible assets and deferred taxes for the quarter ended December 31, 2017, changes to these provisional estimates and re-measurement of deferred taxes negatively impacted net income for the quarter ended March 31, 2018. Changes to recorded provisional estimates for the Liberty acquisitions with respect to loans, goodwill, intangible assets, accrued expenses, deposits and deferred taxes could potentially have a further impact on our earnings.
As part of how we measure our results, we use certain non-GAAP financial measures to ascertain performance. These non-GAAP financial measures are reconciled in the section labeled “Reconciliation of Non-GAAP Financial Measures” at the end of this press release.
Result of Operations for the Three Months Ended March 31, 2018
Net Interest Income
For the three months ended March 31, 2018, net interest income before provision for loan losses was $29.1 million and net interest margin was 4.46% compared to $25.8 million and 4.24%, respectively, for the three months ended December 31, 2017. The $3.3 million increase in net interest income was primarily due to an increase in interest income on loans, which was driven by increased volume in all loan categories resulting from continued organic loan growth and a $1.0 million increase in accretion during the three months ended March 31, 2018 compared to the three months ended December 31, 2017 on loans acquired from Sovereign and Liberty. Net interest margin increased 22 basis points from the three months ended December 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. Average loan balances represented 85.4% of average interest-earnings assets for the three months ended March 31, 2018 compared to 84.3% for the three months ended December 31, 2017.
Net interest income before provision for loan losses increased by $17.8 million from $11.3 million to $29.1 million and net interest margin increased 125 basis points from 3.21% to 4.46% for the three months ended March 31, 2018 as compared to the same period in 2017. The increase in net interest income before provision for loan losses was primarily driven by higher loan balances resulting from loans acquired from Sovereign and Liberty and continued organic loan growth. For the three months ended March 31, 2018, average loan balance increased by $1.3 billion compared to the three months ended March 31, 2017, which resulted in a $20.2 million increase in interest income. Net interest margin increased 125 basis points from the three months ended March 31, 2017 primarily due to a change in mix of earning assets resulting from increased loan balances as well as benefits of increases in the prime rates in new and renewed loans. Average loan balances represented 85.4% of average interest-earnings assets for the three months ended March 31, 2018 compared to 70.8% for the three months ended March 31, 2017.
Noninterest Income
Noninterest income for the three months ended March 31, 2018 was $2.8 million, an increase of $483 thousand or 21.0% compared to the three months ended December 31, 2017. The increase was primarily due to a $355 thousand gain on sale of assets resulting from the completion of the sale of certain assets and liabilities associated with two branches in the Austin market. In addition, the increase was due to $339 thousand increase in rental income resulting from the purchase of our headquarter building on December 6, 2017. This increase was partially offset by a $267 thousand gain on the sale of an other real estate owned property during the fourth quarter of 2017 with no corresponding sale in the first quarter of 2018.
Compared to the three months ended March 31, 2017, noninterest income for the three months ended March 31, 2018 grew $1.2 million or 81.2%. The increase was primarily due to a $424 thousand increase in service charges and fees on deposit accounts resulting from the additional acquired Sovereign and Liberty deposit accounts and the associated income from these accounts, $478 thousand of rental income resulting from the purchase of our headquarter building and the $355 thousand gain on sale of assets referenced above resulting from the completion of the sale of the two branches in the Austin market. This increase was partially offset by a $152 thousand decrease in gain on sale of Small Business Administration loans.
Noninterest Expense
Noninterest expense was $17.3 million for the three months ended March 31, 2018, compared to $15.0 million for the three months ended December 31, 2017, an increase of $2.3 million or 15.1%. The increase was primarily driven by a $1.5 million consent fee paid in connection with the execution of an assignment agreement entered into in January 2018 to assign one of our branch leases that the Company ceased using during the three months ended December 31, 2017, which was recorded in occupancy and equipment expense. Compared to the fourth quarter of 2017, salaries and employee benefits increased $573 thousand primarily due to two additional months of salaries and employee benefit expenses for employees associated with the Liberty acquisition that were recognized during the three months ended March 31, 2018, as the Liberty acquisition closed on December 1, 2017. Amortization of intangibles increased $427 thousand primarily due to a $336 thousand increase in amortization of intangible in-place lease assets associated with the purchase of our headquarter building in December 2017.
Compared to the three months ended March 31, 2017, noninterest expense for the three months ended March 31, 2018 increased $9.9 million, or 132.3%. The increase was primarily driven by a $4.0 million increase in salaries and employee benefits expense related to the additional full-time equivalent employees as a result of the Sovereign and Liberty acquisitions. Additionally, occupancy and equipment expense increased $2.2 million primarily due to the $1.5 million consent fee paid in connection with the lease assignment agreement referenced above. Professional fees increased $1.0 million primarily as a result of increased legal fees associated with closing of the sale of two branches in Austin and the execution of a sublease and a lease assignment agreement during the first quarter of 2018. Amortization of intangibles increased $883 thousand primarily due to a $519 thousand increase in amortization of intangible in-place lease assets associated with the purchase of our headquarter building in December 2017.
Financial Condition
Total loans were $2.3 billion at March 31, 2018, an increase of $56.3 million, or 2.5%, compared to December 31, 2017. Excluding $26.3 million of loans that were sold in connection with the sale of two branch locations in the first quarter of 2018, total loans increased $82.6 million, or 3.7%. The net increase was primarily the result of the continued execution and success of our organic growth strategy.
Total deposits were $2.5 billion at March 31, 2018, an increase of $150.9 million, or 6.4%, compared to the fourth quarter of 2017. Excluding $64.3 million of deposits that were sold in connection with the sale of two branch locations in the first quarter of 2018, total deposits increased $215.2 million, or 9.4%. The increase was primarily due to an increase in financial institution money market accounts of $209.2 million, which includes organic growth in our correspondent money market accounts of $164.3 million. This growth was partially offset by a decrease in non-interest bearing deposits of $54.9 million.
Asset Quality
Our allowance for loan losses as a percentage of loans was 0.58% and 0.57% of total loans at March 31, 2018 and December 31, 2017, respectively. The allowance for loan losses as a percentage of total loans was determined by the qualitative factors around the nature, volume and mix of the loan portfolio. The increase in the allowance for loan loss as a percentage of loans was attributable to continued execution and success of our organic growth strategy. We recorded a provision for loan losses of $678 thousand for the quarter ended March 31, 2018 compared to a provision of $2.5 million for the quarter ended December 31, 2017, due to an increase in our loans as result of organic growth as compared to an increase in acquired loans due to the closing of the Liberty acquisition in December 2017.
Nonperforming assets totaled $3.8 million, or 0.12%, of total assets at March 31, 2018 compared to $932 thousand, or 0.03%, of total assets at December 31, 2017. The increase of $2.9 million in nonperforming assets compared to December 31, 2017 was primarily due to an increase in nonperforming loans of $3.3 million offset by a decrease in other real estate owned of $439 thousand.
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 core net interest income, core non-interest expense, core net income from operations, core net income, core net income available to common stockholders, core diluted earnings per share, core efficiency ratio, core net interest margin, core return on average assets, tangible book value per common share and the tangible common equity to tangible assets ratio. The Company has included in this release information related to these non-GAAP financial measures for the applicable periods presented. Please refer to “Reconciliation of Non-GAAP Financial Measures” at the end of this release for a reconciliation of these non-GAAP financial measures.
Business Combinations Measurement Period
The measurement period for the Company to determine the fair values of acquired identifiable assets and assumed liabilities for Liberty will end at the earlier of (i) twelve months from the date of the acquisition or (ii) as soon as the Company receives the information it was seeking about facts and circumstances that existed as of the acquisition date or learns that more information is not obtainable. Provisional estimates for loans, goodwill, intangible assets, accrued expenses, deposits and deferred taxes have been recorded for the Liberty acquisition as independent valuations have not been finalized. Changes to provisional estimates could potentially have an impact on the re-measurement of our deferred taxes.
Conference Call
The Company will also host an investor conference call to review the results on Tuesday, April 24, 2018 at 8:30 a.m. Central Time. Participants may pre-register for the call by visiting https://edge.media-server.com/m6/p/wqr6oe3g and will receive a unique pin number, which can be used when dialing in for the call. This will allow attendees to enter the call immediately. Alternatively, participants may call toll-free at (877) 703-9880.
The call and corresponding presentation slides will be webcast live on the home page of the Company's website, www.veritexbank.com. An audio replay will be available one hour after the conclusion of the call at (855) 859-2056, Conference #5459708. This replay, as well as the webcast, will be available until May 1, 2018.
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.
This release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information regarding Veritex’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. Such forward-looking statements are based on various facts and derived utilizing important assumptions, current expectations, estimates and projections about Veritex and its subsidiaries, any of which may change over time and some of which may be beyond Veritex’s control. 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 Veritex 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; difficult market conditions and unfavorable economic trends in the United States generally, and particularly in the market areas in which Veritex operates and in which its loans are concentrated, including the effects of declines in housing markets; an increase in unemployment levels and slowdowns in economic growth; Veritex's level of nonperforming assets and the costs associated with resolving any problem loans including litigation and other costs; changes in market interest rates may increase funding costs and reduce earning asset yields thus reducing margin; the impact of changes in interest rates and the credit quality and strength of underlying collateral and the effect of such changes on the market value of Veritex's investment securities portfolio; the credit risk associated with the substantial amount of commercial real estate, construction and land development, and commercial loans in our loan portfolio; the extensive federal and state regulation, supervision and examination governing almost every aspect of Veritex's operations including changes in regulations affecting financial institutions, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations being issued in accordance with this statute and potential expenses associated with complying with such regulations; Veritex's ability to comply with applicable capital and liquidity requirements, including our ability to generate liquidity internally or raise capital on favorable terms, including continued access to the debt and equity capital markets; possible changes in trade, monetary and fiscal policies, laws and regulations and other activities of governments, agencies, and similar organizations; the effects of weather and natural disasters such as floods, droughts, wind, tornadoes and hurricanes as well as effects from geopolitical instability and manmade disasters including terrorist attacks;; and achieve its performance goals. For discussion of these and other risks that may cause actual results to differ from expectations, please refer to “Special Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in Veritex’s Annual Report on Form 10-K filed with the SEC on March 14, 2018 and any updates to those risk factors set forth in Veritex’s subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K. 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, and Veritex does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New risks and uncertainties arise from time to time, and it is not possible for us to predict those events or how they may affect us. In addition, Veritex cannot assess the impact of each factor on Veritex’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements, expressed or implied, included in this communication 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. Annualized, pro forma, projected and estimated numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results.
| VERITEX HOLDINGS, INC. AND SUBSIDIARY | ||||||||||||||||||||
| Consolidated Financial Highlights - (Unaudited) | ||||||||||||||||||||
| (In thousands, except percentages) | ||||||||||||||||||||
| At and For the Three Months Ended | ||||||||||||||||||||
| March 31, 2018 |
December 31, 2017 |
September 30, 2017 |
June 30, 2017 |
March 31, 2017 |
||||||||||||||||
| Selected Financial Data: | ||||||||||||||||||||
| Net income | $ | 10,388 | $ | 3,257 | $ | 5,182 | $ | 3,615 | $ | 3,098 | ||||||||||
| Net income available to common stockholders | 10,388 | 3,257 | 5,140 | 3,615 | 3,098 | |||||||||||||||
| Total assets | 3,063,319 | 2,945,583 | 2,494,861 | 1,508,589 | 1,522,015 | |||||||||||||||
| Total loans(1) | 2,316,089 | 2,259,831 | 1,907,509 | 1,122,468 | 1,020,970 | |||||||||||||||
| Provision for loan losses | 678 | 2,529 | 752 | 943 | 890 | |||||||||||||||
| Allowance for loan losses | 13,401 | 12,808 | 10,492 | 9,740 | 8,816 | |||||||||||||||
| Noninterest-bearing deposits(2) | 597,236 | 652,218 | 495,627 | 337,057 | 338,226 | |||||||||||||||
| Total deposits(2) | 2,493,794 | 2,342,912 | 1,985,658 | 1,211,107 | 1,221,696 | |||||||||||||||
| Total stockholders’ equity | 497,433 | 488,929 | 445,929 | 247,602 | 242,725 | |||||||||||||||
| Summary Performance Ratios: | ||||||||||||||||||||
| Return on average assets(3) | 1.41 | % | 0.48 | % | 0.94 | % | 0.97 | % | 0.83 | % | ||||||||||
| Return on average equity(3) | 8.55 | 2.78 | 5.44 | 5.89 | 5.20 | |||||||||||||||
| Net interest margin(4) | 4.46 | 4.24 | 3.78 | 3.53 | 3.21 | |||||||||||||||
| Efficiency ratio(5) | 54.28 | 53.60 | 59.33 | 55.03 | 58.26 | |||||||||||||||
| Noninterest expense to average assets(3) | 2.35 | 2.22 | 2.26 | 2.08 | 1.99 | |||||||||||||||
| Summary Credit Quality Data: | ||||||||||||||||||||
| Nonaccrual loans | $ | 3,438 | $ | 465 | $ | 1,856 | $ | 1,514 | $ | 1,686 | ||||||||||
| Accruing loans 90 or more days past due(6) | 374 | 18 | 54 | 15 | 212 | |||||||||||||||
| Other real estate owned | 10 | 449 | 738 | 493 | 998 | |||||||||||||||
| Nonperforming assets to total assets | 0.12 | % | 0.03 | % | 0.11 | % | 0.13 | % | 0.19 | % | ||||||||||
| Nonperforming loans to total loans | 0.16 | 0.02 | 0.10 | 0.14 | 0.19 | |||||||||||||||
| Allowance for loan losses to total loans | 0.58 | 0.57 | 0.55 | 0.87 | 0.86 | |||||||||||||||
| Net charge-offs to average loans outstanding | — | 0.01 | — | — | 0.06 | |||||||||||||||
| Capital Ratios: | ||||||||||||||||||||
| Total stockholders’ equity to total assets | 16.24 | % | 16.60 | % | 17.87 | % | 16.41 | % | 15.95 | % | ||||||||||
| Tangible common equity to tangible assets | 11.01 | 11.12 | 12.76 | 14.77 | 14.31 | |||||||||||||||
| Tier 1 capital to average assets | 11.84 | 12.92 | 15.26 | 15.09 | 14.65 | |||||||||||||||
| Tier 1 capital to risk-weighted assets | 12.53 | 12.48 | 14.17 | 18.17 | 19.94 | |||||||||||||||
| Common equity tier 1 (to risk weighted assets) | 12.09 | 12.03 | 13.65 | 17.92 | 19.66 | |||||||||||||||
| Total capital to risk-weighted assets | 13.22 | 13.16 | 14.87 | 19.37 | 21.20 | |||||||||||||||
| (1) Total loans does not include loans held for sale and deferred fees. Loans held for sale were $893 thousand at March 31, 2018, $841 thousand at December 31, 2017, $2.2 million at September 30, 2017, $4.1 million at June 30, 2017 and $1.9 million at March 31, 2017. Deferred fees were $24 thousand at March 31, 2018, $28 thousand at December 31, 2017, $28 thousand at September 30, 2017, $40 thousand at June 30, 2017, and $48 thousand at March 31, 2017. Total loans include branch assets held for sale of $26.3 million at December 31, 2017. | ||||||||||||||||||||
| (2) Total noninterest-bearing deposits and total deposits at December 31, 2017 include branch liabilities held for sale of $39.4 million and $64.3 million, respectively. | ||||||||||||||||||||
| (3) 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. | ||||||||||||||||||||
| (4) Net interest margin represents net interest income, annualized on a fully tax equivalent basis, divided by average interest-earning assets. | ||||||||||||||||||||
| (5) Efficiency ratio represents noninterest expense divided by the sum of net interest income and noninterest income. | ||||||||||||||||||||
| (6) Accruing loans 90 or more days past due excludes $2.0 million, $3.3 million and $3.3 million of PCI loans as of March 31, 2018, December 31, 2017 and September 30, 2017. No PCI loans were considered non-performing loans as of March 31, 2018, December 31, 2017 and September 30, 2017. | ||||||||||||||||||||
| VERITEX HOLDINGS, INC. AND SUBSIDIARY | ||||||||||||||||||||
| Condensed Consolidated Balance Sheets - (Unaudited) | ||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| March 31, 2018 |
December 31, 2017 |
September 30, 2017 |
June 30, 2017 |
March 31, 2017 |
||||||||||||||||
| ASSETS | ||||||||||||||||||||
| Cash and due from banks | $ | 26,861 | $ | 38,243 | $ | 21,879 | $ | 28,687 | $ | 23,021 | ||||||||||
| Interest bearing deposits in other banks | 168,333 | 110,801 | 129,497 | 144,459 | 262,714 | |||||||||||||||
| Total cash and cash equivalents | 195,194 | 149,044 | 151,376 | 173,146 | 285,735 | |||||||||||||||
| Investment securities | 243,164 | 228,117 | 204,788 | 134,708 | 138,698 | |||||||||||||||
| Loans held for sale | 893 | 841 | 2,179 | 4,118 | 1,925 | |||||||||||||||
| Loans, net | 2,302,664 | 2,220,682 | 1,896,989 | 1,112,688 | 1,012,106 | |||||||||||||||
| Accrued interest receivable | 7,127 | 7,676 | 6,387 | 3,333 | 2,845 | |||||||||||||||
| Bank-owned life insurance | 21,620 | 21,476 | 20,517 | 20,369 | 20,224 | |||||||||||||||
| Bank premises, furniture and equipment, net | 76,045 | 75,251 | 40,129 | 17,978 | 17,521 | |||||||||||||||
| Non-marketable equity securities | 20,806 | 13,732 | 10,283 | 7,407 | 7,375 | |||||||||||||||
| Investment in unconsolidated subsidiary | 352 | 352 | 352 | 93 | 93 | |||||||||||||||
| Other real estate owned | 10 | 449 | 738 | 493 | 998 | |||||||||||||||
| Intangible assets, net | 18,372 | 20,441 | 10,531 | 2,171 | 2,161 | |||||||||||||||
| Goodwill | 161,685 | 159,452 | 135,832 | 26,865 | 26,865 | |||||||||||||||
| Other assets | 13,634 | 14,518 | 14,760 | 5,220 | 5,469 | |||||||||||||||
| Branch assets held for sale | 1,753 | 33,552 | — | — | — | |||||||||||||||
| Total assets | $ | 3,063,319 | $ | 2,945,583 | $ | 2,494,861 | $ | 1,508,589 | $ | 1,522,015 | ||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||
| Deposits: | ||||||||||||||||||||
| Noninterest-bearing | $ | 597,236 | $ | 612,830 | $ | 495,627 | $ | 337,057 | $ | 338,226 | ||||||||||
| Interest-bearing | 1,896,558 | 1,665,800 | 1,490,031 | 874,050 | 883,470 | |||||||||||||||
| Total deposits | 2,493,794 | 2,278,630 | 1,985,658 | 1,211,107 | 1,221,696 | |||||||||||||||
| Accounts payable and accrued expenses | 3,862 | 5,098 | 4,017 | 2,574 | 1,631 | |||||||||||||||
| Accrued interest payable and other liabilities | 3,412 | 5,446 | 4,368 | 1,032 | 9,655 | |||||||||||||||
| Advances from Federal Home Loan Bank | 48,128 | 71,164 | 38,200 | 38,235 | 38,271 | |||||||||||||||
| Junior subordinated debentures | 11,702 | 11,702 | 11,702 | 3,093 | 3,093 | |||||||||||||||
| Subordinated notes | 4,988 | 4,987 | 4,987 | 4,946 | 4,944 | |||||||||||||||
| Other borrowings | — | 15,000 | — | — | — | |||||||||||||||
| Branch liabilities held for sale | — | 64,627 | — | — | — | |||||||||||||||
| Total liabilities | 2,565,886 | 2,456,654 | 2,048,932 | 1,260,987 | 1,279,290 | |||||||||||||||
| Commitments and contingencies | ||||||||||||||||||||
| Stockholders’ equity: | ||||||||||||||||||||
| Common stock | 241 | 241 | 227 | 152 | 152 | |||||||||||||||
| Additional paid-in capital | 445,964 | 445,517 | 404,900 | 211,901 | 211,512 | |||||||||||||||
| Retained earnings | 55,015 | 44,627 | 41,143 | 36,003 | 32,388 | |||||||||||||||
| Unallocated Employee Stock Ownership Plan shares | (106 | ) | (106 | ) | (209 | ) | (209 | ) | (209 | ) | ||||||||||
| Accumulated other comprehensive loss | (3,611 | ) | (1,280 | ) | (62 | ) | (175 | ) | (1,048 | ) | ||||||||||
| Treasury stock | (70 | ) | (70 | ) | (70 | ) | (70 | ) | (70 | ) | ||||||||||
| Total stockholders’ equity | 497,433 | 488,929 | 445,929 | 247,602 | 242,725 | |||||||||||||||
| Total liabilities and stockholders’ equity | $ | 3,063,319 | $ | 2,945,583 | $ | 2,494,861 | $ | 1,508,589 | $ | 1,522,015 | ||||||||||
| VERITEX HOLDINGS, INC. AND SUBSIDIARY | ||||||||||||||||||||
| Condensed Consolidated Statements of Income - (Unaudited) | ||||||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||||||
| For the Three Months Ended | ||||||||||||||||||||
| March 31, 2018 |
December 31, 2017 |
September 30, 2017 |
June 30, 2017 |
March 31, 2017 |
||||||||||||||||
| Interest income: | ||||||||||||||||||||
| Interest and fees on loans | $ | 32,067 | $ | 28,182 | $ | 20,706 | $ | 13,024 | $ | 11,883 | ||||||||||
| Interest on investment securities | 1,328 | 1,211 | 941 | 735 | 575 | |||||||||||||||
| Interest on deposits in other banks | 687 | 500 | 629 | 548 | 610 | |||||||||||||||
| Interest on other | 5 | 4 | 3 | — | 1 | |||||||||||||||
| Total interest income | 34,087 | 29,897 | 22,279 | 14,307 | 13,069 | |||||||||||||||
| Interest expense: | ||||||||||||||||||||
| Interest on deposit accounts | 4,293 | 3,677 | 2,812 | 1,742 | 1,647 | |||||||||||||||
| Interest on borrowings | 692 | 470 | 338 | 189 | 169 | |||||||||||||||
| Total interest expense | 4,985 | 4,147 | 3,150 | 1,931 | 1,816 | |||||||||||||||
| Net interest income | 29,102 | 25,750 | 19,129 | 12,376 | 11,253 | |||||||||||||||
| Provision for loan losses | 678 | 2,529 | 752 | 943 | 890 | |||||||||||||||
| Net interest income after provision for loan losses | 28,424 | 23,221 | 18,377 | 11,433 | 10,363 | |||||||||||||||
| Noninterest income: | ||||||||||||||||||||
| Service charges and fees on deposit accounts | 933 | 769 | 669 | 555 | 509 | |||||||||||||||
| Gain on sales of investment securities | 8 | 17 | 205 | — | — | |||||||||||||||
| Gain on sales of loans and other assets owned | 581 | 882 | 705 | 807 | 747 | |||||||||||||||
| Bank-owned life insurance | 189 | 192 | 188 | 186 | 187 | |||||||||||||||
| Other | 1,070 | 438 | 210 | 218 | 92 | |||||||||||||||
| Total noninterest income | 2,781 | 2,298 | 1,977 | 1,766 | 1,535 | |||||||||||||||
| Noninterest expense: | ||||||||||||||||||||
| Salaries and employee benefits | 7,930 | 7,357 | 5,921 | 3,642 | 3,908 | |||||||||||||||
| Occupancy and equipment | 3,234 | 1,996 | 1,596 | 1,015 | 1,011 | |||||||||||||||
| Professional fees | 1,802 | 1,713 | 1,973 | 1,188 | 798 | |||||||||||||||
| Data processing and software expense | 828 | 766 | 719 | 372 | 360 | |||||||||||||||
| FDIC assessment fees | 302 | 116 | 410 | 393 | 258 | |||||||||||||||
| Marketing | 461 | 388 | 436 | 225 | 244 | |||||||||||||||
| Other assets owned expenses and write-downs | 172 | 73 | 71 | 13 | 25 | |||||||||||||||
| Amortization of intangibles | 978 | 551 | 223 | 95 | 95 | |||||||||||||||
| Telephone and communications | 426 | 282 | 230 | 106 | 102 | |||||||||||||||
| Other | 1,173 | 1,793 | 943 | 733 | 649 | |||||||||||||||
| Total noninterest expense | 17,306 | 15,035 | 12,522 | 7,782 | 7,450 | |||||||||||||||
| Net income from operations | 13,899 | 10,484 | 7,832 | 5,417 | 4,448 | |||||||||||||||
| Income tax expense | 3,511 | 7,227 | 2,650 | 1,802 | 1,350 | |||||||||||||||
| Net income | $ | 10,388 | $ | 3,257 | $ | 5,182 | $ | 3,615 | $ | 3,098 | ||||||||||
| Preferred stock dividends | $ | — | $ | — | $ | 42 | $ | — | $ | — | ||||||||||
| Net income available to common stockholders | $ | 10,388 | $ | 3,257 | $ | 5,140 | $ | 3,615 | $ | 3,098 | ||||||||||
| Basic earnings per share | $ | 0.43 | $ | 0.14 | $ | 0.26 | $ | 0.24 | $ | 0.20 | ||||||||||
| Diluted earnings per share | $ | 0.42 | $ | 0.14 | $ | 0.25 | $ | 0.23 | $ | 0.20 | ||||||||||
| Weighted average basic shares outstanding | 24,120 | 23,124 | 19,976 | 15,211 | 15,200 | |||||||||||||||
| Weighted average diluted shares outstanding | 24,539 | 23,524 | 20,392 | 15,637 | 15,632 | |||||||||||||||
| VERITEX HOLDINGS, INC. AND SUBSIDIARY | |||||||||||||||||||||
| Reconciliation of Non-GAAP Financial Measures - (Unaudited) | |||||||||||||||||||||
| (In thousands except per share data and percentages) | |||||||||||||||||||||
| The following table reconciles, at the dates set forth below, GAAP net income available to common stockholders to core (non-GAAP) net income available to common stockholders, core basic and diluted earnings per share, core efficiency ratio, core net interest margin and core return on average assets: | |||||||||||||||||||||
| For the Three Months Ended | |||||||||||||||||||||
| March 31, 2018 |
December 31, 2017 |
September 30, 2017 |
June 30, 2017 |
March 31, 2017 |
|||||||||||||||||
| Net interest income (as reported) | $ | 29,102 | $ | 25,750 | $ | 19,129 | $ | 12,376 | $ | 11,253 | |||||||||||
| Adjustment: | |||||||||||||||||||||
| Income recognized on acquired loans | 4,009 | $ | 2,955 | $ | 637 | $ | 135 | $ | 55 | ||||||||||||
| Core net interest income | 25,093 | 22,795 | 18,492 | 12,241 | 11,198 | ||||||||||||||||
| Provision for loan losses (as reported) | 678 | 2,529 | 752 | 943 | 890 | ||||||||||||||||
| Noninterest income (as reported) | 2,781 | 2,298 | 1,977 | 1,766 | 1,535 | ||||||||||||||||
| Adjustment: | |||||||||||||||||||||
| Gain on sale of disposed branch assets | 388 | — | — | — | — | ||||||||||||||||
| Core noninterest income | 2,393 | 2,298 | 1,977 | 1,766 | 1,535 | ||||||||||||||||
| Noninterest expense (as reported) | 17,306 | 15,035 | 12,522 | 7,782 | 7,450 | ||||||||||||||||
| Adjustment: | |||||||||||||||||||||
| Lease exit costs, net(1) | (1,071 | ) | — | — | — | — | |||||||||||||||
| Branch closure expenses | (172 | ) | — | — | — | — | |||||||||||||||
| M&A and other related one-time expenses | (335 | ) | (1,018 | ) | (1,391 | ) | (193 | ) | (89 | ) | |||||||||||
| Core noninterest expense | 15,728 | 14,017 | 11,131 | 7,589 | 7,361 | ||||||||||||||||
| Core net income from operations | 11,080 | 8,547 | 8,586 | 5,475 | 4,482 | ||||||||||||||||
| Income tax expense (as reported) | 3,511 | 7,227 | 2,650 | 1,802 | 1,350 | ||||||||||||||||
| Adjustments: | |||||||||||||||||||||
| Tax impact of adjustments | (579 | ) | (678 | ) | 264 | 20 | 12 | ||||||||||||||
| Tax Act re-measurement | (820 | ) | (3,051 | ) | — | — | — | ||||||||||||||
| Other M&A discrete tax items | — | (398 | ) | — | — | — | |||||||||||||||
| Core income tax expense | $ | 2,112 | $ | 3,100 | $ | 2,914 | $ | 1,822 | $ | 1,362 | |||||||||||
| Net income (as reported) | $ | 10,388 | $ | 3,257 | $ | 5,182 | $ | 3,615 | $ | 3,098 | |||||||||||
| Core net income | $ | 8,968 | $ | 5,447 | $ | 5,672 | $ | 3,653 | $ | 3,120 | |||||||||||
| Preferred stock dividends (as reported) | $ | — | $ | — | — | $ | 42 | $ | — | $ | — | ||||||||||
| Core net income available to common stockholders | $ | 8,968 | $ | 5,447 | $ | 5,630 | $ | 3,653 | $ | 3,120 | |||||||||||
| Weighted average diluted shares outstanding | 24,539 | 23,524 | 20,392 | 15,637 | 15,632 | ||||||||||||||||
| Diluted earnings per share (as reported) | 0.42 | 0.14 | 0.25 | 0.23 | 0.20 | ||||||||||||||||
| Core diluted earnings per share(2) | 0.37 | 0.23 | 0.28 | 0.23 | 0.20 | ||||||||||||||||
| Efficiency Ratio | |||||||||||||||||||||
| Efficiency ratio (as reported) | 54.28 | % | 53.60 | % | 59.33 | % | 55.03 | % | 58.26 | % | |||||||||||
| Core efficiency ratio(3) | 57.22 | % | 55.86 | % | 54.38 | % | 54.18 | % | 57.81 | % | |||||||||||
| Net Interest Margin | |||||||||||||||||||||
| Net interest margin (as reported) | 4.46 | % | 4.24 | % | 3.78 | % | 3.53 | % | 3.21 | % | |||||||||||
| Core net interest margin(4) | 3.84 | % | 3.75 | % | 3.66 | % | 3.49 | % | 3.19 | % | |||||||||||
| Return on average assets | |||||||||||||||||||||
| Return on average assets (as reported) | 1.41 | % | 0.48 | % | 0.94 | % | 0.97 | % | 0.83 | % | |||||||||||
| Core return on average assets(5) | 1.22 | % | 0.80 | % | 1.02 | % | 0.98 | % | 0.83 | % | |||||||||||
| (1) Lease exit costs, net includes a $1.5 million consent fee and $240 thousand in professional services paid in January 2018 to separately assign and sublease two of our branch leases that the Company ceased using in 2017 offset by the reversal of the corresponding assigned lease cease-use liability totaling $669 thousand. | |||||||||||||||||||||
| (2) Core diluted earnings per share is defined as core net income available to common stockholders divided by weighted average diluted shares outstanding. Excluded from net income available to common stockholders are income recognized on acquired loans, lease exit costs, net, branch closure expenses, M&A and other related one-time expenses, the tax impact of the adjustments to core net interest income and core noninterest expense, the re-measurement of our deferred tax asset as a result of the Tax Act and the tax impact of other M&A discrete tax items. | |||||||||||||||||||||
| (3) We calculate core efficiency ratio as core noninterest expense divided by the sum of core net interest income and core noninterest income. | |||||||||||||||||||||
| (4) Core net interest margin is equal to core net interest income divided by average interest-earning assets. | |||||||||||||||||||||
| (5) Core return on average assets is equal to core net income divided by average assets | |||||||||||||||||||||
| VERITEX HOLDINGS, INC. AND SUBSIDIARY | ||||||||||||||||||||
| Reconciliation of Non-GAAP Financial Measures - (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: | ||||||||||||||||||||
| For the Three Months Ended | ||||||||||||||||||||
| March 31, 2018 |
December 31, 2017 |
September 30, 2017 |
June 30, 2017 |
March 31, 2017 |
||||||||||||||||
| Tangible Common Equity | ||||||||||||||||||||
| Total stockholders’ equity | $ | 497,433 | $ | 488,929 | $ | 445,929 | $ | 247,602 | $ | 242,725 | ||||||||||
| Adjustments: | ||||||||||||||||||||
| Goodwill | (161,685 | ) | (159,452 | ) | (135,832 | ) | (26,865 | ) | (26,865 | ) | ||||||||||
| Intangible assets(1) | (18,372 | ) | (22,165 | ) | (10,531 | ) | (2,171 | ) | (2,161 | ) | ||||||||||
| Total tangible common equity | $ | 317,376 | $ | 307,312 | $ | 299,566 | $ | 218,566 | $ | 213,699 | ||||||||||
| Tangible Assets | ||||||||||||||||||||
| Total assets | $ | 3,063,319 | $ | 2,945,583 | $ | 2,494,861 | $ | 1,508,589 | $ | 1,522,015 | ||||||||||
| Adjustments: | ||||||||||||||||||||
| Goodwill | (161,685 | ) | (159,452 | ) | (135,832 | ) | (26,865 | ) | (26,865 | ) | ||||||||||
| Intangible assets(1) | (18,372 | ) | (22,165 | ) | (10,531 | ) | (2,171 | ) | (2,161 | ) | ||||||||||
| Total tangible assets | $ | 2,883,262 | $ | 2,763,966 | $ | 2,348,498 | $ | 1,479,553 | $ | 1,492,989 | ||||||||||
| Tangible Common Equity to Tangible Assets(2) | 11.01 | % | 11.12 | % | 12.76 | % | 14.77 | % | 14.31 | % | ||||||||||
| Common shares outstanding | 24,149 | 24,110 | 22,644 | 15,233 | 15,229 | |||||||||||||||
| Book value per common share(3) | $ | 20.60 | $ | 20.28 | $ | 19.69 | $ | 16.25 | $ | 15.94 | ||||||||||
| Tangible book value per common share(4) | $ | 13.14 | $ | 12.75 | $ | 13.23 | $ | 14.35 | $ | 14.03 | ||||||||||
| (1) Intangible assets as of December 31, 2017 include branch intangible assets held for sale of $1.7 million. | ||||||||||||||||||||
| (2) We calculate tangible common equity as total stockholders’ equity less goodwill and other intangible assets, net of accumulated amortization, and we calculate tangible assets as total assets less goodwill and other intangible assets, net of accumulated amortization. | ||||||||||||||||||||
| (3) We calculate book value per common share as total 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. | ||||||||||||||||||||
| (4) 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. | ||||||||||||||||||||
| VERITEX HOLDINGS, INC. AND SUBSIDIARY | |||||||||||||||||||||||||||||||||
| Net Interest Margin - (Unaudited) | |||||||||||||||||||||||||||||||||
| (In thousands except percentages) | |||||||||||||||||||||||||||||||||
| For the Three Months Ended | |||||||||||||||||||||||||||||||||
| March 31, 2018 | December 31, 2017 | March 31, 2017 | |||||||||||||||||||||||||||||||
|
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)(4) | $ | 2,261,133 | $ | 32,067 | 5.75 | % | $ | 2,030,587 | $ | 28,182 | 5.51 | % | $ | 1,007,622 | $ | 11,883 | 4.78 | % | |||||||||||||||
| Securities available for sale | 222,026 | 1,328 | 2.43 | 233,244 | 1,211 | 2.06 | 119,226 | 575 | 1.96 | ||||||||||||||||||||||||
| Interest-bearing deposits in other banks | 163,996 | 687 | 1.70 | 145,099 | 500 | 1.37 | 295,637 | 610 | 0.84 | ||||||||||||||||||||||||
| Investment in unconsolidated subsidiary | 327 | 5 | 6.20 | 352 | 4 | 4.51 | 93 | 1 | 4.36 | ||||||||||||||||||||||||
| Total interest-earning assets | 2,647,482 | 34,087 | 5.22 | 2,409,282 | 29,897 | 4.92 | 1,422,578 | 13,069 | 3.73 | ||||||||||||||||||||||||
| Allowance for loan losses | (13,133 | ) | (10,658 | ) | (8,558 | ) | |||||||||||||||||||||||||||
| Noninterest-earning assets(4) | 355,625 | 292,664 | 103,692 | ||||||||||||||||||||||||||||||
| Total assets | $ | 2,989,974 | $ | 2,691,288 | $ | 1,517,712 | |||||||||||||||||||||||||||
| Liabilities and Stockholders’ Equity | |||||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||
| Interest-bearing deposits(4) | $ | 1,745,195 | $ | 4,293 | 1.00 | % | $ | 1,569,950 | $ | 3,677 | 0.93 | % | $ | 858,420 | $ | 1,647 | 0.78 | % | |||||||||||||||
| Advances from FHLB | 117,507 | 460 | 1.59 | 74,589 | 213 | 1.13 | 38,293 | 70 | 0.74 | ||||||||||||||||||||||||
| Other borrowings | 16,926 | 232 | 5.56 | 25,398 | 257 | 4.01 | 8,064 | 99 | 4.98 | ||||||||||||||||||||||||
| Total interest-bearing liabilities | 1,879,628 | 4,985 | 1.08 | 1,669,937 | 4,147 | 0.98 | 904,777 | 1,816 | 0.81 | ||||||||||||||||||||||||
| Noninterest-bearing liabilities: | |||||||||||||||||||||||||||||||||
| Noninterest-bearing deposits(4) | 600,215 | 542,918 | 368,117 | ||||||||||||||||||||||||||||||
| Other liabilities(4) | 17,262 | 13,819 | 3,209 | ||||||||||||||||||||||||||||||
| Total noninterest-bearing liabilities | 617,477 | 556,737 | 371,326 | ||||||||||||||||||||||||||||||
| Stockholders’ equity | 492,869 | 464,614 | 241,609 | ||||||||||||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 2,989,974 | $ | 2,691,288 | $ | 1,517,712 | |||||||||||||||||||||||||||
| Net interest rate spread(2) | 4.14 | % | 3.94 | % | 2.92 | % | |||||||||||||||||||||||||||
| Net interest income | $ | 29,102 | $ | 25,750 | $ | 11,253 | |||||||||||||||||||||||||||
| Net interest margin(3) | 4.46 | % | 4.24 | % | 3.21 | % | |||||||||||||||||||||||||||
| (1) Includes average outstanding balances of loans held for sale of $1,336, $3,155 and $2,094 for the three months ended March 31, 2018, December 31, 2017, and March 31, 2017, 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. | |||||||||||||||||||||||||||||||||
| (4) Includes average outstanding balances of branch assets and liabilities held for sale in total loans, noninterest-bearing assets, interest-bearing deposits, noninterest-bearing deposits and other liabilities for the three months ended December 31, 2017. | |||||||||||||||||||||||||||||||||
Media Contact:
LaVonda Renfro
972-349-6200
lrenfro@veritexbank.com
Investor Relations:
Susan Caudle
972-349-6132
scaudle@veritexbank.com
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