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Veritex Holdings, Inc. Reports Third Quarter Financial Results

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DALLAS, Oct. 25, 2016 (GLOBE NEWSWIRE) -- Veritex Holdings, Inc. (NASDAQ: VBTX), the holding company for Veritex Community Bank, announced today the results for the quarter ended September 30, 2016. The Company reported net income of $3.4 million, or $0.31 diluted earnings per share (EPS), compared to $3.2 million, or $0.29 diluted EPS, for the quarter ended June 30, 2016 and $2.5 million, or $0.23 diluted EPS, for the quarter ended September 30, 2015.

Malcolm Holland, the Company's Chairman and Chief Executive Officer, said, "We achieved another record quarter making this the tenth consecutive quarter the Company reported an increase in earnings over the prior quarter. With the reported $0.31 diluted earnings per share for the third quarter 2016, we have grown 2016 diluted earnings per share to $0.85 through the nine months of 2016, a 39% increase over $0.61 for the same period in 2015."

Mr. Holland continued, "I am proud of our achievements and believe they are a function of our business model. At the heart of our model is a culture focused on key principles: treat our employees like they are our family; never compromise on credit quality; and focus on driving financial results that matter to our shareholders."

Mr. Holland added, "As a testament to these principles, I am happy to announce that we were recognized for a third consecutive year in a row as one of the Best Banks to Work For as featured in American Banker Magazine. This honor reflects our employees' positive experiences and attitudes towards our workplace policies, practices, and benefits. With regard to credit quality, our credit ratios continue to reflect 'best in class' status. Finally, in support of our efforts to focus on financial results, we were honored by being named as one of the top performing small-cap banks in the country by Sandler O'Neill + Partners, L.P.  in their annual Sm-All Stars Class of 2016. The objective of the Sm-All Stars is to identify high quality small-cap companies based on measures related to growth, profitability, credit and capital strength."

"Our loan balances have grown by $106.1 million through the nine months of this year. Our origination activity continues to be strong with a level of new commitments consistent with recent quarters. However, we ended the quarter with an uncharacteristically high level of loan pay-downs and payoffs. As a result, outstanding loan balances were relatively flat as compared to June 30, 2016. I am optimistic about fourth quarter growth and earnings potential and confident we will end the year in a strong place," concluded Mr. Holland.

Third Quarter 2016 Financial Highlights

  • Net interest income was $10.5 million, an increase of $1.9 million, or 22.0%, compared to $8.6 million for the same period in 2015.
  • Total loans increased $172.5 million, or 22.9%, to $926.7 million compared to $754.2 million as of September 30, 2015.
  • Total deposits increased $234.6 million, or 27.8%, to $1.1 billion compared to $842.6 million as of September 30, 2015.
  • Pre-tax, pre-provision income was $5.4 million, an increase of $1.6 million, or 40.9%, compared to $3.8 million for the same period in 2015.
  • Year-over-year improvement in the following performance ratios (annualized):
    • Return on average assets of 1.10% compared to 1.04% for the same period in 2015.
    • Return on average equity of 9.50% compared to 7.38% for the same period in 2015.
    • Efficiency ratio of 56.64% compared to 60.48% for the same period in 2015.

Result of Operations for the Three Months Ended September 30, 2016

Net Interest Income

For the three months ended September 30, 2016, net interest income before provision for loan losses was $10.5 million and net interest margin was 3.70% compared to $10.2 million and 3.90%, respectively, for the three months ended June 30, 2016. Net interest income increased $289 thousand primarily due to increased interest income on loans as average loan balances increased $39.9 million due to organic loan growth during the three months ended September 30, 2016 compared to the three months ended June 30, 2016. The net interest margin decreased 20 basis points from the three months ended June 30, 2016. The decrease in net interest margin was partially due to a decrease in the average yield in interest-earning assets from 4.38% for the three months ended June 30, 2016 to 4.24% for the three months ended September 30, 2016. This was the result of a $35.1 million increase in interest- bearing deposits at other banks with an average yield of 0.54% which represented 8.4% of average earning assets for the three months ending September 30, 2016 compared to 5.6% of average earning assets for the three months ending June 30, 2016. The decrease in net interest margin was also the result of an increase of 7 basis points in the cost of interest bearing liabilities primarily due to an increase in the rate paid on financial institution money market deposit accounts.

Net interest income before provision for loan losses increased by $1.9 million from $8.6 million to $10.5 million for the three months ended September 30, 2016 as compared to the same period during 2015. The increase in net interest income before provision for loan losses was primarily due to $2.4 million in increased interest income on loans resulting from average loan balance increases of $197.5 million compared to September 30, 2015. The net interest margin declined to 3.70% from the three months ended September 30, 2016 from 3.84% for the same three-month period in 2015. The primary driver of the decrease was a 13 basis points increase in the average rate paid on interest-bearing liabilities from 0.66% for the three months ended September 30, 2015 to 0.79% for the three months ended September 20, 2016. This increase was primarily due to an increase in the average rate paid on money market accounts. 

Noninterest Income

Noninterest income for the three months ended September 30, 2016 was $1.9 million, an increase of $481 thousand or 34.07% compared to the three months ended June 30, 2016. The increase was primarily a result of increased gains on sale of Small Business Administration ("SBA") loans totaling $306 thousand and increased gains on sale of mortgage loans of $110 thousand compared to three months ended June 30, 2016.  In addition, the increase was due to a $109 thousand late fee paid with the payoff of a substandard loan during the three months ended September 30, 2016.

Compared to the three months ended September 30, 2015, noninterest income grew $850 thousand or 81.50%. The increase was primarily a result of increased gains on sale of SBA loans totaling $307 thousand, increased gains on sale of mortgage loans totaling $336 thousand, and a $109 thousand late fee paid with the payoff of a substandard loan during the three months ended September 30, 2016.

Noninterest Expense

Noninterest expense was $7.0 million for the three months ended September 30, 2016, compared to noninterest expense of $6.3 million for the three months ended June 30, 2016, an increase of $728 thousand or 11.6%. The increase was primarily due to increases in salaries and employee benefits and professional fees.

Salaries and employee benefits expense was $3.9 million for the three months ended September 30, 2016, compared to $3.6 million for the three months ended June 30, 2016, an increase of $331 thousand or 9.2%.  The increase was attributable to employee compensation increases of $96 thousand resulting from annual merit increases and the addition of six new full-time equivalent employees. Additionally, mortgage commissions increased $62 thousand compared to the prior quarter as the result of increased mortgage loan fundings for the same period. The total number of full-time equivalent employees at September 30, 2016 and June 30, 2016 was 163 and 157, respectively.  In addition, employee benefit expenses increased by $166 thousand which was due to higher claims incurred under our partially self-insured medical plan compared to the previous quarter.  The Company adopted a fully-insured medical plan effective September 1, 2016.  Professional fees expense was $785 thousand for the three months ended September 30, 2016, compared to $503 thousand for the three months ended June 30, 2016, an increase of $282 thousand or 56.1%. The increase was primarily comprised of $200 thousand in legal and other professional services related to a potential acquisition and $60 thousand in audit and accounting expenses due to increased regulatory internal control requirements as a result of asset growth.

Compared to the three months ended September 30, 2015, noninterest expense increased $1.2 million, or 20.3%, to $7.0 million for the three months ended September 30, 2016. The increase was primarily due to increases in salaries and employee benefits and in professional fees.

Salaries and employee benefits expense was $3.9 million for the three months ended September 30, 2016, compared to $3.0 million for the three months ended September 30, 2015, an increase of $919 thousand or 30.6%. The increase was attributable to employee compensation increases of $374 thousand resulting from annual merit increases and the addition of 19 new full-time equivalent employees.  Mortgage commissions increased $144 thousand as the result of increased mortgage loan fundings for the same period. Additionally, incentive costs including executive and lender incentives and stock compensation increased by $112 thousand compared to the three months ended September 30, 2015.  The total number of full-time equivalent employees at September 30, 2016 and September 30, 2015 was 163 and144, respectively.  In addition, employee benefit expenses increased by $178 thousand which was due to increased number of covered employees and higher claims incurred under our partially self-insured medical plan compared to the prior year. The increase in employee expense was also affected by a decrease of $106 thousand in the deferral of employee expense related to loan originations. Professional fees expense was $785 thousand for the three months ended September 30, 2016, compared to $632 thousand for the three months ended September 30, 2015, an increase of $153 thousand or 24.0%.  The increase was comprised of $69 thousand related to SEC reporting and filing expenses and includes a new subscription to a cloud-based SEC reporting and collaboration software.  In addition, audit and accounting expenses increased $71 thousand as fees increased due to increased regulatory internal control requirements as a result of asset growth. During the nine months ended September 30, 2016 and 2015, the Company incurred professional fees of $200 thousand in legal and other professional services related to a potential acquisition and non-recurring acquisition expenses of $205 thousand related to investment banker's success fees and legal expense, respectively.

Income Taxes

Income tax expense for the three months ended September 30, 2016 totaled $1.8 million, an increase of $129 thousand, or 7.9%, compared to the three months ended June 30, 2016. The Company's effective tax rate was approximately 34.4% and 34.1% for the three months ended September 30, 2016 and the three months ended June 30, 2016, respectively.

Compared to the three months ended September 30, 2015, income tax expense increased $487 thousand, or 38.0%, to $1.8 million for the three months ended September 30, 2016. The increase in the income tax expense was primarily due to the $1.3 million increase in net operating income from $3.8 million for the three months ended September 30, 2015 to $5.1 million for the three months ended September 2016.  The Company's effective tax rate was approximately 34.4% for the three months ended September 30, 2016 compared to 33.6% for the three months ended September 30, 2015. The increase in effective tax rates from the three months ended September 30, 2015 was affected primarily by increases in our federal statutory rate from 34% to 35%.

Financial Condition

Loans (excluding loans held for sale and deferred loan fees) at September 30, 2016 were $926.7 million, a decrease of $1.3 million or 0.1% compared to $928.0 million at June 30, 2016. The net decrease from June 30, 2016 was primarily the result of gross loan growth of $73.5 million which was offset by $74.8 million in loan paydowns and payoffs during the third quarter.

Loans (excluding loans held for sale and deferred loan fees) increased $172.5 million, or 22.9%, compared to $754.2 million at September 30, 2015. The growth over September 30, 2015 is due to the continued execution and success of our organic growth strategy.

Deposits at September 30, 2016 were $1.1 billion, an increase of $49.5 million, or 4.8%, compared to $1.0 billion at June 30, 2016. The increase from June 30, 2016 was primarily due to an increase of $114.8 million in financial institution money market accounts resulting from the launch of a correspondent banking group. This increase was partially offset by a decrease of $49.6 million in noninterest bearing deposit accounts, primarily due to a single customer deposit of $38.6 million. These funds were deposited at the bank prior to June 30, 2016 and were held at the bank for less than ten days. In addition, wholesale deposits declined by $11.5 million.

Deposits increased $234.6 million, or 27.8%, compared to $842.6 million at September 30, 2015. The increase from September 30, 2015 was due to an increase in financial institution money market accounts of $137.8 million resulting from the launch of a correspondent banking group, organic growth in retail and business money market accounts of $70.1 million, growth in time deposits of $30.2 million, and an increase of $5.1 million in noninterest bearing deposits which was partially offset by decreases in wholesale deposits of $10.0 million.

Advances from the Federal Home Loan Bank were $38.3 million at September 30, 2016 and $38.4 million at June 30, 2016 compared to $18.5 million at September 30, 2015.

Asset Quality

The allowance for loan losses was 0.87%, 0.85%, and 0.82% of total loans at September 30, 2016, June 30, 2016, and September 30, 2015, respectively. The increase in allowance for loan losses as a percentage of total loans over the three quarter period was primarily due to changes in qualitative factors around the nature, volume and mix of the loan portfolio.

The provision for loan losses for the three months ended September 30, 2016 totaled $238 thousand compared to $527 thousand for three months ended June 30, 2016. The decrease in provision for loan losses for the three months ended September 30, 2016 compared to June 30, 2016 was due to a decrease in general provision requirements as loans decreased 0.1% for the three months ended September 30, 2016. The increase of $238 thousand in provision for loan losses from September 30, 2015 to September 30, 2016 was due to the general provision required from the increasing loan growth compared to the same period in 2015.

Other real estate owned totaled $662 thousand at September 30, 2016 compared to $493 thousand at June 30, 2016 and September 30, 2015. Non-accrual loans were $1.1 million at September 30, 2016 compared to $1.0 million at June 30, 2016 and $428 thousand at September 30, 2015.  At September 30, 2016 and June 30, 2016, non-accrual loans to our total loans held for investment was minimal at 0.12% and 0.11%, respectively.

Nonperforming assets totaled $2.1 million, or 0.17%, of total assets at September 30, 2016 compared to $7.2 million, or 0.59%, of total assets at June 30, 2016. Nonperforming assets were $921 thousand, or 0.09%, of total assets at September 30, 2015. The decrease of $5.1 million in nonperforming assets compared to June 30, 2016 is primarily related to the pay-off of a single $5.4 million loan which was included in the accruing loans 90 or more days past due category as of June 30, 2016.  This $5.4 million loan is part of the borrowing relationship detailed in the following paragraph and table below. 

In the Company's Annual Report on Form 10-K for the year ended December 31, 2015, the Company disclosed a borrowing relationship comprised of loans to multiple affiliated funds in which one of the funds had publicly disclosed that it was subject to ongoing SEC investigations and that the Federal Bureau of Investigation served a search warrant in February 2016 at the fund's corporate offices in connection with a law enforcement investigation. The borrowing relationship consisted of four loans to five affiliated funds secured by various assets, including multiple notes made to numerous residential developers in favor of the funds and further secured by deeds of trust. These loans were made to separate and distinct borrowing entities, and were not dependent on each other for repayment.  Each loan had specific collateral note assignments that related to particular single-family residential projects in either the Houston, Dallas, Austin or San Antonio markets. The specific collateral note assignments were not cross-collateralized. The Company believes that the value of collateral securing the last loan is well in excess of the loan amount with the loan to value ratios less than 50%. The borrowing relationship is not considered to be impaired and no specific reserves have been established at this time.

The following table shows the principal balance of loans as of the dates specified for the above mentioned borrowing relationship.

           
Borrower September 30,
 2016
 June 30,
 2016
 March 31,
 2016
 December 31,
 2015
 Comments
  (In thousands)    
Loan 1 $  $5,400  $6,000  $6,000  Paid in full
Loan 2   1,579  1,579  3,082  Paid in full
Loan 3     5,116  5,116  Paid in full
Loan 4 4,242  8,644  10,290  11,250  Split grade:$1,242 Pass:$3,000 Special Mention, note
matured 10/15/2016 and is in the process of renewing
Total: $4,242  $15,623  $22,985  $25,448   
                   

The total is presented for informational purposes only; debts are not required to be aggregated for legal lending limit purposes.

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 ten 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: 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); 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, dated October 10, 2014, filed pursuant to Rule 424(b)(4), the Company's Annual Report on Form 10-K filed on March 15, 2016, 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 share and per share data)
 
  At and For the Three Months Ended
  September 30,
 2016
 June 30,
 2016
 March 31,
 2016
 December 31,
 2015
 September 30,
 2015
Selected Financial Data:          
Net income $3,375  $3,173  $2,813  $2,573  $2,537  
Net income available to common stockholders 3,375  3,173  2,813  2,535  2,517  
Total assets 1,269,238  1,215,497  1,130,480  1,039,600  1,009,539  
Total loans(1) 926,712  928,000  885,415  820,567  754,199  
Provision for loan losses 238  527  845  610    
Allowance for loan losses 8,102  7,910  7,372  6,772  6,214  
Noninterest-bearing deposits 304,972  354,570  296,481  301,367  299,864  
Total deposits 1,077,217  1,027,729  946,058  868,410  842,607  
Total stockholders' equity 142,423  138,850  135,241  132,046  137,508  
Summary Performance Ratios:                     
Return on average assets(2) 1.10% 1.12% 1.04% 0.99% 1.04% 
Return on average equity(2) 9.50  9.26  8.39  7.37  7.38  
Net interest margin(3) 3.70  3.90  3.87  3.78  3.84  
Efficiency ratio(4) 56.64  54.13  54.01  56.11  60.48  
Noninterest expense to average assets(2) 2.29  2.23  2.20  2.22  2.39  
Summary Credit Quality Data:                     
Nonaccrual loans $1,087  $1,028  $525  $593  $428  
Accruing loans 90 or more days past due 357  5,634  141  84    
Other real estate owned 662  493  493  493  493  
Nonperforming assets to total assets 0.17% 0.59% 0.11% 0.11% 0.09% 
Nonperforming loans to total loans 0.16  0.72  0.08  0.08  0.06  
Allowance for loan losses to total loans 0.87  0.85  0.83  0.83  0.82  
Net (recoveries) charge-offs to average loans outstanding 0.03  0.03  0.03  0.01    
Capital Ratios:                     
Total stockholders' equity to total assets 11.22% 11.42% 11.96% 12.70% 13.62% 
Tangible common equity to tangible assets(5) 9.14  9.25  9.63  10.17  10.30  
Tier 1 capital to average assets 9.82  10.21  10.38  10.75  12.02  
Tier 1 capital to risk-weighted assets 12.04  11.88  12.03  12.85  14.73  
Common equity tier 1 (to risk weighted assets) 11.72  11.56  11.69  12.48  13.29  
Total capital to risk-weighted assets 13.38  13.23  13.38  14.25  16.18  
_________________                


(1) Total loans does not include loans held for sale and deferred fees. Loans held for sale were $4.9 million at September 30, 2016, $4.8 million at June 30, 2016, $3.6 million at March 31, 2016, $2.8 million at December 31, 2015 and $1.8 million at September 30, 2015. Deferred fees were $51 thousand at September 30, 2016, $52 thousand at June 30, 2016, $65 thousand at March 31, 2016, $61 thousand at December 31, 2015, and $55 thousand at September 30, 2015.
 
(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. 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, except share and per share data)
 
  September 30,
 2016
 June 30,
 2016
 March 31,
 2016
 December 31,
 2015
 September 30,
 2015
ASSETS          
Cash and due from banks $15,837  $12,951  $12,416  $10,989  $10,478 
Interest bearing deposits in other banks 162,750  114,293  79,967  60,562  113,031 
Total cash and cash equivalents 178,587  127,244  92,383  71,551  123,509 
Investment securities 86,772  83,677  79,146  75,813  61,023 
Loans held for sale 4,856  4,793  3,597  2,831  1,766 
Loans, net 918,559  920,039  877,978  813,733  747,930 
Accrued interest receivable 2,414  2,259  2,252  2,216  2,088 
Bank-owned life insurance 19,922  19,767  19,614  19,459  19,299 
Bank premises, furniture and equipment, net 17,501  17,243  17,248  17,449  17,585 
Non-marketable equity securities 7,358  7,035  5,541  4,167  4,045 
Investment in unconsolidated subsidiary 93  93  93  93  93 
Other real estate owned 662  493  493  493  493 
Intangible assets, net 2,257  2,264  2,347  2,410  2,458 
Goodwill 26,865  26,865  26,865  26,865  26,025 
Other assets 3,392  3,725  2,923  2,520  3,225 
Total assets $1,269,238  $1,215,497  $1,130,480  $1,039,600  $1,009,539 
LIABILITIES AND STOCKHOLDERS' EQUITY          
Deposits:          
Noninterest-bearing $304,972  $354,570  $296,481  $301,367  $299,864 
Interest-bearing 772,245  673,159  649,577  567,043  542,743 
Total deposits 1,077,217  1,027,729  946,058  868,410  842,607 
Accounts payable and accrued expenses 2,082  1,611  2,122  1,776  1,782 
Accrued interest payable and other liabilities 1,098  855  573  848  1,089 
Advances from Federal Home Loan Bank 38,341  38,375  38,410  28,444  18,478 
Junior subordinated debentures 3,093  3,093  3,093  3,093  3,093 
Subordinated notes 4,984  4,984  4,983  4,983  4,982 
Total liabilities 1,126,815  1,076,647  995,239  907,554  872,031 
Commitments and contingencies          
Stockholders' equity:          
Preferred stock         8,000 
Common stock 107  107  107  107  107 
Additional paid-in capital 116,315  116,111  115,876  115,721  115,579 
Retained earnings 26,101  22,725  19,552  16,739  14,204 
Unallocated Employee Stock Ownership Plan shares (309) (309) (309) (309) (406)
Accumulated other comprehensive income (loss) 279  286  85  (142) 94 
Treasury stock, 10,000 shares at cost (70) (70) (70) (70) (70)
Total stockholders' equity 142,423  138,850  135,241  132,046  137,508 
Total liabilities and stockholders' equity $1,269,238  $1,215,497  $1,130,480  $1,039,600  $1,009,539 


VERITEX HOLDINGS, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Income - (Unaudited)
(In thousands, except share and per share data)
 
  Nine Months Ended
  September 30,
2016
 September 30,
2015
Interest income:    
Interest and fees on loans $32,996  $24,032 
Interest on investment securities 1,014  712 
Interest on deposits in other banks 302  169 
Interest on other 2  1 
Total interest income 34,314  24,914 
Interest expense:    
Interest on deposit accounts 3,388  2,075 
Interest on borrowings 491  392 
Total interest expense 3,879  2,467 
Net interest income 30,435  22,447 
Provision for loan losses 1,610  258 
Net interest income after provision for loan losses 28,825  22,189 
Noninterest income:    
Service charges and fees on deposit accounts 1,309  907 
Gain on sales of investment securities 15  7 
Gain on sales of loans 2,318  824 
Loss on sales of other assets owned   19 
Bank-owned life insurance 577  552 
Other 460  188 
Total noninterest income 4,679  2,497 
Noninterest expense:    
Salaries and employee benefits 10,683  8,247 
Occupancy and equipment 2,718  2,560 
Professional fees 1,861  1,536 
Data processing and software expense 850  903 
FDIC assessment fees 447  317 
Marketing 704  595 
Other assets owned expenses and write-downs 139  29 
Amortization of intangibles 285  243 
Telephone and communications 295  182 
Other 1,323  1,043 
Total noninterest expense 19,305  15,655 
Net income from operations 14,199  9,031 
Income tax expense 4,837  2,814 
Net income $9,362  $6,217 
Preferred stock dividends $  $60 
Net income available to common stockholders $9,362  $6,157 
Basic earnings per share $0.88  $0.62 
Diluted earnings per share $0.85  $0.61 
Weighted average basic shares outstanding 10,698,452  9,853,785 
Weighted average diluted shares outstanding 10,992,723  10,121,184 


VERITEX HOLDINGS, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Income - (Unaudited)
(In thousands, except share and per share data)
 
  For the Three Months Ended
  September 30,
 2016
 June 30,
 2016
 March 31,
 2016
 December 31,
 2015
 September 30,
 2015
Interest income:          
Interest and fees on loans $11,589  $11,052  $10,355  $9,648  $9,230 
Interest on investment securities 335  344  335  285  247 
Interest on deposits in other banks 129  80  92  73  60 
Interest on other 1  1  1  1  1 
Total interest income 12,054  11,477  10,783  10,007  9,538 
Interest expense:          
Interest on deposit accounts 1,381  1,072  935  843  778 
Interest on borrowings 156  177  158  151  143 
Total interest expense 1,537  1,249  1,093  994  921 
Net interest income 10,517  10,228  9,690  9,013  8,617 
Provision for loan losses 238  527  845  610   
Net interest income after provision for loan losses 10,279  9,701  8,845  8,403  8,617 
Noninterest income:          
Service charges and fees on deposit accounts 433  443  434  419  380 
Gain on sales of investment securities     15     
Gain on sales of loans 1,036  620  662  430  392 
Gain on sales of other assets owned         21 
Bank-owned life insurance 193  191  193  195  194 
Other 231  158  69  163  56 
Total noninterest income 1,893  1,412  1,373  1,207  1,043 
Noninterest expense:          
Salaries and employee benefits 3,920  3,589  3,174  3,019  3,001 
Occupancy and equipment 923  894  901  917  894 
Professional fees 785  503  573  487  632 
Data processing and software expense 296  270  284  313  368 
FDIC assessment fees 179  132  137  131  121 
Marketing 293  211  200  205  227 
Other assets owned expenses and write-downs 9  55  75  24  (5)
Amortization of intangibles 95  95  95  95  96 
Telephone and communications 98  100  97  81  68 
Other 431  452  439  462  440 
Total noninterest expense 7,029  6,301  5,975  5,734  5,842 
Net income from operations 5,143  4,812  4,243  3,876  3,818 
Income tax expense 1,768  1,639  1,430  1,303  1,281 
Net income $3,375  $3,173  $2,813  $2,573  $2,537 
Preferred stock dividends $  $  $  $38  $20 
Net income available to common stockholders $3,375  $3,173  $2,813  $2,535  $2,517 
Basic earnings per share $0.32  $0.30  $0.26  $0.24  $0.24 
Diluted earnings per share $0.31  $0.29  $0.26  $0.23  $0.23 
Weighted average basic shares outstanding 10,705,115  10,696,366  10,693,800  10,675,948  10,652,602 
Weighted average diluted shares outstanding 11,024,695  10,993,921  10,963,986  10,954,920  10,940,427 


VERITEX HOLDINGS, INC. AND SUBSIDIARY
Reconciliation GAAP — NON-GAAP - (Unaudited)
(In thousands, except share and per share data)
 
The following table reconciles, at the dates set forth below, total stockholders' equity to tangible common equity and total assets to tangible assets:
 
  September 30,
 2016
 June 30,
 2016
 March 31,
 2016
 December 31,
 2015
 September 30,
 2015
Tangible Common Equity          
Total stockholders' equity $142,423  $138,850  $135,241  $132,046  $137,508 
Adjustments:          
Preferred stock         (8,000)
Goodwill (26,865) (26,865) (26,865) (26,865) (26,025)
Intangible assets (2,257) (2,264) (2,347) (2,410) (2,458)
Total tangible common equity $113,301  $109,721  $106,029  $102,771  $101,025 
Tangible Assets          
Total assets $1,269,238  $1,215,497  $1,130,480  $1,039,600  $1,009,539 
Adjustments:          
Goodwill (26,865) (26,865) (26,865) (26,865) (26,025)
Intangible assets (2,257) (2,264) (2,347) (2,410) (2,458)
Total tangible assets $1,240,116  $1,186,368  $1,101,268  $1,010,325  $981,056 
Tangible Common Equity to Tangible Assets 9.14% 9.25% 9.63% 10.17% 10.30%
Common shares outstanding 10,736  10,728  10,724  10,712  10,700 
           
Book value per common share(1) $13.27  $12.94  $12.61  $12.33  $12.10 
Tangible book value per common share(2) $10.55  $10.23  $9.89  $9.59  $9.44 
_________________                    


(1) We calculate book value per common share as stockholders' equity less preferred stock 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 stockholders' equity less preferred stock, goodwill, and intangible assets, net of accumulated amortization 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. 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 total stockholders' equity per common share.



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
  September 30,
 2016
 June 30,
 2016
 March 31,
 2016
 December 31,
 2015
 September 30,
 2015
Pre-Tax, Pre-Provision Income          
Provision for loan losses $238  $527  $845  $610  $ 
Net income from operations 5,143  4,812  4,243  3,876  3,818 
Total pre-tax, pre-provision income(1) $5,381  $5,339  $5,088  $4,486  $3,818 
_____________________


(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.

  

VERITEX HOLDINGS, INC. AND SUBSIDIARY
Net Interest Margin - (Unaudited)
(In thousands)
 
  For the Three Months Ended
  September 30, 2016 June 30, 2016 September 30, 2015
  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) $954,053  $11,589  4.83% $914,121  $11,052  4.86% $756,542  $9,230  4.84% 
Securities available for sale 83,233  335  1.60  80,498  344  1.72  63,204  247  1.55  
Investment in subsidiary 93  1  4.28  93  1  4.32  93  1  4.27  
Interest-earning deposits in financial institutions 94,596  129  0.54  59,506  80  0.54  70,363  60  0.34  
Total interest-earning assets 1,131,975  12,054  4.24  1,054,218  11,477  4.38  890,202  9,538  4.25  
Allowance for loan losses (8,115)     (7,604)     (7,146)     
Noninterest-earning assets 95,901      92,179      88,023      
Total assets $1,219,761      $1,138,793      $971,079      
Liabilities and Stockholders' Equity                   
Interest-bearing liabilities:                   
Interest-bearing deposits $726,958  $1,381  0.76% $636,875  $1,072  0.68% $520,806  $778  0.59% 
Advances from FHLB 38,363  59  0.61  54,425  80  0.59  19,404  56  1.14  
Other borrowings 8,078  97  4.78  8,077  97  4.83  9,077  86  3.76  
Total interest-bearing liabilities 773,399  1,537  0.79  699,377  1,249  0.72  549,287  920  0.66  
Noninterest-bearing liabilities:                   
Noninterest-bearing deposits 301,740      298,887      282,934      
Other liabilities 3,284      2,687      2,403      
Total noninterest-bearing liabilities 305,024      301,574      285,337      
Stockholders' equity 141,338      137,842      136,455      
Total liabilities and stockholders' equity $1,219,761      $1,138,793      $971,079      
Net interest rate spread(2)     3.45%     3.66%     3.59% 
Net interest income   $10,517      $10,228      $8,618    
Net interest margin(3)     3.70%     3.90%     3.84% 
_________________                      


(1) Includes average outstanding balances of loans held for sale of $6,047, $5,192 and $4,215 for the three months ended September 30, 2016, June 30, 2016, and September 30, 2015, 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: LaVonda Renfro 972-349-6200 lrenfro@veritexbank.com Investor Relations: 972-349-6200 scaudle@veritexbank.com
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