Veritex Holdings, Inc. Reports Third Quarter Financial Results

DALLAS, Oct. 27, 2015 (GLOBE NEWSWIRE) — Veritex Holdings, Inc. (NASDAQ:VBTX), the holding company for Veritex Community Bank, announced the results today for the quarter ended September 30, 2015.¬† The Company reported net income of $2.5 million or $0.23 diluted earnings per common share.¬† These results compared to net income of $1.9 million or $0.19 diluted earnings per common share for the quarter ended June 30, 2015 and net income of $1.4 million or $0.21 diluted earnings per common share for the quarter ended September 30, 2014.

Malcolm Holland, the Company‚Äôs Chairman and Chief Executive Officer, said, ‚ÄúWe reached an important milestone this quarter by surpassing $1 billion in assets. In addition, I am thrilled that we were again named by American Banker in its annual list of ‚ÄúBest Banks to Work For‚ÄĚ ranking number 9 of 50 top banks in the country. Our team‚Äôs hard work resulted in both strong organic growth and the successful acquisition and integration of IBT Bancorp, Inc. Average loan balances grew $132 million from the prior quarter average balances not only due to the addition of IBT, but a significant amount of the growth originated from core customer balances despite a number of unexpected payoffs.‚ÄĚ

Mr. Holland also said, ‚ÄúThe quality of our loan portfolio continues to be strong as evidenced by solid credit metrics. As noted in past quarters, we continue to see pressure on pricing of new loans, however we believe our net interest margin will hold within the range we have seen over the past several quarters.‚ÄĚ

‚ÄúIn addition to our loan growth,‚ÄĚ Mr. Holland added, ‚ÄúI am excited about our success in building deposit relationships.¬† Average deposits increased from the prior quarter with the addition of IBT and growth in core customers. We‚Äôve also taken advantage of low cost wholesale deposits and reduced our cost of funds.‚ÄĚ

Mr. Holland continued, ‚ÄúNew commitments continue to out-pace our expectations. We anticipate continued growth in loans and deposits during the fourth quarter. We have a lot to be excited about.‚ÄĚ

Financial Highlights 

  • Successfully closed the acquisition of IBT Bancorp, Inc. (‚ÄúIBT‚ÄĚ) on July 1, 2015 and fully integrated systems and operations on August 22, 2015.
  • Net income increased $1.2 million or 86.7% from the same three-month period last year and $681,000 or 36.7% from the prior quarter to $2.5 million.
  • Return on average assets improved to 1.04% for the three months ended September 30, 2015 compared to 0.74% for the same period last year and 0.93% for the prior quarter. The efficiency ratio improved to 60.48% for the three months ended September 30, 2015 compared to 65.88% for the same period last year and 61.75% for the prior quarter.
  • Total assets increased $264.2 million or 35.4% year-over-year to $1.0 billion as of September 30, 2015. Average assets grew $166.8 million over the prior quarter average balances. Approximately $113.7 million of the increase was a result of the IBT acquisition and the remaining $53.1 million increase was a result of organic growth.
  • Total loans increased $172.9 million or 29.7% year-over-year to $754.2 million as of September 30, 2015. Average loan balances grew $131.6 million from June 30, 2015 with $89.7 million due to the IBT acquisition, $41.9 million resulting from growth in core customer lending.
  • Deposits increased $198.1 million or 30.7% year-over-year to $842.6 million as of September 30, 2015. Average deposits grew $141.1 million compared to the quarter ending June 30, 2015 with $98.4 million resulting from the acquisition of IBT, $13.1 million due to growth in core customer deposits, and $29.6 million due to increases in low cost wholesale deposits.

Result of Operations for the Three Months Ended September 30, 2015

Net Interest Income

For the three months ended September 30, 2015, net interest income before provision for loan losses was $8.6 million and net interest margin was 3.84% compared to $7.0 million and 3.77% for the three months ended June 30, 2015. The net interest margin increased 0.07% from the three months ended June 30, 2015 primarily due to an increase of 0.06% in average yield on loans from 4.78% for the three months ended June 30, 2015 to 4.84% for the three months ended September 30, 2015. The addition of higher yielding loans from IBT as well as the impact of approximately $50,000 in purchase discount accretion income from loans acquired in the IBT acquisition were the primary drivers in the increase in yield compared to the prior quarter.  The average rate paid on interest-bearing liabilities declined 0.03% to 0.67% for the three months ended September 30, 2015 from 0.70% for the three months ended June 30, 2015 primarily due to a change in mix of deposits from premium money market accounts with an average rate of 0.67% and certificates of deposits with an average rate of 1.05% to brokered money market deposits with an average rate of 0.25%.

Net interest income before provision for loan losses increased by $1.9 million compared to $6.7 million for the three months ended September 30, 2014 primarily due to increased average loans balances resulting from organic loan growth as well as loans acquired from IBT. Net interest margin declined 0.11% compared to 3.95% for the same three months in 2014 primarily due to a decline of 0.20% in average yield on loans from 5.04% for the three months ended September 30, 2014. Competitive pricing pressure resulted in overall market yields for loan originations and renewals below the average yield of amortizing or paid-off loans. Partially offsetting the decrease in net interest margin was a 0.04% decrease in the rate paid on interest-bearing liabilities from 0.71% for the three months ended September 30, 2014 to 0.67% for the three months ended September 30, 2015, respectively. The decrease was related to a change in the mix of deposits from premium money market accounts with an average rate of 0.67% and certificates of deposits with an average rate paid of 1.05% to money market accounts with average rate paid of 0.25%.

Noninterest Income

Noninterest income for the three months ended September 30, 2015 was $1.0 million representing an increase of $355,000 or 51.6% compared to the three months ended June 30, 2015. The increase from the three months ended June 30, 2015 was driven by gains on Small Business Administration (‚ÄúSBA‚ÄĚ) loan sales of $251,000, SBA servicing income of $44,000 and increased service charges and fees on deposits of $98,000 primarily related to the IBT acquisition.

Noninterest income increased $413,000 or 65.6% compared to the three months ended September 30, 2014. The increase from the three months ended September 30, 2014 was primarily related to the increase in gains on SBA loan sales of $251,000, SBA servicing income of $44,000, bank owned life insurance income of $89,000, and increased service charges and fees on deposits of $98,000 primarily related to the IBT acquisition. The increase was partially offset by a $99,000 decrease in gains on sale of mortgage loans.

Noninterest Expense

Noninterest expense was $5.8 million for the three months ended September 30, 2015 compared to $4.7 million for the three months ended June 30, 2015, an increase of $1.1 million or 23.5%. Noninterest expense included non-recurring acquisition expenses of $205,000 and $15,000 for the three months ended September 30, 2015 and June 30, 2015, respectively, primarily related to investment banker’s success fees and legal expense. Excluding acquisition related expenses, noninterest expense for the three months ended September 30, 2015 was $5.6 million compared to $4.7 million, an increase of $922,000 or 19.5% from the three months ended June 30, 2015. The increase was primarily due to increased employee expense of $413,000, occupancy and equipment expense of $86,000, data processing and software expense of $96,000 and other operating expenses related to IBT’s operations.

Noninterest expense for the three months ended September 30, 2015 increased $1.0 million or 21.0% compared to the three months ended September 30, 2014. Excluding acquisition related expenses, noninterest expense for the three months ended September 30, 2015 increased $807,000 or 16.7%. The year-over-year increase was primarily related to increased employee expense of $246,000, occupancy and equipment expense of $50,000, data processing and software expense of $114,000, marketing expense of $85,000 and other operating expenses related to IBT operations.

Income Taxes

Income tax expense for the three months ended September 30, 2015 totaled $1.3 million, an increase of $355,000 or 38.3% from $926,000 for the three months ended June 30, 2015 and an increase of $558,000 or 77.2% compared to $723,000 for the three months ended September 30, 2014. The Company’s estimated annual effective tax rate was approximately 33.6%, 33.3%, and 34.7% for the three months ended September 30, 2015, June 30, 2015 and September 30 2014, respectively. Effective tax rates for these periods were affected by permanent differences primarily related to employee stock option incentive plans, bank-owned life insurance and other nondeductible expenses.

Financial Condition

Loans (excluding loans held for sale and deferred loan fees) at September 30, 2015 were $754.2 million, an increase of $109.3 million or 16.9% compared to $644.9 million at June 30, 2015. The increase from the prior quarter ended June 30, 2015 was the result of the acquisition of IBT and continued execution of our organic growth strategy. The acquisition of IBT represented $89.7 million or 82.1% of the increase from the prior quarter and organic growth accounted for $19.6 million or 17.9% of the increase from prior quarter.

Loans (excluding loans held for sale and deferred loan fees) increased $172.9 million or 29.7% compared to $581.3 million at September 30, 2014. The acquisition of IBT represented 52.1% of the increase from the prior year.  Organic growth accounted for $82.9 million or 47.9% of the increase over prior year.

Deposits at September 30, 2015 were $842.6 million an increase of $169.5 or 25.2% compared to $673.1 million at June 30, 2015.  The increase from prior quarter was due to acquisition of IBT’s deposits of $98.4 million, customer deposit growth of $48.9 million, and wholesale deposit growth of $22.2 million.

Deposits increased $198.1 or 30.7% compared to $644.5 million at September 30, 2014. The increase from September 30, 2014 was due to acquisition of IBT’s deposits of $98.4 million, customer deposit growth of $82.3 million, and wholesale deposit growth of $17.4 million.

Advances from the Federal Home Loan Bank were $18.5 million at September 30, 2015 compared to $27.0 million at June 30, 2015 and $15.0 million at September 30, 2014.

Asset Quality

Nonperforming assets totaled $921,000 or 0.09% of total assets at September 30, 2015 compared to $860,000 or 0.10% at June 30, 2015 and $1.9 million or 0.25% of total assets at September 30, 2014. The allowance for loan losses was 0.82% of total loans at September 30, 2015 compared to 0.96% of total loans at June 30, 2015 and 1.01% of total loans at September 30, 2014. The decrease in allowance for loan losses as a percentage of total loans was due to the recording of IBT acquired loans at an estimated fair value.

Other real estate owned totaled $493,000 at September 30, 2015 compared to $548,000 at June 30, 2015 and $1.4 million at September 30, 2014. The decrease in other real estate owned from September 30, 2014 was due to the sale of properties over the year. Nonaccrual loans were $428,000 at September 30, 2015 compared to $312,000 at June 30, 2015 and $445,000 at September 30, 2014.

There was no provision for loan losses for the three months ended September 30, 2015 compared to provisions of $148,000 and $420,000 for the three months ended June 30, 2015 and September 30, 2014, respectively. Reductions from the continued improvement in credit quality offset general provision requirements related to loan growth.

Non-GAAP Financial Measures

The Company‚Äôs 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, 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 ‚ÄúConsolidated Financial Highlights‚ÄĚ 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 locations throughout the Dallas metropolitan area. Veritex Community Bank is a Texas state chartered bank regulated by the Texas Department of Banking and the Board of Governors of the Federal Reserve System.

Acquisition of IBT Bancorp, Inc.

On July 1, 2015, the Company completed the acquisition of IBT, the parent holding company of Independent Bank, headquartered in Irving, Texas with two banking locations in the Dallas metropolitan area. Under the terms of the definitive agreement, the Company issued 1,185,067 shares of its common stock (with cash in lieu of fractional shares) and paid approximately $4.0 million in cash for the outstanding shares of IBT common stock in connection with the closing of the acquisition., which resulted in goodwill of $6.9 million as of July 1, 2015. Additionally, we recognized $1.1 million of core deposit intangibles as of July 1, 2015.  These goodwill and core deposit intangible balances are preliminary estimates as of September 30, 2015 as fair value adjustments are still being finalized.

For more information, visit www.veritexbank.com

‚ÄúSafe Harbor‚ÄĚ 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‚Äôs future financial performance, business and growth strategy, projected plans and objectives, expectations concerning the costs associated with the acquisition of IBT and related transactions, integration of the acquired business, 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 ‚Äúbelieves,‚ÄĚ ‚Äúexpects,‚ÄĚ ‚Äúanticipates,‚ÄĚ ‚Äúintends,‚ÄĚ ‚Äúprojects,‚ÄĚ ‚Äúestimates,‚ÄĚ ‚Äúplans‚ÄĚ and similar expressions or future or conditional verbs such as ‚Äúwill,‚ÄĚ ‚Äúshould,‚ÄĚ ‚Äúwould,‚ÄĚ ‚Äúmay‚ÄĚ and ‚Äúcould‚ÄĚ 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‚Äôs Final Prospectus, dated October 10, 2014, filed pursuant to Rule 424(b)(4), the Company‚Äôs Annual Report on Form 10-K filed on March 27, 2015, 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 www.veritexbank.com¬†under the Investor Relations tab.

   
VERITEX HOLDINGS, INC. AND SUBSIDIARY  
Consolidated Financial Highlights (Unaudited)  
   
    At and For the Three Months Ended  
    September 30,   June 30,   March 31,   December 31,   September 30,  
    2015   2015   2015   2014   2014  
    (Dollars in thousands, except per share data)  
Selected Financial Data:                      
Net income   $ 2,537   $ 1,856   $ 1,824   $ 1,690   $ 1,359  
Net income available to common stockholders   2,517   1,836   1,804   1,670   1,339  
Total assets   1,009,539   827,140   808,906   802,286   745,344  
Total loans(1)   754,199   644,938   615,495   603,310   581,338  
Allowance for loan losses   6,214   6,193   6,006   5,981   5,880  
Noninterest‚ÄĎbearing deposits ¬† 299,864 ¬† 240,919 ¬† 241,732 ¬† 251,124 ¬† 242,688 ¬†
Total deposits   842,607   673,106   668,255   638,743   644,543  
Total stockholders’ equity   137,508   117,085   115,133   113,312   75,603  
Summary Performance Ratios:                      
Return on average assets(2)   1.04 % 0.93 % 0.94 % 0.86 % 0.74 %
Return on average equity(2)   7.38   6.39   6.45   6.21   7.16  
Net interest margin(3)   3.84   3.77   3.82   3.74   3.95  
Efficiency ratio(4)   60.48   61.75   66.67   62.49   65.87  
Noninterest expense to average assets(2)   2.39   2.36   2.61   2.38   2.63  
Summary Credit Quality Data:                      
Nonaccrual loans   $ 428   $ 312   $ 323   $ 436   $ 445  
Accruing loans 90 or more days past due ¬† ‚ÄĒ ¬† ‚ÄĒ ¬† ‚ÄĒ ¬† ‚ÄĒ ¬† 3 ¬†
Other real estate owned   493   548   548   105   1,434  
Nonperforming assets to total assets   0.09 % 0.10 % 0.12 % 0.07 % 0.25 %
Nonperforming loans to total loans   0.06   0.05   0.05   0.07   0.08  
Allowance for loan losses to total loans   0.82   0.96   0.98   0.99   1.01  
Net (recoveries) charge-offs to average loans outstanding   (0.00 ) (0.01 ) 0.01   0.04   0.01  
Capital Ratios:                      
Total stockholders’ equity to total assets   13.62 % 14.16 % 14.23 % 14.11 % 10.14 %
Tangible common equity to tangible assets(5)   10.30   11.01   11.01   10.86   6.50  
Tier 1 capital to average assets   12.02   12.82   12.78   12.66   8.28  
Tier 1 capital to risk-weighted assets   14.73   14.87   15.43   15.45   10.04  
Common equity tier 1 to risk-weighted assets   13.29   13.23   13.70   n/a   n/a  
Total capital to risk-weighted assets   16.18   16.52   17.16   17.21   11.90  
                       

(1) Total loans does not include loans held for sale and deferred fees. Loans held for sale were $1.8 million at September 30, 2015, $2.1 million at June 30, 2015, $2.5 million at March 31, 2015, $8.9 million at December 31, 2014 and $3.5 million at September 30, 2014. Deferred fees were $55,000 at September 30, 2015, $49,000 at June 30, 2015, $50,000 at March 31, 2015, $51,000 at December 31, 2014 and $60,000 at September 30, 2014.

(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‚Äô 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‚Äô equity to total assets. See our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures in the table captioned ‚ÄúReconciliation GAAP ‚ÄĒNON-GAAP (Unaudited).‚ÄĚ

 
VERITEX HOLDINGS, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands)
 
    September 30,   June 30,   December 31,   September 30,  
    2015   2015   2014   2014  
ASSETS                  
Cash and due from banks   $ 10,478   $ 11,699   $ 9,223   $ 9,441  
Interest bearing deposits in other banks   113,031   51,570   84,028   58,292  
Total cash and cash equivalents   123,509   63,269   93,251   67,733  
Investment securities   61,023   59,299   45,127   47,497  
Loans held for sale   1,766   2,127   8,858   3,488  
Loans, net   747,930   638,696   597,278   575,398  
Accrued interest receivable   2,088   1,557   1,542   1,351  
Bank‚ÄĎowned life insurance ¬† 19,299 ¬† 18,115 ¬† 17,822 ¬† 10,731 ¬†
Bank premises, furniture and equipment, net   17,585   12,107   11,150   11,235  
Non‚ÄĎmarketable equity securities ¬† 4,045 ¬† 3,970 ¬† 4,139 ¬† 3,115 ¬†
Investment in unconsolidated subsidiary   93   93   93   93  
Other real estate owned   493   548   105   1,434  
Intangible assets   2,458   1,110   1,261   1,337  
Goodwill   26,025   19,148   19,148   19,148  
Other assets   3,225   7,101   2,512   2,784  
Total assets   $ 1,009,539   $ 827,140   $ 802,286   $ 745,344  
LIABILITIES AND STOCKHOLDERS’ EQUITY                  
Deposits:                  
Noninterest‚ÄĎbearing ¬† $ 299,864 ¬† $ 240,919 ¬† $ 251,124 ¬† $ 242,688 ¬†
Interest‚ÄĎbearing ¬† 542,743 ¬† 432,187 ¬† 387,619 ¬† 401,855 ¬†
Total deposits   842,607   673,106   638,743   644,543  
Accounts payable and accrued expenses   1,782   1,202   1,582   1,327  
Accrued interest payable and other liabilities   1,089   672   575   798  
Advances from Federal Home Loan Bank   18,478   27,000   40,000   15,000  
Junior subordinated debentures   3,093   3,093   3,093   8,073  
Subordinated notes ¬† 4,982 ¬† 4,982 ¬† 4,981 ¬† ‚ÄĒ ¬†
Total liabilities   872,031   710,055   688,974   669,741  
Commitments and contingencies                  
Stockholders’ equity:                  
Preferred stock   8,000   8,000   8,000   8,000  
Common stock   107   95   95   64  
Additional paid‚ÄĎin capital ¬† 115,579 ¬† 97,761 ¬† 97,469 ¬† 61,513 ¬†
Retained earnings   14,204   11,687   8,047   6,378  
Unallocated Employee Stock Ownership Plan shares   (406 ) (406 ) (401 ) 119  
Accumulated other comprehensive income   94   18   172   (401 )
Treasury stock, 10,000 shares at cost   (70 ) (70 ) (70 ) (70 )
Total stockholders’ equity   137,508   117,085   113,312   75,603  
Total liabilities and stockholders’ equity   $ 1,009,539   $ 827,140   $ 802,286   $ 745,344  

VERITEX HOLDINGS, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Income (Unaudited)
(In thousands, except share amounts)
 
    Nine Months Ended  
    September 30,   September 30,  
    2015   2014  
Interest income:          
Interest and fees on loans   $ 24,032   $ 19,901  
Interest on investment securities   712   629  
Interest on deposits in other banks   169   120  
Interest on other   1   2  
Total interest income   24,914   20,652  
Interest expense:          
Interest on deposit accounts   2,075   1,770  
Interest on borrowings   392   374  
Total interest expense   2,467   2,144  
Net interest income   22,447   18,508  
Provision for loan losses   258   1,097  
Net interest income after provision for loan losses   22,189   17,411  
Noninterest income:          
Service charges and fees on deposit accounts   907   807  
Gain on sales of investment securities   7   34  
Gain on sales of loans   824   486  
Gain on sales of other assets owned   19   4  
Bank‚ÄĎowned life insurance ¬† 552 ¬† 317 ¬†
Other   188   193  
Total noninterest income   2,497   1,841  
Noninterest expense:          
Salaries and employee benefits   8,247   7,593  
Occupancy and equipment   2,560   2,460  
Professional fees   1,536   943  
Data processing and software expense   903   760  
FDIC assessment fees   317   315  
Marketing   595   432  
Other assets owned expenses and writedowns   29   187  
Amortization of intangibles   243   221  
Telephone and communications   182   168  
Other   1,043   744  
Total noninterest expense   15,655   13,823  
Net income from operations   9,031   5,429  
Income tax expense   2,814   1,913  
Net income   $ 6,217   $ 3,516  
Preferred stock dividends   $ 60   $ 60  
Net income available to common stockholders   $ 6,157   $ 3,456  
Basic earnings per share   $ 0.62   $ 0.55  
Diluted earnings per share   $ 0.61   $ 0.54  
Weighted average basic shares outstanding   9,853,785   6,261,653  
Weighted average diluted shares outstanding   10,121,184   6,394,791  

VERITEX HOLDINGS, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Income (Unaudited)
(In thousands, except share amounts)
 
    Three Months Ended  
    September 30,   June 30,   March 31,   December 31,   September 30,  
    2015   2015   2015   2014   2014  
Interest income:                      
Interest and fees on loans   $ 9,230   $ 7,454   $ 7,348   $ 7,335   $ 7,183  
Interest on investment securities   247   252   212   209   207  
Interest on deposits in other banks   60   55   54   63   43  
Interest on other ¬† 1 ¬† ‚ÄĒ ¬† ‚ÄĒ ¬† ‚ÄĒ ¬† 1 ¬†
Total interest income   9,538   7,761   7,614   7,607   7,434  
Interest expense:                      
Interest on deposit accounts   778   666   631   652   609  
Interest on borrowings   143   123   126   123   123  
Total interest expense   921   789   757   775   732  
Net interest income   8,617   6,972   6,857   6,832   6,702  
Provision for loan losses ¬† ‚ÄĒ ¬† 148 ¬† 110 ¬† 326 ¬† 420 ¬†
Net interest income after provision for loan losses   8,617   6,824   6,747   6,506   6,282  
Noninterest income:                      
Service charges and fees on deposit accounts   380   282   245   292   282  
Gain on sales of investment securities ¬† ‚ÄĒ ¬† ‚ÄĒ ¬† 7 ¬† ‚ÄĒ ¬† ‚ÄĒ ¬†
Gain on sales of loans   392   129   302   155   241  
Gain (loss) on sales of other assets owned ¬† 21 ¬† ‚ÄĒ ¬† (2 ) 6 ¬† (33 )
Bank‚ÄĎowned life insurance ¬† 194 ¬† 179 ¬† 178 ¬† 111 ¬† 105 ¬†
Other   56   98   36   92   35  
Total noninterest income   1,043   688   766   656   630  
Noninterest expense:                      
Salaries and employee benefits   3,001   2,588   2,657   2,444   2,755  
Occupancy and equipment   894   808   857   786   844  
Professional fees   632   365   540   439   296  
Data processing and software expense   368   272   263   281   254  
FDIC assessment fees   121   96   100   105   99  
Marketing   227   162   205   156   142  
Other assets owned expenses and write-downs   (5 ) 22   13   24   53  
Amortization of intangibles   96   74   74   74   74  
Telephone and communications   68   57   57   58   54  
Other   440   286   316   312   259  
Total noninterest expense   5,842   4,730   5,082   4,679   4,830  
Net income from operations   3,818   2,782   2,431   2,483   2,082  
Income tax expense   1,281   926   607   793   723  
Net income   $ 2,537   $ 1,856   $ 1,824   $ 1,690   $ 1,359  
Preferred stock dividends   $ 20   $ 20   $ 20   $ 20   $ 20  
Net income available to common stockholders   $ 2,517   $ 1,836   $ 1,804   $ 1,670   $ 1,339  
Basic earnings per share   $ 0.24   $ 0.19   $ 0.19   $ 0.18   $ 0.21  
Diluted earnings per share   $ 0.23   $ 0.19   $ 0.19   $ 0.18   $ 0.21  
Weighted average basic shares outstanding   10,652,602   9,447,807   9,447,706   9,157,582   6,321,897  
Weighted average diluted shares outstanding   10,940,427   9,708,673   9,743,576   9,405,168   6,462,897  

VERITEX HOLDINGS, INC. AND SUBSIDIARY
Reconciliation GAAP ‚ÄĒ NON GAAP (Unaudited)
(In thousands)
 
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,   June 30,   March 31,   December 31,   September 30,  
    2015   2015   2015   2014   2014  
Tangible Common Equity                      
Total stockholders’ equity   $ 137,508   $ 117,085   $ 115,133   $ 113,312   $ 75,603  
Adjustments:                      
Preferred stock   (8,000 ) (8,000 ) (8,000 ) (8,000 ) (8,000 )
Goodwill   (26,025 ) (19,148 ) (19,148 ) (19,148 ) (19,148 )
Intangible assets   (2,458 ) (1,110 ) (1,186 ) (1,261 ) (1,337 )
Total tangible common equity   $ 101,025   $ 88,827   $ 86,799   $ 84,903   $ 47,118  
Tangible Assets                      
Total assets   $ 1,009,539   $ 827,140   $ 808,906   $ 802,286   $ 745,344  
Adjustments:                      
Goodwill   (26,025 ) (19,148 ) (19,148 ) (19,148 ) (19,148 )
Intangible assets   (2,458 ) (1,110 ) (1,186 ) (1,261 ) (1,337 )
Total tangible assets   $ 981,056   $ 806,882   $ 788,572   $ 781,877   $ 724,859  
Tangible Common Equity to Tangible Assets   10.30 % 11.01 % 11.01 % 10.86 % 6.50 %
Common shares outstanding   10,700   9,494   9,485   9,471   6,359  
                       
Book value per common share(1)   $ 12.10   $ 11.49   $ 11.29   $ 11.12   $ 10.63  
Tangible book value per common share(2)   $ 9.44   $ 9.36   $ 9.15   $ 8.96   $ 7.41  
                                 

(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. 

(3) Goodwill reflects provisional estimates of fair value of assets and liabilities acquired in the IBT acquisition.

 
VERITEX HOLDINGS, INC. AND SUBSIDIARY
Net Interest Margin (Unaudited)
(In thousands)
 
    For the Three Months Ended  
    September 30, 2015   June 30, 2015   September 30, 2014  
        Interest           Interest           Interest      
    Average   Earned/   Average   Average   Earned/   Average   Average   Earned/   Average  
    Outstanding   Interest   Yield/   Outstanding   Interest   Yield/   Outstanding   Interest   Yield/  
    Balance   Paid   Rate   Balance   Paid   Rate   Balance   Paid   Rate  
Assets                                      
Interest‚ÄĎearning assets: ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬†
Total loans(1)   $ 756,542   $ 9,230   4.84 % $ 624,971   $ 7,454   4.78 % $ 565,465   $ 7,183   5.04 %
Securities available for sale   63,204   248   1.56   56,603   252   1.79   49,148   207   1.67  
Investment in subsidiary ¬† 93 ¬† ‚ÄĒ ¬† ‚ÄĒ ¬† 93 ¬† ‚ÄĒ ¬† ‚ÄĒ ¬† 93 ¬† 1 ¬† 4.27 ¬†
Interest‚ÄĎearning deposits in financial institutions ¬† 70,363 ¬† 60 ¬† 0.34 ¬† 60,630 ¬† 55 ¬† 0.36 ¬† 58,027 ¬† 43 ¬† 0.29 ¬†
Total interest‚ÄĎearning assets ¬† 890,202 ¬† 9,538 ¬† 4.25 ¬† 742,297 ¬† 7,761 ¬† 4.19 ¬† 672,733 ¬† 7,434 ¬† 4.38 ¬†
Allowance for loan losses   (7,146 )         (6,069 )         (5,665 )        
Noninterest‚ÄĎearning assets ¬† 88,023 ¬† ¬† ¬† ¬† ¬† 68,046 ¬† ¬† ¬† ¬† ¬† 60,668 ¬† ¬† ¬† ¬† ¬†
Total assets   $ 971,079           $ 804,274           $ 727,736          
Liabilities and Stockholders’ Equity                                      
Interest‚ÄĎbearing liabilities: ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬†
Interest‚ÄĎbearing deposits ¬† $ 520,806 ¬† $ 778 ¬† 0.59 % $ 428,146 ¬† $ 666 ¬† 0.62 % $ 384,671 ¬† $ 609 ¬† 0.63 %
Advances from FHLB   19,404   56   1.14   15,132   30   0.80   15,000   30   0.79  
Other borrowings   9,077   86   3.76   8,077   93   4.62   8,073   93   4.57  
Total interest‚ÄĎbearing liabilities ¬† 549,287 ¬† 920 ¬† 0.66 ¬† 451,355 ¬† 789 ¬† 0.70 ¬† 407,744 ¬† 732 ¬† 0.71 ¬†
Noninterest‚ÄĎbearing liabilities: ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬† ¬†
Noninterest‚ÄĎbearing deposits ¬† 282,934 ¬† ¬† ¬† ¬† ¬† 234,510 ¬† ¬† ¬† ¬† ¬† 242,728 ¬† ¬† ¬† ¬† ¬†
Other liabilities   2,403           1,974           1,965          
Total noninterest‚ÄĎbearing liabilities ¬† 285,337 ¬† ¬† ¬† ¬† ¬† 236,484 ¬† ¬† ¬† ¬† ¬† 244,693 ¬† ¬† ¬† ¬† ¬†
Stockholders’ equity   136,455           116,435           75,299          
Total liabilities and stockholders’ equity   $ 971,079           $ 804,274           $ 727,736          
Net interest rate spread(2)           3.59 %         3.49 %         3.67 %
Net interest income       $ 8,617           $ 6,972           $ 6,702      
Net interest margin(3)           3.84 %         3.77 %         3.95 %
                                       

(1) Includes average outstanding balances of loans held for sale of $4,215, $1,429 and $3,367 for the three months ended September 30, 2015, June 30, 2015, and September 30, 2014, 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.

CONTACT: Media Contact:
LaVonda Renfro
972-349-6200
lrenfro@veritexbank.com

Investor Relations:
972-349-6200
scaudle@veritexbank.com

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