Veritex Holdings, Inc. Reports Third Quarter Financial Results

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

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

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