Veritex Holdings, Inc. Announces Stock Buyback Program and Investment Portfolio Restructuring
- Veritex Holdings, Inc. authorizes a stock buyback program to purchase up to $50.0 million shares of common stock.
- The stock buyback program has an expiration date of March 31, 2025, and may be modified or terminated by the Board at any time.
- The program will be funded using the Company's cash on hand and cash from operations of Veritex Community Bank.
- Veritex completed a restructuring of its available-for-sale debt security portfolio, selling $120.1 million of lower-yielding securities and reinvesting $115.9 million in higher yielding ones.
- The restructuring resulted in a pre-tax loss of $6.5 million.
- The sold lower-yielding securities had a yield of 3.11%, while the reinvested higher yielding ones have a yield of 6.24%.
- None.
Insights
Veritex Holdings' recent announcement of a $50 million stock buyback program indicates a strategic move to manage its capital structure and potentially enhance shareholder value. From a financial perspective, buybacks can be a signal of management's belief that the stock is undervalued. The fact that the buyback is being funded from cash on hand and operations suggests a strong liquidity position, which is often viewed favorably by investors.
However, the effectiveness of such a program depends on the execution price relative to intrinsic value. If repurchases are made above intrinsic value, it could destroy shareholder value. The open-ended nature of the buyback, with no obligation to purchase any specific number of shares, provides flexibility but also creates uncertainty about the impact on the company's share price and earnings per share.
The restructuring of Veritex's available-for-sale debt security portfolio is an interesting development. By selling lower-yielding securities at a pre-tax loss and reinvesting into higher-yielding ones, the company is actively managing its interest income. This move is likely to be seen as a proactive approach to optimizing the bank's investment portfolio in response to the interest rate environment.
Investors should consider the immediate impact of the $6.5 million pre-tax loss against the long-term benefits of higher yields from the new securities. The shift from a 3.11% yield to a 6.24% yield is substantial and could significantly improve net interest income over time. However, the market's reaction to this restructuring may vary as it weighs the upfront loss against the anticipated future income.
The actions taken by Veritex Holdings reflect broader trends in the banking sector, where institutions are continually adjusting their balance sheets to respond to changing economic conditions and regulatory landscapes. The buyback program and portfolio restructuring are strategic decisions that need to be assessed in the context of the company's overall financial strategy and the current interest rate environment.
For stakeholders, the key questions revolve around the timing and the potential impact on Veritex's financial stability and growth prospects. While the immediate financial hit from the AFS portfolio restructuring is clear, the long-term benefits will depend on the performance of the newly acquired assets and the company's ability to effectively deploy its capital.
DALLAS, March 28, 2024 (GLOBE NEWSWIRE) -- Veritex Holdings, Inc. (Nasdaq: VBTX) (“Veritex” or "the Company”), the parent holding company for Veritex Community Bank, today announced that its Board of Directors (the "Board") authorized a stock buyback program (the "Stock Buyback Program") pursuant to which the Company is authorized to purchase up to
The Stock Buyback Program is expected to be funded using the Company’s cash on hand and cash from operations of Veritex Community Bank. Repurchases under the Stock Buyback Program may be made, from time to time, in amounts and at prices the Company deems appropriate. The Stock Buyback Program does not obligate the Company to purchase any shares of its common stock. Repurchases by the Company under the Stock Buyback Program will be subject to general market and economic conditions, applicable legal and regulatory requirements and other considerations.
In addition, Veritex announces completion of a restructuring of it's available-for-sale ("AFS") debt security portfolio in March by selling approximately
About Veritex Holdings, Inc.
Headquartered in Dallas, Texas, Veritex is a bank holding company that conducts banking activities through its wholly-owned subsidiary, Veritex Community Bank, with locations throughout the Dallas-Fort Worth metroplex and in the Houston metropolitan area. Veritex Community Bank is a Texas state chartered bank regulated by the Texas Department of Banking and the Board of Governors of the Federal Reserve System. For more information, visit www.veritexbank.com.
Forward Looking Statement
This press release includes “forward-looking statements,” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements include statements regarding Veritex’s projected plans and objectives, including expectations about share repurchases. Forward-looking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “target,” “estimate,” “seek,” “plan,” “outlook,” “continue,” “positions,” “prospects” or “potential,” by future conditional verbs such as “will,” “would,” “should,” “could” or “may”, or by variations of such words or by similar expressions. These forward-looking statements are subject to numerous assumptions, risks and uncertainties which change over time and are beyond Veritex’s control. Forward-looking statements speak only as of the date they are made and Veritex assumes no duty to supplement, update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise. We refer you to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Veritex’s Annual Report on Form 10-K for the year ended December 31, 2023 and any updates to those risk factors set forth in Veritex’s Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings with the Securities and Exchange Commission (“SEC”), which are available on the SEC’s website at www.sec.gov. If one or more events related to these or other risks or uncertainties materialize, or if Veritex’s underlying assumptions prove to be incorrect, actual results may differ materially from what Veritex anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made. Veritex does not undertake any obligation, and specifically declines any obligation, to supplement, update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by law. All forward-looking statements, expressed or implied, included in this press release are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that Veritex or persons acting on Veritex’s behalf may issue.
Source: Veritex Holdings, Inc.
Investor Relations:
972-349-6132
investorrelations@veritexbank.com
FAQ
What is the purpose of Veritex Holdings, Inc.'s stock buyback program?
How will the stock buyback program be funded?
What was the result of Veritex's restructuring of its debt security portfolio?
What was the yield of the lower-yielding AFS debt securities sold by Veritex?
What is the yield of the higher yielding AFS securities that Veritex reinvested in?
