Veritex Holdings, Inc. Reports Fourth Quarter And Full Year 2023 Results

Rhea-AI Summary

Veritex Holdings, Inc. announced its Q4 and full year 2023 results, highlighting $1.2 billion deposit growth, 10.3% CET1, and a decrease in LDR to 93.6%. The company also declared a quarterly cash dividend of $0.20 per share and was named one of the 'Best Companies to Work For' in 2023. However, noninterest income saw a significant decrease, and NPAs increased to $95.8 million.

Positive

• Deposit growth of $1.2 billion in 2023
• CET1 increased to 10.3%
• Quarterly cash dividend of $0.20 per share declared
• Named one of the 'Best Companies to Work For' in 2023

Negative

• Significant decrease in noninterest income
• NPAs increased to $95.8 million

Insights

Financial Analyst

The recent financial results from Veritex Holdings, Inc. indicate a complex year for the company, marked by both growth in certain areas and challenges in others. The increase in total deposits by $1.2 billion, or 13.3% year-over-year and the decrease in the loan to deposit ratio (LDR) to 93.6% are positive signs of liquidity and capital management. The growth in deposits suggests effective customer acquisition and retention strategies, which is crucial in a competitive banking environment.

However, the decline in net interest income by 10.0% compared to the previous year, alongside a decrease in net interest margin (NIM) by 56 basis points, reflects the pressure on earnings in a rising interest rate environment. The increase in interest expense points to higher costs of funds, which can compress margins if not offset by corresponding increases in asset yields. This could be a concern for investors focusing on the bank's profitability.

Additionally, the increase in the allowance for credit losses (ACL) to 1.14% suggests a more cautious approach to potential loan defaults, potentially in response to economic uncertainty. The rise in nonperforming assets (NPAs) to 0.77% of total assets also indicates a need for close monitoring of asset quality going forward.

Market Research Analyst

Veritex's strategic focus on strengthening the balance sheet has shown resilience in the face of market volatility. The significant reduction in unfunded Acquisition, Development and Construction (ADC) commitments by approximately 57% is a strategic move to de-risk the balance sheet amidst economic uncertainty. This could be interpreted as a conservative approach to credit exposure, particularly in more speculative development projects.

From a market perspective, the increase in tangible book value per share by 8.4% is a strong indicator of shareholder value creation. It reflects the company's ability to grow its intrinsic value. This metric is often scrutinized by investors as it provides a more accurate representation of a company's value by excluding intangible assets.

Economist

The reported financials reflect broader economic trends, such as the impact of monetary policy changes on interest rates and banking operations. The increase in interest expenses and the subsequent reduction in net interest margin are consistent with the tightening monetary policy environment, where higher interest rates can lead to increased funding costs for banks. Such an environment necessitates careful interest rate risk management.

Moreover, the effective tax rate increase to approximately 25.0% for the twelve months ended December 31, 2023, from 21.6% for the same period in 2022, reflects the impact of non-deductible expenses and changes in income composition. This change in tax rate can affect net income and must be considered when analyzing the company's after-tax profitability.

DALLAS, Jan. 23, 2024 (GLOBE NEWSWIRE) -- Veritex Holdings, Inc. (“Veritex”, the “Company”, “we” or “our”) (Nasdaq: VBTX), the holding company for Veritex Community Bank, today announced the results for the fourth quarter and full year of 2023.

"Looking back at 2023, I am extremely proud of the ability of our team, in a volatile economic environment, to remain disciplined on our strategic plan and strengthen our balance sheet", said C. Malcolm Holland, III. "This team achieved deposit growth of $1.2 billion in 2023, increased CET1 to 10.3% and decreased our LDR below 94%. Market volatility brings many challenges and opportunities that this Company has navigated with great precision."

2023 Highlights:

• Total deposits grew $141.7 million for the fourth quarter of 2023, or 5.6% annualized. Total deposits grew $1.2 billion, or 13.3%, year-over-year;
• Loan to deposit ratio decreased to 93.6% as of December 31, 2023 compared to 104.4% as of December 31, 2022;
• Common equity tier 1 capital increased 120 bps to 10.29% as of December 31, 2023 compared to 9.09% as of December 31, 2022;
• Tangible book value per common share increased 8.4%, or $1.57, during 2023 compared to 2022, and including dividends increased 12.7%, or $2.37;
• Allowance for credit losses (“ACL”) to total loans increased to 1.14%, or 18 bps from 0.96% compared to December 31, 2022;
• Non-owner office book decreased $78 million, or 12.1%, during 2023 and represents 5.8% of total assets;
• Pre-tax, pre-provision operating return on average assets was 1.81% for 2023;
• Total unfunded Acquisition, Development, and Construction (“ADC”) decreased to $900.0 million, or approximately 57%, as of December 31, 2023 compared to $2.1 billion as of December 31, 2022, and risk-weighted assets decreased $612.2 million, or 5.1%, during 2023 compared to 2022;
• Declared quarterly cash dividend of $0.20 per share of outstanding common stock payable on February 23, 2024;.and
• Named one of the “Best Companies to Work For” by the 2023 Inaugural U.S. News & World Report which evaluates companies based on quality of pay, work/life balance, and opportunities for professional development and advancement.

Financial Highlights		Fourth Quarter 2023				Third Quarter 2023				Fourth Quarter 2022					Full Year 2023				Full Year 2022
		(Dollars in thousands, except per share data) (unaudited)
GAAP
Net income		$	3,499			$	32,621			$	39,897				$	108,261			$	146,315
Diluted EPS			0.06				0.60				0.73					1.98				2.71
Book value per common share			28.18				27.46				26.83					28.18				26.83
Return on average assets2			0.11	%			1.06	%			1.35	%				0.88	%			1.33	%
Efficiency ratio			77.49				54.49				47.63					55.82				48.64
Return on average equity2			0.92				8.58				11.03					7.21				10.28
Non-GAAP1
Operating earnings		$	31,625			$	32,621			$	40,395				$	142,114			$	147,889
Diluted operating EPS			0.58				0.60				0.74					2.60				2.74
Tangible book value per common share			20.21				19.44				18.64					20.21				18.64
Pre-tax, pre-provision operating earnings			47,688				49,621				63,694					222,211				216,413
Pre-tax, pre-provision operating return on average assets2			1.54	%			1.61	%			2.15	%				1.81	%			1.97	%
Pre-tax, pre-provision operating return on average loans2			1.97				2.05				2.78					2.32				2.60
Operating return on average assets2			1.02				1.06				1.36					1.16				1.35
Operating efficiency ratio			55.50				54.49				47.11					50.94				48.16
Return on average tangible common equity2			2.00				12.80				16.75					10.91				15.78
Operating return on average tangible common equity2			12.37				12.80				16.95					14.09				15.94

¹ Refer to the section titled "Reconciliation of Non-GAAP Financial Measures" for a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures.
² Annualized ratio.

Results of Operations for the Three Months Ended December 31, 2023

Net Interest Income

For the three months ended December 31, 2023, net interest income before provision for credit losses was $95.5 million and net interest margin was 3.31%, compared to $99.4 million and 3.46%, respectively, for the three months ended September 30, 2023. The $3.8 million decrease, or 3.9%, in net interest income before provision for credit losses was primarily due to a $6.3 million increase in interest expense on transaction and savings deposits, a $4.0 million increase in interest expense on certificates and other time deposits and a $1.9 million decrease in interest income on loans primarily driven by interest reversals on loans placed on nonaccrual status during the three months ended December 31, 2023. The decrease was offset by a $5.9 million decrease in advances from the Federal Home Loan Bank (“FHLB”), a $1.4 million increase in interest income on debt securities and a $1.0 million increase in interest income on deposits in financial institutions and fed funds sold driven by an increase in average balances and rates during three months ended December 31, 2023. Net interest margin decreased 15 bps from the three months ended September 30, 2023, primarily due to the increase in funding costs on deposits during the three months ended December 31, 2023, partially offset by an increase in yields on debt securities and other investments.

Compared to the three months ended December 31, 2022, net interest income before provision for credit losses for the three months ended December 31, 2023 decreased by $10.6 million, or 10.0%. The decrease was primarily due to a $31.6 million increase in interest expense certificates and other time deposits and a $22.2 million increase in transaction and savings deposits driven by an increase in funding costs. The decrease in net interest income was partially offset by a $28.6 million increase in interest income on loans driven by an increase in loan yields and average balances, an $8.0 million decrease in interest expense on advances from FHLB, a $4.8 million increase in interest income in deposits in financial institutions and fed funds sold and a $1.4 million increase in interest income on debt securities. Net interest margin decreased 56 bps to 3.31% for the three months ended December 31, 2023 from 3.87% for the three months ended December 31, 2022. The decrease was primarily due to the increase in funding costs on deposits during the three months ended December 31, 2023, partially offset by an increase in loan yields and debt securities.

Noninterest (Loss) Income

Noninterest (loss) income for the three months ended December 31, 2023 was a loss of $17.8 million, a decrease of $27.5 million, or 283.9%, compared to noninterest income of $9.7 million for the three months ended September 30, 2023. The decrease in noninterest income was primarily due to a $29.3 million decrease in equity method investment income related to a write down of our equity method investment in Thrive Mortgage, LLC ("Thrive") related to Thrive’s entry into a definitive agreement in December 2023 to be acquired by Lower Holding Company. The decrease was partially offset by a $665 thousand increase in government guaranteed loan income, primarily driven by an increase in U.S. Department of Agriculture (“USDA”) loans sold through our wholly owned subsidiary North Avenue Capital, LLC ("NAC").

Compared to the three months ended December 31, 2022, noninterest income for the three months ended December 31, 2023   decreased $32.1 million, or 224.2%. The decrease was primarily due to a $24.0 million decrease in equity method investment income related to the write down of our equity method investment in Thrive. In addition, the decrease was partially due to $946 thousand increase in gain on sale of USDA loans through NAC, a $2.0 million decrease in customer swap income, a $1.3 million decrease in loan fees and a $1.0 million decrease in other income.

Noninterest Expense

Noninterest expense was $60.2 million for the three months ended December 31, 2023, compared to $59.4 million for the three months ended September 30, 2023, an increase of $824 thousand, or 1.4%. The increase was primarily driven by a $1.4 million increase in other expenses and a $768 thousand FDIC special assessment expense recorded in the fourth quarter 2023, partially offset by a decrease of $408 thousand in marketing expenses and a decrease of $343 thousand in salaries and employee benefits.

Noninterest expense was $60.2 million for the three months ended December 31, 2023, compared to $57.4 million for the three months ended December 31, 2022, an increase of $2.9 million, or 5.0%. The increase was primarily driven by a $3.2 million increase in professional and regulatory fees driven by FDIC insurance assessment expense, which includes the $768 thousand FDIC special assessment expense recorded in the fourth quarter 2023, and a $2.8 million increase in other expenses. The increase was partially offset by a $3.1 million decrease in salary and employee benefits.

Financial Condition

Total loans held for investment (“LHI”) was $9.2 billion at December 31, 2023, a decrease of $30.9 million, compared to September 30, 2023, and an increase of $170.1 million, or 1.9%, compared to December 31, 2022.

Total deposits were $10.34 billion at December 31, 2023, an increase of $141.7 million, or 5.5% annualized, compared to September 30, 2023, and an increase of $1.21 billion, or 13.3%, compared to December 31, 2022. The increase from September 30, 2023 was primarily the result of an increase of $412.3 million in interest-bearing transaction, money market and savings deposits accounts. The increase was partially offset by a decrease of $211.7 million in certificates and other time deposits and a decrease of $145.3 million of noninterest bearing deposits. The increase from December 31, 2022 was primarily the result of increases of $1.11 billion and $833.7 million in certificates and other time deposits and interest-bearing transaction, money market, and savings deposits, respectively. The increase was partially offset by a $422.6 million decrease in non-interest bearing deposits and a $301.2 million decrease in correspondent money market accounts.

Credit Quality

Nonperforming assets (“NPAs”) increased to $95.8 million, or 0.77% of total assets, at December 31, 2023, compared to $79.9 million, or 0.65% of total assets, at September 30, 2023. The Company had net charge-offs of $9.5 million for the fourth quarter of 2023. Net charge-offs compared to average loans outstanding were 25 bps for the year ended December 31, 2023, compared to 16 bps for year ended December 31, 2022.

ACL as a percentage of LHI was 1.14%, 1.14%, and 0.96% at December 31, 2023, September 30, 2023, and December 31, 2022, respectively. The Company recorded a provision for credit losses of $9.5 million for the three months ended December 31, 2023, compared to a provision for credit losses of $8.6 million and $11.8 million for the three months ended September 30, 2023 and December 31, 2022, respectively. The recorded provision for credit losses reported for the three months ended December 31, 2023, compared to the three months ended December 31, 2022 was primarily attributable to an increase in general reserves as a result of changes in economic factors and individually analyzed loans receiving specific reserves. The Company recorded a benefit for unfunded commitments of $1.5 million, $909 thousand and $523 thousand during the three months ended December 31, 2023, September 30, 2023 and December 31, 2022, respectively. The increase in the recorded benefit for unfunded commitments during the three months ended December 31, 2023, compared to the three months ended September 30, 2023, was attributable to a decrease in unfunded commitment balances partially offset by changes in economic factors.

Income Tax

Income tax expense for the twelve months ended December 31, 2023 totaled $36.0 million, a decrease of $4.3 million, or 10.7%, compared to the twelve months ended December 31, 2022. The Company’s effective tax rate was approximately 25.0% and 21.6% for the twelve months December 31, 2023 and December 31, 2022, respectively. The change in the effective tax rate for the twelve months ended December 31, 2023, compared to the twelve months ended December 31, 2022, was primarily due to a $4.2 million valuation allowance relating to our impairment on our investment in Thrive and its relative relation to less pre-tax income.

Dividend Information

On January 23, 2024, Veritex's Board of Directors declared a quarterly cash dividend of $0.20 per share on its outstanding shares of common stock. The dividend will be paid on February 23, 2024 to stockholders of record as of the close of business on February 9, 2024.

Non-GAAP Financial Measures

Veritex’s management uses certain non-GAAP (U.S. generally accepted accounting principles) financial measures to evaluate its operating performance and provide information that is important to investors. However, non-GAAP financial measures are supplemental and should be viewed in addition to, and not as an alternative for, Veritex’s reported results prepared in accordance with GAAP. Specifically, Veritex reviews and reports tangible book value per common share, operating earnings, tangible common equity to tangible assets, return on average tangible common equity, pre-tax, pre-provision operating earnings, pre-tax, pre-provision operating return on average assets, pre-tax, pre-provision operating return on average loans, diluted operating earnings per share, operating return on average assets, operating return on average tangible common equity and operating efficiency ratio. Veritex has included in this earnings release information related to these non-GAAP financial measures for the applicable periods presented. Please refer to “Reconciliation of Non-GAAP Financial Measures” after the financial highlights at the end of this earnings release for a reconciliation of these non-GAAP financial measures.

Conference Call

The Company will host an investor conference call to review the results on Wednesday, January 24, 2024 at 8:30 a.m. Central Time. Participants may pre-register for the call by visiting https://edge.media-server.com/mmc/p/9o9pd6vj/ and will receive a unique PIN, which can be used when dialing in for the call.

Participants may also register via teleconference at:
https://register.vevent.com/register/BI07dad5089afd439ebad10a33915b98b6. Once registration is completed, participants will be provided with a dial-in number containing a personalized conference code to access the call. All participants are instructed to dial-in 15 minutes prior to the start time.

A replay will be available within approximately two hours after the completion of the call, and made accessible for one week. You may access the replay via webcast through the investor relations section of Veritex’s website.

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.

Media and Investor Relations:
investorrelations@veritexbank.com

Forward-Looking Statements

This earnings release includes “forward-looking statements”, within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on various facts and derived utilizing assumptions, current expectations, estimates and projections and are subject to known and unknown risks, uncertainties and other factors, which change over time and are beyond our control, that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.   Forward-looking statements include, without limitation, statements relating to the expected payment of Veritex’s quarterly cash dividend; expected loss on Veritex’s current equity method investment in Thrive; the transaction between Thrive and Lower Holding Company, including the expected timing of the completion of such transaction, the ability of the parties thereto to complete such transaction, the ability of the parties thereto to obtain any required regulatory or other approvals, authorizations or consents in connection with such transaction, and diversion of management time on issues related to such transaction; the impact of certain changes in Veritex’s accounting policies, standards and interpretations; a continuation of recent turmoil in the banking industry, responsive measures to mitigate and manage it and related supervisory and regulatory actions and costs and Veritex’s future financial performance, business and growth strategy, projected plans and objectives, as well as other projections based on macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact broader economic and industry 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,” “seeks,” “targets,” “outlooks,” “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 words. 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, 2022 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 earnings 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.

VERITEX HOLDINGS, INC. AND SUBSIDIARIES Financial Highlights (Unaudited)
		For the Quarter Ended																				For the Year Ended
		Dec 31, 2023				Sep 30, 2023				Jun 30, 2023				Mar 31, 2023				Dec 31, 2022				Dec 31, 2023				Dec 31, 2022
		(Dollars and shares in thousands, except per-share data)
Per Share Data (Common Stock):
Basic EPS		$	0.06			$	0.60			$	0.62			$	0.71			$	0.74			$	2.00			$	2.75
Diluted EPS			0.06				0.60				0.62				0.70				0.73				1.98				2.71
Book value per common share			28.18				27.46				27.48				27.54				26.83				28.18				26.83
Tangible book value per common share1			20.21				19.44				19.41				19.43				18.64				20.21				18.64
Dividends paid per common share outstanding2			0.20				0.20				0.20				0.20				0.20				0.80				0.80
Common Stock Data:
Shares outstanding at period end			54,338				54,305				54,261				54,229				54,030				54,338				54,030
Weighted average basic shares outstanding for the period			54,327				54,300				54,247				54,149				54,011				54,256				53,170
Weighted average diluted shares outstanding for the period			54,691				54,597				54,486				54,606				54,780				54,596				53,952
Summary of Credit Ratios:
ACL to total LHI			1.14	%			1.14	%			1.05	%			1.02	%			0.96	%			1.14	%			0.96	%
NPAs to total assets			0.77				0.65				0.55				0.35				0.36				0.77				0.36
NPAs, excluding nonaccrual purchase credit deteriorated ("PCD") loans, to total assets3			0.66				0.54				0.44				0.25				0.25				0.66				0.25
Net charge-offs to average loans outstanding4			0.40				0.08				0.48				0.04				0.24				0.25				0.16
Summary Performance Ratios:
Return on average assets4			0.11	%			1.06	%			1.10	%			1.28	%			1.35	%			0.88	%			1.33	%
Return on average equity4			0.92				8.58				8.96				10.55				11.03				7.21				10.28
Return on average tangible common equity1, 4			2.00				12.80				13.35				15.81				16.75				10.91				15.78
Efficiency ratio			77.49				54.49				49.94				48.42				47.63				55.82				48.64
Net interest margin			3.31				3.46				3.51				3.69				3.87				3.49				3.59
Selected Performance Metrics - Operating:
Diluted operating EPS1		$	0.58			$	0.60			$	0.64			$	0.79			$	0.74			$	2.60			$	2.74
Pre-tax, pre-provision operating return on average assets1, 2			1.54	%			1.61	%			1.90	%			2.20	%			2.15	%			1.81	%			1.97	%
Pre-tax, pre-provision operating return on average loans1, 4			1.97				2.05				2.43				2.83				2.78				2.32				2.60
Operating return on average assets1,4			1.02				1.06				1.13				1.43				1.36				1.16				1.35
Operating return on average tangible common equity1,3			12.37				12.80				13.70				17.68				16.95				14.09				15.94
Operating efficiency ratio1			55.50				54.49				48.90				45.70				47.11				50.94				48.16
Veritex Holdings, Inc. Capital Ratios:
Average stockholders' equity to average total assets			12.27	%			12.30	%			12.23	%			12.09	%			12.20	%			12.22	%			12.96	%
Tangible common equity to tangible assets1			9.18				8.86				8.76				8.66				8.60				9.18				8.60
Tier 1 capital to average assets (leverage)			10.03				10.10				9.80				9.67				9.82				10.03				9.82
Common equity tier 1 capital			10.29				10.11				9.76				9.32				9.09				10.29				9.09
Tier 1 capital to risk-weighted assets			10.56				10.37				10.01				9.56				9.34				10.56				9.34
Total capital to risk-weighted assets			13.18				12.95				12.51				11.99				11.63				13.18				11.63

¹Refer to the section titled "Reconciliation of Non-GAAP Financial Measures" after the financial highlights for a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures.
² Dividend amount represents dividend paid per common share subsequent to each respective quarter end.
³ Nonaccrual PCD loans consist of PCD loans that transitioned upon adoption of ASC 326 Financial Instruments-Credit Losses and were accounted for on a pooled basis that have subsequently been placed on nonaccrual status.
⁴Annualized ratio for quarterly metrics.

VERITEX HOLDINGS, INC. AND SUBSIDIARIES Financial Highlights (in thousands)
		Dec 31, 2023				Sep 30, 2023				Jun 30, 2023				Mar 31, 2023				Dec 31, 2022
		(unaudited)				(unaudited)				(unaudited)				(unaudited)
ASSETS
Cash and cash equivalents		$	629,063			$	713,408			$	663,921			$	808,395			$	436,077
Debt securities, net			1,257,042				1,060,629				1,144,020				1,150,959				1,282,460
Other investments			76,238				80,869				138,894				137,621				122,450
Loans held for sale ("LHFS")			79,072				41,313				29,876				42,816				20,641
LHI, mortgage warehouse ("MW")			377,796				390,767				436,255				437,501				446,227
LHI, excluding MW			9,206,544				9,237,447				9,257,183				9,237,159				9,036,424
Total loans			9,663,412				9,669,527				9,723,314				9,717,476				9,503,292
ACL			(109,816	)			(109,831	)			(102,150	)			(98,694	)			(91,052	)
Bank-owned life insurance			84,833				84,867				84,375				84,962				84,496
Bank premises, furniture and equipment, net			105,727				106,118				105,986				107,540				108,824
Intangible assets, net of accumulated amortization			41,753				44,294				48,293				51,086				53,213
Goodwill			404,452				404,452				404,452				404,452				404,452
Other assets			241,633				291,998				259,263				245,690				250,149
Total assets		$	12,394,337			$	12,346,331			$	12,470,368			$	12,609,487			$	12,154,361
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Noninterest-bearing deposits		$	2,218,036			$	2,363,340			$	2,234,109			$	2,212,389			$	2,640,617
Interest-bearing transaction and savings deposits			4,348,385				3,936,070				3,590,253				3,492,011				3,514,729
Certificates and other time deposits			3,191,737				3,403,427				2,928,949				2,896,870				2,086,642
Correspondent money market deposits			580,037				493,681				480,598				433,468				881,246
Total deposits			10,338,195				10,196,518				9,233,909				9,034,738				9,123,234
Accounts payable and other liabilities			195,036				229,116				190,900				171,985				177,579
Advances from FHLB			100,000				200,000				1,325,000				1,680,000				1,175,000
Subordinated debentures and subordinated notes			229,783				229,531				229,279				229,027				228,775
Total liabilities			10,863,014				10,855,165				10,979,088				11,115,750				10,704,588
Commitments and contingencies
Stockholders’ equity:
Common stock			610				609				609				609				607
Additional paid-in capital			1,317,516				1,314,459				1,311,687				1,308,345				1,306,852
Retained earnings			444,242				451,513				429,753				406,873				379,299
Accumulated other comprehensive loss			(63,463	)			(107,833	)			(83,187	)			(54,508	)			(69,403	)
Treasury stock			(167,582	)			(167,582	)			(167,582	)			(167,582	)			(167,582	)
Total stockholders’ equity			1,531,323				1,491,166				1,491,280				1,493,737				1,449,773
Total liabilities and stockholders’ equity		$	12,394,337			$	12,346,331			$	12,470,368			$	12,609,487			$	12,154,361

VERITEX HOLDINGS, INC. AND SUBSIDIARIES Financial Highlights (in thousands, except per share data)
		For the Quarter Ended																				For the Year Ended
		Dec 31, 2023				Sep 30, 2023				Jun 30, 2023				Mar 31, 2023				Dec 31, 2022				Dec 31, 2023				Dec 31, 2022
		(unaudited)				(unaudited)				(unaudited)				(unaudited)				(unaudited)				(unaudited)
Interest income:
Loans, including fees		$	165,443			$	167,368			$	163,727			$	151,707			$	136,846			$	648,245			$	399,679
Debt securities			12,282				10,928				10,166				10,988				10,880				44,364				38,736
Deposits in financial institutions and Fed Funds sold			8,162				7,128				7,507				5,534				3,401				28,331				6,275
Equity securities and other investments			1,717				1,691				1,118				1,408				1,087				5,934				4,720
Total interest income			187,604				187,115				182,518				169,637				152,214				726,874				449,410
Interest expense:
Transaction and savings deposits			46,225				39,936				32,957				29,857				24,043				148,975				42,785
Certificates and other time deposits			40,165				36,177				28,100				20,967				8,543				125,409				15,307
Advances from FHLB			2,581				8,523				17,562				12,358				10,577				41,024				15,501
Subordinated debentures and subordinated notes			3,100				3,118				3,068				3,066				2,954				12,352				11,160
Total interest expense			92,071				87,754				81,687				66,248				46,117				327,760				84,753
Net interest income			95,533				99,361				100,831				103,389				106,097				399,114				364,657
Provision for credit losses1			9,500				8,627				15,000				9,385				11,800				42,512				26,950
(Benefit) provision for unfunded commitments			(1,500	)			(909	)			(1,129	)			1,497				(523	)			(2,041	)			820
Net interest income after provisions			87,533				91,643				86,960				92,507				94,820				358,643				336,887
Noninterest income:
Service charges and fees on deposit accounts			4,800				5,159				5,272				5,017				5,173				20,248				20,139
Loan fees			1,200				1,564				1,520				2,064				2,477				6,348				10,442
Loss on sales of debt securities			—				—				—				(5,321	)			—				(5,321	)			—
Gain on sales of mortgage LHFS			10				21				40				6				4				77				550
U.S. Small Business Administration loan income			1,240				575				574				322				294				2,711				2,838
USDA loan income			3,138				1,197				3,570				9,366				7,514				17,271				11,222
Equity method investment (loss) income			(29,417	)			(136	)			485				(1,521	)			(5,416	)			(30,589	)			(5,141	)
Customer swap income			238				202				961				217				2,273				1,618				7,898
Other income			999				1,092				1,270				3,381				2,007				6,742				4,874
Total noninterest (loss) income			(17,792	)			9,674				13,692				13,531				14,326				19,105				52,822
Noninterest expense:
Salaries and employee benefits			30,606				30,949				28,650				31,865				33,690				122,070				117,841
Occupancy and equipment			4,670				4,881				4,827				4,973				5,116				19,351				18,744
Professional and regulatory fees			7,626				7,283				6,868				4,389				4,401				26,166				14,142
Data processing and software expense			4,569				4,541				4,709				4,720				4,197				18,539				14,013
Marketing			1,945				2,353				2,627				1,779				1,841				8,704				7,179
Amortization of intangibles			2,438				2,437				2,468				2,495				2,495				9,838				9,979
Telephone and communications			356				362				355				478				358				1,551				1,484
Merger and acquisition ("M&A") expense			—				—				—				—				—				—				1,379
Other			8,028				6,608				6,693				5,916				5,261				27,245				18,314
Total noninterest expense			60,238				59,414				57,197				56,615				57,359				233,464				203,075
Income before income tax expense			9,503				41,903				43,455				49,423				51,787				144,284				186,634
Income tax expense			6,004				9,282				9,725				11,012				11,890				36,023				40,319
Net income		$	3,499			$	32,621			$	33,730			$	38,411			$	39,897			$	108,261			$	146,315
Net income available to common stockholders		$	3,499			$	32,621			$	33,730			$	38,411			$	39,897			$	108,261			$	146,315
Basic EPS		$	0.06			$	0.60			$	0.62			$	0.71			$	0.74			$	2.00			$	2.75
Diluted EPS		$	0.06			$	0.60			$	0.62			$	0.70			$	0.73			$	1.98			$	2.71
Weighted average basic shares outstanding			54,327				54,300				54,247				54,149				54,011				54,256				53,170
Weighted average diluted shares outstanding			54,691				54,597				54,486				54,606				54,780				54,596				53,952

¹ Includes provision for credit losses on available for sale (“AFS”) securities of $885 thousand for the three months ended March 31, 2023.

VERITEX HOLDINGS, INC. AND SUBSIDIARIES Financial Highlights (Unaudited)
		For the Quarter Ended
		December 31, 2023										September 30, 2023										December 31, 2022
		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
		(Dollars in thousands)
Assets
Interest-earning assets:
Loans1		$	9,280,439			$	161,021		6.88	%		$	9,267,366			$	161,615		6.92	%		$	8,743,380			$	131,823		5.98	%
LHI, MW			301,345				4,422		5.82				357,639				5,753		6.38				383,080				5,024		5.20
Debt securities			1,188,776				12,282		4.10				1,121,716				10,928		3.87				1,286,342				10,880		3.36
Interest-earning deposits in other banks			587,929				8,162		5.51				520,785				7,128		5.43				353,737				3,401		3.81
Equity securities and other investments			82,271				1,717		8.28				135,714				1,691		4.94				119,054				1,087		3.62
Total interest-earning assets			11,440,760				187,604		6.51				11,403,220				187,115		6.51				10,885,593				152,215		5.55
ACL			(111,937	)									(105,320	)									(85,275	)
Noninterest-earning assets			977,811										961,162										960,726
Total assets		$	12,306,634									$	12,259,062									$	11,761,044
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Interest-bearing demand and savings deposits		$	4,547,911				46,225		4.03	%		$	4,168,876			$	39,936		3.80	%		$	4,321,936				24,043		2.21	%
Certificates and other time deposits			3,285,164				40,165		4.85				3,151,704				36,177		4.55				1,785,152				8,543		1.90
Advances from FHLB and Other			182,935				2,581		5.60				725,543				8,523		4.66				1,073,049				10,577		3.91
Subordinated debentures and subordinated notes			229,648				3,100		5.36				229,389				3,118		5.39				229,037				2,954		5.12
Total interest-bearing liabilities			8,245,658				92,071		4.43				8,275,512				87,754		4.21				7,409,174				46,117		2.47
Noninterest-bearing liabilities:
Noninterest-bearing deposits			2,322,555										2,272,207										2,737,468
Other liabilities			228,135										203,173										179,584
Total liabilities			10,796,348										10,750,892										10,326,226
Stockholders’ equity			1,510,286										1,508,170										1,434,818
Total liabilities and stockholders’ equity		$	12,306,634									$	12,259,062									$	11,761,044
Net interest rate spread2									2.08	%									2.30	%									3.08	%
Net interest income and margin3						$	95,533		3.31	%						$	99,361		3.46	%						$	106,097		3.87	%

¹ Includes average outstanding balances of LHFS of $31,242, $28,284 and $15,296 for the three months ended December 31, 2023, September 30, 2023 and December 31, 2022, respectively, and average balances of LHI, excluding MW.
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.

VERITEX HOLDINGS, INC. AND SUBSIDIARIES Financial Highlights (Unaudited)
		For the Year Ended December 31,
			2023										2022
		Average Outstanding Balance				Interest Earned/ Interest Paid			Average Yield/ Rate			Average Outstanding Balance				Interest Earned/ Interest Paid			Average Yield/ Rate
		(Dollars in thousands)
Assets
Interest-earning assets:
Loans1		$	9,244,070			$	628,122		6.79	%		$	7,877,949			$	383,008		4.86	%
LHI, MW			347,596				20,123		5.79				433,062				16,671		3.85
Debt securities			1,173,880				44,364		3.78				1,277,643				38,736		3.03
Interest-earning deposits in other banks			542,959				28,331		5.22				405,471				6,275		1.55
Equity securities and other investments			120,135				5,934		4.94				169,875				4,720		2.78
Total interest-earning assets			11,428,640				726,874		6.36				10,164,000				449,410		4.42
ACL			(103,179	)									(79,845	)
Noninterest-earning assets			957,286										905,103
Total assets		$	12,282,747									$	10,989,258
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Interest-bearing demand and savings deposits		$	4,197,517				148,975		3.55			$	3,934,926				42,785		1.09
Certificates and other time deposits			2,977,178				125,409		4.21				1,601,687				15,307		0.96
Advances from FHLB and Other			873,617				41,024		4.70				896,687				15,501		1.73
Subordinated debentures and subordinated notes			229,268				12,352		5.39				230,984				11,160		4.83
Total interest-bearing liabilities			8,277,580				327,760		3.96				6,664,284				84,753		1.27
Noninterest-bearing liabilities:
Noninterest-bearing deposits			2,309,983										2,782,077
Other liabilities			193,659										119,237
Total liabilities			10,781,222										9,565,598
Stockholders’ equity			1,501,525										1,423,660
Total liabilities and stockholders’ equity		$	12,282,747									$	10,989,258
Net interest rate spread2									2.40	%									3.15	%
Net interest income and margin3						$	399,114		3.49	%						$	364,657		3.59	%

¹Includes average outstanding balances of LHFS of $25,684 and $13,558 for the twelve months ended December 31, 2023 and 2022, respectively, and average balances of LHI, excluding MW.
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.

VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(Unaudited)

Yield Trend

		For the Quarter Ended
		Dec 31, 2023			Sep 30, 2023			Jun 30, 2023			Mar 31, 2023			Dec 31, 2022
Average yield on interest-earning assets:
Loans1		6.88	%		6.92	%		6.85	%		6.51	%		5.98	%
LHI, MW		5.82			6.38			5.44			5.52			5.20
Debt securities		4.10			3.87			3.60			3.56			3.36
Interest-bearing deposits in other banks		5.51			5.43			5.16			4.69			3.81
Equity securities and other investments		8.28			4.94			3.25			4.57			3.62
Total interest-earning assets		6.51	%		6.51	%		6.36	%		6.06	%		5.55	%
Average rate on interest-bearing liabilities:
Interest-bearing demand and savings deposits		4.03	%		3.80	%		3.37	%		2.92	%		2.21	%
Certificates and other time deposits		4.85			4.55			3.92			3.28			1.90
Advances from FHLB and Other		5.60			4.66			4.78			4.46			3.91
Subordinated debentures and subordinated notes		5.36			5.39			5.37			5.38			5.12
Total interest-bearing liabilities		4.43	%		4.21	%		3.86	%		3.32	%		2.47	%
Net interest rate spread2		2.08	%		2.30	%		2.50	%		2.74	%		3.08	%
Net interest margin3		3.31	%		3.46	%		3.51	%		3.69	%		3.87	%

  
¹ Includes average outstanding balances of LHFS of $31,242, $28,284, $23,374, $19,679 and $15,296 for the three months ended December 31, 2023, September 30, 2023, June 30, 2023, March 31, 2023 and December 31, 2022, respectively, and average balances of LHI, excluding MW.
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.

Supplemental Yield Trend

		For the Quarter Ended
		Dec 31, 2023			Sep 30, 2023			Jun 30, 2023			Mar 31, 2023			Dec 31, 2022
Average cost of interest-bearing deposits		4.38	%		4.12	%		3.61	%		3.06	%		2.12	%
Average costs of total deposits, including noninterest-bearing		3.37			3.15			2.73			2.24			1.46

VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(Unaudited)

LHI and Deposit Portfolio Composition

		Dec 31, 2023							Sep 30, 2023							Jun 30, 2023							Mar 31, 2023							Dec 31, 2022
		(In thousands, except percentages)
LHI1
Commercial and Industrial ("C&I")		$	2,752,063			29.9	%		$	2,841,024			30.7	%		$	2,850,084			30.7	%		$	2,895,957			31.3	%		$	2,942,348			32.4	%
Real Estate:
Owner occupied commercial ("OOCRE")			794,088			8.6				697,299			7.5				671,602			7.2				631,563			6.8				715,829			7.9
Non-owner occupied commercial ("NOOCRE")			2,350,725			25.5				2,398,060			26.1				2,509,731			27.1				2,505,344			27.1				2,341,379			25.9
Construction and land			1,734,254			18.8				1,705,053			18.4				1,659,700			17.9				1,831,349			19.8				1,787,400			19.7
Farmland			31,114			0.3				59,684			0.6				51,663			0.6				51,680			0.6				43,500			0.5
1-4 family residential			937,119			10.2				933,225			10.1				923,442			10.0				896,252			9.7				894,456			9.9
Multi-family residential			605,817			6.6				603,395			6.5				592,473			6.4				432,209			4.6				322,679			3.6
Consumer			10,149			0.1				9,845			0.1				11,189			0.1				8,316			0.1				7,806			0.1
Total LHI		$	9,215,329			100	%		$	9,247,585			100	%		$	9,269,884			100	%		$	9,252,670			100	%		$	9,055,397			100	%
MW			377,796							390,767							436,255							437,501							446,227
Total LHI1		$	9,593,125						$	9,638,352						$	9,706,139						$	9,690,171						$	9,501,624
Total LHFS			79,072							41,313							29,876							42,816							20,641
Total Loans		$	9,672,197						$	9,679,665						$	9,736,015						$	9,732,987						$	9,522,265
Deposits
Noninterest-bearing		$	2,218,036			21.5	%		$	2,363,340			23.2	%		$	2,234,109			24.2	%		$	2,212,389			24.5	%		$	2,640,617			28.9	%
Interest-bearing transaction			347,156			3.4				739,098			7.2				676,653			7.3				866,609			9.6				622,814			6.8
Money market			3,864,361			37.3				3,096,498			30.4				2,816,769			30.5				2,518,922			27.9				2,773,622			30.4
Savings			136,868			1.3				100,474			1.0				96,831			1.0				106,480			1.2				118,293			1.3
Certificates and other time deposits			3,191,737			30.9				3,403,427			33.4				2,928,949			31.7				2,896,870			32.0				2,086,642			22.9
Correspondent money market account			580,037			5.6				493,681			4.8				480,598			5.3				433,468			4.8				881,246			9.7
Total deposits		$	10,338,195			100	%		$	10,196,518			100	%		$	9,233,909			100	%		$	9,034,738			100	%		$	9,123,234			100	%
Total loans to total deposits ratio			93.6	%						94.9	%						105.4	%						107.7	%						104.4	%
LHI to Deposit Ratio, excluding MW			89.1	%						90.7	%						100.4	%						102.4	%						99.3	%

¹ Total LHI does not include deferred costs of $8.8 million, $10.1 million, $12.7 million, $15.5 million and $19.0 million at December 31, 2023, September 30, 2023, June 30, 2023, March 31, 2023 and December 31, 2022, respectively.

VERITEX HOLDINGS, INC. AND SUBSIDIARIES Financial Highlights (Unaudited) Asset Quality
	For the Quarter Ended																				For the Year Ended
	Dec 31, 2023				Sep 30, 2023				Jun 30, 2023				Mar 31, 2023				Dec 31, 2022				Dec 31, 2023				Dec 31, 2022
	(In thousands, except percentages)
NPAs:
Nonaccrual loans	$	79,133			$	65,676			$	54,055			$	31,452			$	30,364			$	79,133			$	30,364
Nonaccrual PCD loans1		13,715				13,718				13,721				12,784				13,178				13,715				13,178
Accruing loans 90 or more days past due2		2,975				474				528				296				125				2,975				125
Total nonperforming loans held for investment ("NPLs")		95,823				79,868				68,304				44,532				43,667				95,823				43,667
Other real estate owned		—				—				—				—				—				—				—
Total NPAs	$	95,823			$	79,868			$	68,304			$	44,532			$	43,667			$	95,823			$	43,667
Charge-offs:
1-4 family residential	$	(21	)		$	—			$	—			$	—			$	—			$	(21	)		$	—
Multifamily		(192	)			—				—				—				—				(192	)			—
OOCRE		(364	)			(375	)			—				(116	)			—				(855	)			(2,646	)
NOOCRE		(5,434	)			—				(8,215	)			—				(1,019	)			(13,649	)			(2,410	)
C&I		(3,893	)			(1,929	)			(3,540	)			(1,051	)			(5,449	)			(10,413	)			(9,731	)
Consumer		(33	)			(49	)			(92	)			(62	)			(41	)			(236	)			(1,285	)
Total charge-offs		(9,937	)			(2,353	)			(11,847	)			(1,229	)			(6,509	)			(25,366	)			(16,072	)
Recoveries:
1-4 family residential		1				—				1				1				24				3				31
OOCRE		—				—				—				—				26				—				271
NOOCRE		—				200				150				—				229				350				725
C&I		387				308				106				364				415				1,165				1,308
Consumer		34				14				46				6				30				100				85
Total recoveries		422				522				303				371				724				1,618				2,420
Net charge-offs	$	(9,515	)		$	(1,831	)		$	(11,544	)		$	(858	)		$	(5,785	)		$	(23,748	)		$	(13,652	)
Provision for credit losses	$	9,500			$	8,627			$	15,000			$	9,385			$	11,800			$	42,512			$	26,950
ACL	$	109,816			$	109,831			$	102,150			$	98,694			$	91,052			$	109,816			$	91,052
Asset Quality Ratios:
NPAs to total assets		0.77	%			0.65	%			0.55	%			0.35	%			0.36	%			0.77	%			0.36	%
NPAs, excluding nonaccrual PCD loans, to total assets		0.66				0.54				0.44				0.25				0.25				0.66				0.25
NPLs to total LHI		1.00				0.83				0.70				0.46				0.46				1.00				0.46
NPLs, excluding nonaccrual PCD loans, to total LHI		0.86				0.69				0.56				0.33				0.32				0.86				0.32
ACL to total LHI		1.14				1.14				1.05				1.02				0.96				1.14				0.96
Net charge-offs to average loans outstanding3		0.40				0.08				0.48				0.04				0.24				0.25				0.16

¹ Nonaccrual PCD loans consist of PCD loans that transitioned upon adoption of ASC 326 Financial Instruments - Credit Losses and were accounted for on a pooled basis that have subsequently been placed on nonaccrual status.
² Accruing loans greater than 90 days past due exclude PCD loans greater than 90 days past due that are accounted for on a pooled basis.
³Annualized ratio for quarterly metrics.

VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)

We identify certain financial measures discussed in this earnings release as being “non-GAAP financial measures.” In accordance with SEC rules, we classify a financial measure as being a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with GAAP, in our statements of income, balance sheets or statements of cash flows. Non-GAAP financial measures do not include operating and other statistical measures or ratios calculated using exclusively either one or both of (i) financial measures calculated in accordance with GAAP and (ii) operating measures or other measures that are not non-GAAP financial measures.

The non-GAAP financial measures that we present in this earnings release should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which we calculate the non-GAAP financial measures that we present in this earnings release may differ from that of other companies reporting measures with similar names. You should understand how such other financial institutions calculate their financial measures that appear to be similar or have similar names to the non-GAAP financial measures we have discussed in this earnings release when comparing such non-GAAP financial measures.

Tangible Book Value Per Common Share. Tangible book value per common share is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) tangible common equity as total stockholders’ equity less goodwill and core deposit intangibles, net of accumulated amortization; and (b) tangible book value per common share as tangible common equity (as described in clause (a)) divided by number of common shares outstanding. For tangible book value per common share, the most directly comparable financial measure calculated in accordance with GAAP is book value per common share.

We believe that this measure is important to many investors in the marketplace who are interested in changes from period to period in book value per common share exclusive of changes in core deposit intangibles. Goodwill and other intangible assets have the effect of increasing total book value while not increasing our tangible book value.

The following table reconciles, as of the dates set forth below, total stockholders’ equity to tangible common equity and presents our tangible book value per common share compared with our book value per common share:

		As of
		Dec 31, 2023				Sep 30, 2023				Jun 30, 2023				Mar 31, 2023				Dec 31, 2022
		(Dollars in thousands, except per share data)
Tangible Common Equity
Total stockholders' equity		$	1,531,323			$	1,491,166			$	1,491,280			$	1,493,737			$	1,449,773
Adjustments:
Goodwill			(404,452	)			(404,452	)			(404,452	)			(404,452	)			(404,452	)
Core deposit intangibles			(28,495	)			(30,933	)			(33,371	)			(35,808	)			(38,247	)
Tangible common equity		$	1,098,376			$	1,055,781			$	1,053,457			$	1,053,477			$	1,007,074
Common shares outstanding			54,338				54,305				54,261				54,229				54,030
Book value per common share		$	28.18			$	27.46			$	27.48			$	27.54			$	26.83
Tangible book value per common share		$	20.21			$	19.44			$	19.41			$	19.43			$	18.64

VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)

Tangible Common Equity to Tangible Assets. Tangible common equity to tangible assets is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) tangible common equity as total stockholders’ equity, less goodwill and core deposit intangibles, net of accumulated amortization; (b) tangible assets as total assets less goodwill and core deposit intangibles, net of accumulated amortization; and (c) tangible common equity to tangible assets as tangible common equity (as described in clause (a)) divided by tangible assets (as described in clause (b)). For tangible common equity to tangible assets, the most directly comparable financial measure calculated in accordance with GAAP is total stockholders’ equity to total assets.

We believe that this measure is important to many investors in the marketplace who are interested in the relative changes from period to period in common equity and total assets, in each case, exclusive of changes in core deposit intangibles. Goodwill and other intangible assets have the effect of increasing both total stockholders’ equity and assets while not increasing our tangible common equity or tangible assets.

The following table reconciles, as of the dates set forth below, total stockholders’ equity to tangible common equity and total assets to tangible assets and presents our tangible common equity to tangible assets:

		As of
		Dec 31, 2023				Sep 30, 2023				Jun 30, 2023				Mar 31, 2023				Dec 31, 2022
		(Dollars in thousands)
Tangible Common Equity
Total stockholders' equity		$	1,531,323			$	1,491,166			$	1,491,280			$	1,493,737			$	1,449,773
Adjustments:
Goodwill			(404,452	)			(404,452	)			(404,452	)			(404,452	)			(404,452	)
Core deposit intangibles			(28,495	)			(30,933	)			(33,371	)			(35,808	)			(38,247	)
Tangible common equity		$	1,098,376			$	1,055,781			$	1,053,457			$	1,053,477			$	1,007,074
Tangible Assets
Total assets		$	12,394,337			$	12,346,331			$	12,470,368			$	12,609,487			$	12,154,361
Adjustments:
Goodwill			(404,452	)			(404,452	)			(404,452	)			(404,452	)			(404,452	)
Core deposit intangibles			(28,495	)			(30,933	)			(33,371	)			(35,808	)			(38,247	)
Tangible Assets		$	11,961,390			$	11,910,946			$	12,032,545			$	12,169,227			$	11,711,662
Tangible Common Equity to Tangible Assets			9.18	%			8.86	%			8.76	%			8.66	%			8.60	%

VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)

Return on Average Tangible Common Equity. Return on average tangible common equity is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) net income available for common stockholders adjusted for amortization of core deposit intangibles (which we refer to as “return”) as net income, plus amortization of core deposit intangibles, less tax benefit at the statutory rate; (b) average tangible common equity as total average stockholders’ equity less average goodwill and average core deposit intangibles, net of accumulated amortization; and (c) return (as described in clause (a)) divided by average tangible common equity (as described in clause (b)). For return on average tangible common equity, the most directly comparable financial measure calculated in accordance with GAAP is return on average equity.

We believe that this measure is important to many investors in the marketplace who are interested in the return on common equity, exclusive of the impact of core deposit intangibles. Goodwill and core deposit intangibles have the effect of increasing total stockholders’ equity while not increasing our tangible common equity. This measure is particularly relevant to acquisitive institutions that may have higher balances in goodwill and core deposit intangibles than non-acquisitive institutions.

The following table reconciles, as of the dates set forth below, average tangible common equity to average common equity and net income available for common stockholders adjusted for amortization of core deposit intangibles, net of taxes to net income and presents our return on average tangible common equity:

		For the Quarter Ended																				For the Year Ended
		Dec 31, 2023				Sep 30, 2023				Jun 30, 2023				Mar 31, 2023				Dec 31, 2022				Dec 31, 2023				Dec 31, 2022
		(Dollars in thousands)
Net (loss) income available for common stockholders adjusted for amortization of core deposit intangibles
Net (loss) income		$	3,499			$	32,621			$	33,730			$	38,411			$	39,897			$	108,261			$	146,315
Adjustments:
Plus: Amortization of core deposit intangibles			2,438				2,438				2,438				2,438				2,438				9,752				9,752
Less: Tax benefit at the statutory rate			512				512				512				512				512				2,048				2,048
Net (loss) income available for common stockholders adjusted for amortization of core deposit intangibles		$	5,425			$	34,547			$	35,656			$	40,337			$	41,823			$	115,965			$	154,019
Average Tangible Common Equity
Total average stockholders' equity		$	1,510,286			$	1,508,170			$	1,510,625			$	1,476,576			$	1,434,818			$	1,501,525			$	1,423,660
Adjustments:
Average goodwill			(404,452	)			(404,452	)			(404,452	)			(404,452	)			(404,452	)			(404,452	)			(404,344	)
Average core deposit intangibles			(30,093	)			(32,540	)			(34,969	)			(37,361	)			(39,792	)			(33,718	)			(43,451	)
Average tangible common equity		$	1,075,741			$	1,071,178			$	1,071,204			$	1,034,763			$	990,574			$	1,063,355			$	975,865
Return on Average Tangible Common Equity (Annualized)			2.00	%			12.80	%			13.35	%			15.81	%			16.75	%			10.91	%			15.78	%

VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)

Operating Earnings, Pre-tax, Pre-provision Operating Earnings and performance metrics calculated using Operating Earnings and Pre-tax, Pre-provision Operating Earnings, including Diluted Operating Earnings per Share, Operating Return on Average Assets, Pre-tax, Pre-Provision Operating Return on Average Assets, Operating Return on Average Assets, Pre-tax, Pre-Provision Operating Return on Average Assets, Pre-tax, Pre-Provision Operating Return on Average Loans, Operating Return on Average Tangible Common Equity and Operating Efficiency Ratio. Operating earnings, pre-tax, pre-provision operating earnings and the performance metrics calculated using these metrics, listed below, are non-GAAP measures used by management to evaluate the Company’s financial performance. We calculate (a) operating earnings as net income plus equity method investment write-down, plus FDIC special assessment, plus severance payments, plus loss on sale of debt securities AFS, net, plus M&A expenses less tax impact of adjustments, plus nonrecurring tax adjustments. We calculate (b) diluted operating earnings per share as operating earnings as described in clause (a) divided by weighted average diluted shares outstanding. We calculate (c) pre-tax, pre-provision operating earnings as operating earnings as described in clause (a) plus provision for income taxes, plus benefit (provision) for credit losses and unfunded commitments. We calculate (d) pre-tax, pre-provision operating return on average assets as pre-tax, pre-provision operating earnings as described in clause (a) divided by total average assets. We calculate (e) operating return on average assets as operating earnings as described in clause (a) divided by total average assets. We calculate (f) operating return on average tangible common equity as operating earnings as described in clause (a), adjusted for the amortization of intangibles and tax benefit at the statutory rate, divided by total average tangible common equity (average stockholders’ equity less average goodwill and average core deposit intangibles, net of accumulated amortization). We calculate (g) operating efficiency ratio as noninterest expense plus adjustments to operating noninterest expense divided by noninterest income plus adjustments to operating noninterest income, plus net interest income

We believe that these measures and the operating metrics calculated utilizing these measures are important to management and many investors in the marketplace who are interested in understanding the ongoing operating performance of the Company and provide meaningful comparisons to its peers.

The following tables reconcile, as of the dates set forth below, operating net income and pre-tax, pre-provision operating earnings and related metrics:

		For the Quarter Ended															For the Year Ended
		Dec 31, 2023			Sep 30, 2023			Jun 30, 2023			Mar 31, 2023			Dec 31, 2022			Dec 31, 2023			Dec 31, 2022
		(Dollars in thousands, except per share data)
Operating Earnings
Net income		$	3,499		$	32,621		$	33,730		$	38,411		$	39,897		$	108,261		$	146,315
Plus: Equity method investment write-down			29,417			—			—			—			—			29,417			—
Plus: FDIC special assessment			768			—			—			—			—			768			—
Plus: Severance payments1			—			—			1,194			756			630			1,950			630
Plus: Loss on sale of debt securities AFS, net			—			—			—			5,321			—			5,321			—
Plus: M&A expenses			—			—			—			—			—			—			1,379
Operating pre-tax income			33,684			32,621			34,924			44,488			40,527			145,717			148,324
Less: Tax impact of adjustments			2,059			—			251			1,293			132			3,603			435
Operating earnings		$	31,625		$	32,621		$	34,673		$	43,195		$	40,395		$	142,114		$	147,889
Weighted average diluted shares outstanding			54,691			54,597			54,486			54,606			54,780			54,596			53,952
Diluted EPS		$	0.06		$	0.60		$	0.62		$	0.70		$	0.73		$	1.98		$	2.71
Diluted operating EPS		$	0.58		$	0.60		$	0.64		$	0.79		$	0.74		$	2.60		$	2.74

¹ Severance payments relate to restructurings made during the periods disclosed.

		For the Quarter Ended																				For the Year Ended
(Dollars in thousands)		Dec 31, 2023				Sep 30, 2023				Jun 30, 2023				Mar 31, 2023				Dec 31, 2022				Dec 31, 2023				Dec 31, 2022
Pre-Tax, Pre-Provision Operating Earnings
Net Income		$	3,499			$	32,621			$	33,730			$	38,411			$	39,897			$	108,261			$	146,315
Plus: Provision for income taxes			6,004				9,282				9,725				11,012				11,890				36,023				40,319
Plus: Provision for credit losses and unfunded commitments			8,000				7,718				13,871				10,882				11,277				40,471				27,770
Plus: Severance payments			—				—				1,194				756				630				1,950				630
Plus: Loss on sale of debt securities AFS, net			—				—				—				5,321				—				5,321				—
Plus: Equity method investment write-down			29,417				—				—				—				—				29,417				—
Plus: FDIC special assessment			768				—				—				—				—				768				—
Plus: M&A expenses			—				—				—				—				—				—				1,379
Net pre-tax, pre-provision operating earnings		$	47,688			$	49,621			$	58,520			$	66,382			$	63,694			$	222,211			$	216,413
Average total assets		$	12,306,634			$	12,259,062			$	12,350,223			$	12,214,313			$	11,761,044			$	12,282,747			$	10,989,258
Pre-tax, pre-provision operating return on average assets1			1.54	%			1.61	%			1.90	%			2.20	%			2.15	%			1.81	%			1.97	%
Average Total Assets		$	12,306,634			$	12,259,062			$	12,350,223			$	12,214,313			$	11,761,044			$	12,282,747			$	10,989,258
Return on average assets1			0.11	%			1.06	%			1.10	%			1.28	%			1.35	%			0.88	%			1.33	%
Operating return on average assets1			1.02				1.06				1.13				1.43				1.36				1.16				1.35
Average loans		$	9,581,784			$	9,625,005			$	9,657,313			$	9,501,309			$	9,103,552			$	9,591,666			$	8,311,011
Pre-tax, pre-provision operating return on average loans1			1.97	%			2.05	%			2.43	%			2.83	%			2.78	%			2.32	%			2.60	%
Operating earnings adjusted for amortization of core deposit intangibles
Operating earnings		$	31,625			$	32,621			$	34,673			$	43,195			$	40,395			$	142,114			$	147,889
Adjustments:
Plus: Amortization of core deposit intangibles			2,438				2,438				2,438				2,438				2,438				9,752				9,752
Less: Tax benefit at the statutory rate			512				512				512				512				512				2,048				2,048
Operating earnings adjusted for amortization of core deposit intangibles		$	33,551			$	34,547			$	36,599			$	45,121			$	42,321			$	149,818			$	155,593
Average Tangible Common Equity
Total average stockholders' equity		$	1,510,286			$	1,508,170			$	1,510,625			$	1,476,576			$	1,434,818			$	1,501,525			$	1,423,660
Adjustments:
Less: Average goodwill			(404,452	)			(404,452	)			(404,452	)			(404,452	)			(404,452	)			(404,452	)			(404,344	)
Less: Average core deposit intangibles			(30,093	)			(32,540	)			(34,969	)			(37,361	)			(39,792	)			(33,718	)			(43,451	)
Average tangible common equity		$	1,075,741			$	1,071,178			$	1,071,204			$	1,034,763			$	990,574			$	1,063,355			$	975,865
Operating return on average tangible common equity1			12.37	%			12.80	%			13.70	%			17.68	%			16.95	%			14.09	%			15.94	%
Efficiency ratio			77.49	%			54.49	%			49.94	%			48.42	%			47.63	%			55.82	%			48.64	%
Net interest income		$	95,533			$	99,361			$	100,831			$	103,389			$	106,097			$	399,114			$	364,657
Noninterest (loss) income			(17,792	)			9,674				13,692				13,531				14,326				19,105				52,822
Plus: Loss on sale of debt securities AFS, net			—				—				—				5,321				—				5,321				—
Plus: Equity method investment write-down			29,417				—				—				—				—				29,417				—
Operating noninterest income			11,625				9,674				13,692				18,852				14,326				53,843				52,822
Noninterest expense			60,238				59,414				57,197				56,615				57,359				233,464				203,075
Less: FDIC special assessment			768				—				—				—				—				768				—
Less: Severance payments			—				—				1,194				756				630				1,950				630
Less: M&A expenses			—				—				—				—				—				—				1,379
Operating noninterest expense		$	59,470			$	59,414			$	56,003			$	55,859			$	56,729			$	230,746			$	201,066
Operating efficiency ratio			55.50	%			54.49	%			48.90	%			45.70	%			47.11	%			50.94	%			48.21	%

¹ Annualized ratio for quarterly metrics.

FAQ

What was the deposit growth in 2023?

The deposit growth in 2023 was $1.2 billion.

What was the CET1 as of December 31, 2023?

The CET1 was 10.3% as of December 31, 2023.

What was the quarterly cash dividend declared?

A quarterly cash dividend of $0.20 per share was declared.

What recognition did the company receive in 2023?

The company was named one of the 'Best Companies to Work For' in 2023.

What was the net charge-offs for the fourth quarter of 2023?

The net charge-offs for the fourth quarter of 2023 were $9.5 million.

What was the increase in NPAs at December 31, 2023?

NPAs increased to $95.8 million at December 31, 2023.