Veritex Holdings, Inc. Reports Second Quarter 2024 Operating Results

Rhea-AI Summary

Veritex Holdings (VBTX) reported Q2 2024 results with net income of $27.2 million and diluted EPS of $0.50, up from $24.2 million and $0.44 in Q1 2024. Key highlights include:

- Net interest margin increased to 3.29%, up 5 bps from Q1
- Total deposits grew $71.0 million (2.67% annualized)
- Total loans grew $70.3 million (2.88% annualized)
- Nonperforming assets decreased to 0.65% of total assets
- Common equity tier 1 capital improved to 10.49%

The company declared a quarterly cash dividend of $0.20 per share. Credit quality improved with net charge-offs of 28 bps annualized. The allowance for credit losses to total loans increased to 1.16%.

Positive

• Net income increased to $27.2 million in Q2 2024, up from $24.2 million in Q1 2024
• Diluted EPS rose to $0.50 in Q2 2024, compared to $0.44 in Q1 2024
• Net interest margin improved by 5 basis points to 3.29%
• Total deposits grew by $71.0 million (2.67% annualized)
• Total loans increased by $70.3 million (2.88% annualized)
• Nonperforming assets decreased to 0.65% of total assets from 0.82% in Q1 2024
• Common equity tier 1 capital improved to 10.49%, up 12 basis points from Q1 2024

Negative

• Net interest income before provision for credit losses decreased by $4.6 million (4.6%) compared to Q2 2023
• Noninterest income decreased by $3.1 million (22.7%) compared to Q2 2023
• Noninterest expense increased by $5.9 million (10.4%) compared to Q2 2023
• Net charge-offs increased to 28 basis points annualized, compared to 22 basis points in Q1 2024

Insights

Financial Analyst

Net Income and EPS: Veritex reported $27.2 million in GAAP net income for Q2 2024, a $3.0 million increase over Q1 2024. This improvement is reflected in the diluted EPS, which rose to $0.50 from $0.44. These figures indicate that the company is effectively managing its operations and expenses. However, when comparing year-over-year, there's a notable decline from Q2 2023's net income of $72.1 million and diluted EPS of $1.32. Investors should consider this in their long-term strategy, noting that while there’s short-term growth, the year-over-year decline suggests potential underlying issues or a more challenging market environment.

Return Metrics: The return on average assets (ROA) and return on average equity (ROE) improved sequentially but are down compared to last year. ROA increased to 0.87% in Q2 2024 from 0.79% in Q1 2024, but it was 1.18% in Q2 2023. Similarly, ROE moved up to 7.10% from 6.33% quarter-over-quarter, yet it was 9.74% a year ago. These declining year-over-year returns warrant scrutiny as they may point to efficiency or market challenges that need addressing for sustained profitability.

Net Interest Margin (NIM): NIM increased by 5 basis points sequentially to 3.29%. This improvement is a positive sign and suggests that Veritex is optimizing its interest-earning assets. However, the NIM remains down from 3.60% a year ago, reflecting potentially rising interest expenses or competitive pressures on loan yields. Investors should monitor how management addresses these challenges to improve margins further.

Credit Analyst

Credit Quality: Veritex showed an improvement in credit quality, with nonperforming assets (NPAs) decreasing to 0.65% of total assets from 0.82% in the previous quarter. This reduction in NPAs is a strong indicator of better asset management and risk mitigation practices. Furthermore, the allowance for credit losses (ACL) to total loans held for investment (LHI) increased slightly to 1.16% from 1.15% in Q1 2024, showing a prudent approach towards maintaining reserves against potential loan defaults.

Loan and Deposit Growth: Total loans grew by $70.3 million while total deposits increased by $71.0 million. The loan-to-deposit ratio (LDR) decreased to 85.9%, which is a healthy sign suggesting a balanced approach towards lending and deposit growth. This also indicates that Veritex is not overly reliant on high LDR, thereby reducing liquidity risk.

Market Research Analyst

Strategic Repositioning: Veritex highlighted its strategic repositioning efforts, which included a significant shift in its securities portfolio. The sale of $120.1 million of lower-yielding available-for-sale (AFS) securities and the reinvestment into higher-yielding AFS securities with an average yield of 6.24% demonstrates active portfolio management aimed at optimizing interest income. This strategic move underlines management's ability to adapt to changing market conditions and maximize returns on investments.

Operational Efficiency: The efficiency ratio improved to 59.11% from 62.45% in Q1 2024. This shows that Veritex has been successful in controlling non-interest expenses relative to its revenue generation. A lower efficiency ratio is a positive indicator of operational effectiveness, potentially leading to higher profitability in the long run.

Recognition and Dividend: Being named among the “Best Companies to Work For” and “Best in Banking” by the U.S. News & World Report enhances the company’s reputation and could positively affect employee morale and retention. Additionally, the declared quarterly cash dividend of $0.20 per share reinforces the company’s commitment to returning value to shareholders.

DALLAS, July 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 quarter ended June 30, 2024.

“We are pleased with the second quarter results, highlighted by improved credit quality, stabilized NIM and continued repositioning of our balance sheet,” said C. Malcolm Holland, III, the Company’s Chairman and Chief Executive Officer. “Our LDR, excluding mortgage warehouse, dropped below 86%, we built capital and continue to execute on our strategic plan.”

		Quarter to Date								Year to Date
Financial Highlights		Q2 2024				Q1 2024				Q2 2024				Q2 2023
		(Dollars in thousands, except per share data) (unaudited)
GAAP
Net income		$	27,202			$	24,156			$	51,358			$	72,141
Diluted EPS			0.50				0.44				0.94				1.32
Book value per common share			28.49				28.23				28.49				27.48
Return on average assets1			0.87	%			0.79	%			0.83	%			1.18	%
Return on average equity1			7.10				6.33				6.72				9.74
Net interest margin			3.29				3.24				3.27				3.60
Efficiency ratio			59.11				62.45				60.72				49.17
Non-GAAP2
Operating earnings		$	28,310			$	29,137			$	57,447			$	77,947
Diluted operating EPS			0.52				0.53				1.05				1.43
Tangible book value per common share			20.62				20.33				20.62				19.41
Pre-tax, pre-provision operating earnings			44,420				43,656				88,076				124,981
Pre-tax, pre-provision operating return on average assets1			1.42	%			1.42	%			1.42	%			2.05	%
Pre-tax, pre-provision operating return on average loans1			1.83				1.84				1.83				2.63
Operating return on average assets1			0.91				0.95				0.93				1.28
Return on average tangible common equity1			10.54				9.52				10.03				14.55
Operating return on average tangible common equity1			10.94				11.34				11.14				15.66
Operating efficiency ratio			58.41				58.73				58.57				47.21

¹ Annualized ratio.
² Refer to the section titled “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of these non-generally accepted accounting principles (“GAAP”) financial measures to their most directly comparable GAAP measures.

Other Second Quarter Financial, Credit and Company Highlights

• Pre-tax, pre-provision operating return on average assets was 1.42% as of June 30, 2024;
• Nonperforming assets (“NPAs”) decreased 17 bps from the prior quarter to 0.65% of total assets;
• Net interest margin (“NIM”) increased to 3.29%, a 5 bps improvement from the prior quarter;
• Common equity tier 1 capital grew 12 bps from the prior quarter to 10.49%;
• Total deposits grew $71.0 million, or 2.67% annualized, compared to March 31, 2024;
• Total loans grew $70.3 million, or 2.88% annualized, compared to March 31, 2024;
• Loan to deposit ratio, excluding mortgage warehouse loans, decreased to 85.9% as of June 30, 2024 compared to 86.9% as of March 31, 2024 and 100.4% as of June 30, 2023;
• Tangible book value per common share increased to $20.62;
• Allowance for credit losses (“ACL”) to total loans held for investment (“LHI”) increased to 1.16%, compared to 1.15% as of March 31, 2024 and 1.05% as of June 30, 2023;
• Named one of the “Best Companies to Work For”, “Best in Banking” and “Best Companies in the South” by the 2024 - 2025 U.S. News & World Report which evaluates companies based on quality of pay, work/life balance, and opportunities for professional development and advancement; and
• Declared quarterly cash dividend of $0.20 per share of outstanding common stock payable on August 23, 2024.
  

Results of Operations for the Three Months Ended June 30, 2024

Net Interest Income

For the three months ended June 30, 2024, net interest income before provision for credit losses was $96.2 million and net interest margin was 3.29% compared to $92.8 million and 3.24%, respectively, for the three months ended March 31, 2024. The $3.4 million increase, or 3.7%, in net interest income before provision for credit losses was primarily due to a $5.0 million increase in interest income on loans driven by an increase in loan yields, a $1.7 million increase in interest income on debt securities and other investments and a $1.2 million decrease in interest expense on transaction and savings deposits. The increase in net interest income was partially offset by a $4.3 million increase in interest expense on certificates and other time deposits, during the three months ended June 30, 2024. NIM increased 5 bps compared to the three months ended March 31, 2024, primarily due to an increase in loan yields during the three months ended June 30, 2024, partially offset by an increase in rates on certificates and other time deposits.

Compared to the three months ended June 30, 2023, net interest income before provision for credit losses for the three months ended June 30, 2024 decreased by $4.6 million, or 4.6%. The decrease was primarily due to a $16.7 million increase in interest expense on certificates and other time deposits and a $12.7 million increase in interest expense on transaction and savings deposits. The decrease was partially offset by a $16.1 million decrease in interest expense on advances from the Federal Home Loan Bank (“FHLB”), a $5.2 million increase in interest income on debt securities and a $3.3 million increase in interest income on loans driven by an increase in loan yields and average balances. NIM decreased 22 bps from 3.51% for the three months ended June 30, 2023. The decrease was primarily due to the increase in funding costs on deposits during the three months ended June 30, 2024, partially offset by an increase in loan yields and debt securities.

Noninterest Income

Noninterest income for the three months ended June 30, 2024 was $10.6 million, an increase of $3.9 million, or 58.8%, compared to the three months ended March 31, 2024. The increase was primarily due to a $6.3 million loss on sales of investment securities in the prior quarter as a result of a strategic restructuring, in which we sold $120.1 million of lower-yielding available for sale (“AFS”) securities, at amortized cost, with a 3.11% average yield, and reinvested the proceeds in higher yielding AFS securities with a 6.24% average yield, which occurred in March of 2024, with no corresponding transaction in the three months ended June 30, 2024. The increase was partially offset by a $1.3 million decrease in government guaranteed loan income, primarily driven by a decrease in the Company’s SBA and USDA sales, a $746 thousand decrease in other income and a $303 thousand decrease in loan fees.

Compared to the three months ended June 30, 2023, noninterest income for the three months ended June 30, 2024 decreased by $3.1 million, or 22.7%. The decrease was primarily due to a $2.8 million decrease in government guaranteed loan income, primarily driven by a decrease in the Company’s USDA sales, a $657 thousand decrease in customer swap income and a $485 thousand decrease in equity method investment income. Additionally, the decrease was related to a $298 thousand decrease in service charges and fees on deposit accounts. The decrease was partially offset by a $687 thousand increase in loan fees and a $463 thousand increase in other income.

Noninterest Expense

Noninterest expense was $63.1 million for the three months ended June 30, 2024, compared to $62.1 million for the three months ended March 31, 2024, an increase of $1.0 million, or 1.7%. The increase was primarily due to a $1.4 million increase in other noninterest expense, a $430 thousand increase in marketing expenses and a $241 thousand increase in data processing and software expense. The increase is partially offset by a $575 thousand decrease in salaries and employee benefits and a decrease of $436 thousand in professional and regulatory fees driven by FDIC insurance assessment expense, which decreased $203 thousand compared to the three months ended March 31, 2024.

Compared to the three months ended June 30, 2023, noninterest expense for the three months ended June 30, 2024 increased by $5.9 million, or 10.4%. The increase was primarily due to a $4.1 million increase in salaries and employee benefits and a $3.6 million increase in other noninterest expense. The increase was partially offset by a $1.3 million decrease in professional and regulatory fees driven by FDIC insurance assessment expense, which decreased $937 thousand compared to the three months ended June 30, 2023 and a $651 thousand decrease in marketing expense.

Financial Condition

Total LHI was $9.21 billion at June 30, 2024, a decrease of $40.5 million, or 1.7% annualized, compared to March 31, 2024.

Total deposits were $10.72 billion at June 30, 2024, an increase of $71.0 million, or 2.7% annualized, compared to March 31, 2024. The increase was primarily the result of an increase of $257.8 million in certificates and other time deposits and an increase of $67.5 million in noninterest-bearing deposits. The increase was partially offset by a decrease of $13.6 million in correspondent money market account balances and a decrease of $240.7 million in interest-bearing transaction and savings deposits.

Credit Quality

NPAs totaled $83.0 million, or 0.65% of total assets, of which $58.8 million represents LHI and $24.3 million represents other real estate owned (“OREO”) at June 30, 2024, compared to $103.8 million, or 0.82% of total assets, at March 31, 2024. The Company had net charge-offs of $6.9 million for the three months ended June 30, 2024. Annualized net charge-offs to average loans outstanding were 28 bps, of which 16 bps were acquired credits, for the three months ended June 30, 2024, compared to 22 bps and 48 bps for the three months ended March 31, 2024 and June 30, 2023, respectively.

ACL as a percentage of LHI was 1.16%, 1.15% and 1.05% at June 30, 2024, March 31, 2024 and June 30, 2023, respectively. The Company recorded a provision for credit losses of $8.3 million, $7.5 million and $15.0 million for the three months ended June 30, 2024, March 31, 2024 and June 30, 2023, respectively. The recorded provision for credit losses for the three months ended June 30, 2024, compared to the three months ended March 31, 2024, was primarily attributable to an increase in general reserves as a result of changes in economic factors. As the balance for unfunded commitments for the three months ended June 30, 2024 remained stable compared to the three months ended March 31, 2024, the Company recorded no benefit or provision for unfunded commitments for the three months ended June 30, 2024. The Company recorded a $1.5 million and a $1.1 million benefit for unfunded commitments for the three months ended March 31, 2024, and June 30, 2023, respectively.

Income Tax

Income tax expense for the three months ended June 30, 2024 totaled $8.2 million, an increase of $1.0 million, or 13.6%, compared to the three months ended March 31, 2024. The Company’s effective tax rate was approximately 23.2% for the three months ended June 30, 2024. The increase was primarily due to an one-time tax expense of $527 thousand, which is excluded from operating earnings, and a net discrete tax expense of $410 thousand associated with the recognition of an excess tax expense realized on share-based payment awards.

Dividend Information

After the close of the market on Tuesday, July 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 or after August 23, 2024 to stockholders of record as of the close of business on August 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 of the Company; 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 and webcast to review the results on Wednesday, July 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/kp9m28ir and will receive a unique PIN, which can be used when dialing in for the call.

Participants may also register via teleconference: https://register.vevent.com/register/BIc18141b3387848439444d3060b38d779. 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 thereafter. 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 Holdings, Inc.’s (“Veritex”) quarterly cash dividend; the impact of certain changes in Veritex’s accounting policies, standards and interpretations; turmoil in the banking industry, responsive measures to mitigate and manage such turmoil 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, 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 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 Six Months Ended
		Jun 30, 2024				Mar 31, 2024				Dec 31, 2023				Sep 30, 2023				Jun 30, 2023				Jun 30, 2024				Jun 30, 2023
		(Dollars and shares in thousands, except per share data)
Per Share Data (Common Stock):
Basic EPS		$	0.50			$	0.44			$	0.06			$	0.60			$	0.62			$	0.94			$	1.33
Diluted EPS			0.50				0.44				0.06				0.60				0.62				0.94				1.32
Book value per common share			28.49				28.23				28.18				27.46				27.48				28.49				27.48
Tangible book value per common share1			20.62				20.33				20.21				19.44				19.41				20.62				19.41
Dividends paid per common share outstanding2			0.20				0.20				0.20				0.20				0.20				0.40				0.40
Common Stock Data:
Shares outstanding at period end			54,350				54,496				54,338				54,305				54,261				54,350				54,261
Weighted average basic shares outstanding for the period			54,457				54,444				54,327				54,300				54,247				54,451				54,199
Weighted average diluted shares outstanding for the period			54,823				54,842				54,691				54,597				54,486				54,832				54,546
Summary of Credit Ratios:
ACL to total LHI			1.16	%			1.15	%			1.14	%			1.14	%			1.05	%			1.16	%			1.05	%
NPAs to total assets			0.65				0.82				0.77				0.65				0.55				0.65				0.55
NPAs to total loans and OREO			0.85				1.06				0.99				0.83				0.70				0.85				0.70
Net charge-offs to average loans outstanding4			0.28				0.22				0.40				0.08				0.48				0.25				0.26
Summary Performance Ratios:
Return on average assets4			0.87	%			0.79	%			0.11	%			1.06	%			1.10	%			0.83	%			1.18	%
Return on average equity4			7.10				6.33				0.92				8.58				8.96				6.72				9.74
Return on average tangible common equity1, 4			10.54				9.52				2.00				12.80				13.35				10.03				14.55
Efficiency ratio			59.11				62.45				77.49				54.49				49.94				60.72				49.17
Net interest margin			3.29				3.24				3.31				3.46				3.51				3.27				3.60
Selected Performance Metrics - Operating:
Diluted operating EPS1		$	0.52			$	0.53			$	0.58			$	0.60			$	0.64			$	1.05			$	1.43
Pre-tax, pre-provision operating return on average assets1, 4			1.42	%			1.42	%			1.54	%			1.61	%			1.90	%			1.42	%			2.05	%
Pre-tax, pre-provision operating return on average loans1, 4			1.83				1.84				1.97				2.05				2.43				1.83				2.63
Operating return on average assets1,4			0.91				0.95				1.02				1.06				1.13				0.93				1.28
Operating return on average tangible common equity1,4			10.94				11.34				12.37				12.80				13.70				11.14				15.66
Operating efficiency ratio1			58.41				58.73				55.50				54.49				48.90				58.57				47.21
Veritex Holdings, Inc. Capital Ratios:
Average stockholders' equity to average total assets			12.26	%			12.43	%			12.27	%			12.30	%			12.23	%			12.34	%			12.16	%
Tangible common equity to tangible assets1			9.14				9.02				9.18				8.86				8.76				9.14				8.76
Tier 1 capital to average assets (leverage)			10.06				10.12				10.03				10.10				9.80				10.06				9.80
Common equity tier 1 capital			10.49				10.37				10.29				10.11				9.76				10.49				9.76
Tier 1 capital to risk-weighted assets			10.75				10.63				10.56				10.37				10.01				10.75				10.01
Total capital to risk-weighted assets			13.45				13.33				13.18				12.95				12.51				13.45				12.51
Risk weighted assets		$	11,450,997			$	11,407,446			$	11,387,825			$	11,617,229			$	11,742,321			$	11,450,997			$	11,742,321

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.
²Dividend amount represents dividend paid per common share subsequent to each respective quarter end.
³Nonaccrual 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)

		Jun 30, 2024				Mar 31, 2024				Dec 31, 2023				Sep 30, 2023				Jun 30, 2023
		(unaudited)				(unaudited)								(unaudited)				(unaudited)
ASSETS
Cash and cash equivalents		$	651,837			$	740,769			$	629,063			$	713,408			$	663,921
Debt securities, net			1,349,354				1,344,930				1,257,042				1,060,629				1,144,020
Other investments			75,885				76,788				76,238				80,869				138,894
Loans held for sale (“LHFS”)			57,046				64,762				79,072				41,313				29,876
LHI, mortgage warehouse (“MW”)			568,047				449,531				377,796				390,767				436,255
LHI, excluding MW			9,209,094				9,249,551				9,206,544				9,237,447				9,257,183
Total loans			9,834,187				9,763,844				9,663,412				9,669,527				9,723,314
ACL			(113,431	)			(112,032	)			(109,816	)			(109,831	)			(102,150	)
Bank-owned life insurance			84,233				85,359				84,833				84,867				84,375
Bank premises, furniture and equipment, net			105,222				105,299				105,727				106,118				105,986
Other real estate owned (“OREO”)			24,256				18,445				—				—				—
Intangible assets, net of accumulated amortization			35,817				38,679				41,753				44,294				48,293
Goodwill			404,452				404,452				404,452				404,452				404,452
Other assets			232,518				241,863				241,633				291,998				259,263
Total assets		$	12,684,330			$	12,708,396			$	12,394,337			$	12,346,331			$	12,470,368
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Noninterest-bearing deposits		$	2,416,727			$	2,349,211			$	2,218,036			$	2,363,340			$	2,234,109
Interest-bearing transaction and savings deposits			3,979,454				4,220,114				4,348,385				3,936,070				3,590,253
Certificates and other time deposits			3,744,596				3,486,805				3,191,737				3,403,427				2,928,949
Correspondent money market deposits			584,067				597,690				580,037				493,681				480,598
Total deposits			10,724,844				10,653,820				10,338,195				10,196,518				9,233,909
Accounts payable and other liabilities			180,585				186,027				195,036				229,116				190,900
Advances from FHLB			—				100,000				100,000				200,000				1,325,000
Subordinated debentures and subordinated notes			230,285				230,034				229,783				229,531				229,279
Total liabilities			11,135,714				11,169,881				10,863,014				10,855,165				10,979,088
Commitments and contingencies
Stockholders’ equity:
Common stock			612				611				610				609				609
Additional paid-in capital			1,321,995				1,319,144				1,317,516				1,314,459				1,311,687
Retained earnings			473,801				457,499				444,242				451,513				429,753
Accumulated other comprehensive loss			(76,713	)			(71,157	)			(63,463	)			(107,833	)			(83,187	)
Treasury stock			(171,079	)			(167,582	)			(167,582	)			(167,582	)			(167,582	)
Total stockholders’ equity			1,548,616				1,538,515				1,531,323				1,491,166				1,491,280
Total liabilities and stockholders’ equity		$	12,684,330			$	12,708,396			$	12,394,337			$	12,346,331			$	12,470,368

VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(In thousands, except per share data)

		For the Quarter Ended																			For the Six Months Ended
		Jun 30, 2024			Mar 31, 2024				Dec 31, 2023				Sep 30, 2023				Jun 30, 2023				Jun 30, 2024				Jun 30, 2023
		(unaudited)			(unaudited)				(unaudited)				(unaudited)				(unaudited)				(unaudited)				(unaudited)
Interest income:
Loans, including fees		$	166,979		$	161,942			$	165,443			$	167,368			$	163,727			$	328,921			$	315,434
Debt securities			15,408			13,695				12,282				10,928				10,166				29,103				21,154
Deposits in financial institutions and Fed Funds sold			7,722			8,050				8,162				7,128				7,507				15,772				13,041
Equity securities and other investments			1,138			900				1,717				1,691				1,118				2,038				2,526
Total interest income			191,247			184,587				187,604				187,115				182,518				375,834				352,155
Interest expense:
Transaction and savings deposits			45,619			46,784				46,225				39,936				32,957				92,403				62,814
Certificates and other time deposits			44,811			40,492				40,165				36,177				28,100				85,303				49,067
Advances from FHLB			1,468			1,391				2,581				8,523				17,562				2,859				29,920
Subordinated debentures and subordinated notes			3,113			3,114				3,100				3,118				3,068				6,227				6,134
Total interest expense			95,011			91,781				92,071				87,754				81,687				186,792				147,935
Net interest income			96,236			92,806				95,533				99,361				100,831				189,042				204,220
Provision for credit losses1			8,250			7,500				9,500				8,627				15,000				15,750				24,385
(Benefit) provision for unfunded commitments			—			(1,541	)			(1,500	)			(909	)			(1,129	)			(1,541	)			368
Net interest income after provisions			87,986			86,847				87,533				91,643				86,960				174,833				179,467
Noninterest income:
Service charges and fees on deposit accounts			4,974			4,896				4,800				5,159				5,272				9,870				10,289
Loan fees			2,207			2,510				1,200				1,564				1,520				4,717				3,584
Loss on sales of debt securities			—			(6,304	)			—				—				—				(6,304	)			(5,321	)
Government guaranteed loan income, net			1,320			2,614				4,378				1,772				4,144				3,934				13,832
Equity method investment (loss) income			—			—				(29,417	)			(136	)			485				—				(1,036	)
Customer swap income			326			449				258				180				983				775				1,196
Other income			1,751			2,497				989				1,135				1,288				4,248				4,679
Total noninterest income (loss)			10,578			6,662				(17,792	)			9,674				13,692				17,240				27,223
Noninterest expense:
Salaries and employee benefits			32,790			33,365				30,606				30,949				28,650				66,155				60,515
Occupancy and equipment			4,585			4,677				4,670				4,881				4,827				9,262				9,800
Professional and regulatory fees			5,617			6,053				7,626				7,283				6,868				11,670				11,257
Data processing and software expense			5,097			4,856				4,569				4,541				4,709				9,953				9,429
Marketing			1,976			1,546				1,945				2,353				2,627				3,522				4,406
Amortization of intangibles			2,438			2,438				2,438				2,437				2,468				4,876				4,963
Telephone and communications			365			261				356				362				355				626				833
Other			10,273			8,920				8,028				6,608				6,693				19,193				12,609
Total noninterest expense			63,141			62,116				60,238				59,414				57,197				125,257				113,812
Income before income tax expense			35,423			31,393				9,503				41,903				43,455				66,816				92,878
Income tax expense			8,221			7,237				6,004				9,282				9,725				15,458				20,737
Net income		$	27,202		$	24,156			$	3,499			$	32,621			$	33,730			$	51,358			$	72,141
Basic EPS		$	0.50		$	0.44			$	0.06			$	0.60			$	0.62			$	0.94			$	1.33
Diluted EPS		$	0.50		$	0.44			$	0.06			$	0.60			$	0.62			$	0.94			$	1.32
Weighted average basic shares outstanding			54,457			54,444				54,327				54,300				54,247				54,451				54,199
Weighted average diluted shares outstanding			54,823			54,842				54,691				54,597				54,486				54,832				54,546

¹ Includes provision for credit losses on AFS securities of $885 thousand for the six months ended June 30, 2023.

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

		For the Quarter Ended
		June 30, 2024										March 31, 2024										June 30, 2023
		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		$	9,344,482			$	160,323		6.90	%		$	9,283,815			$	157,585		6.83	%		$	9,285,550			$	158,685		6.85	%
LHI, MW			420,946				6,656		6.36				279,557				4,357		6.27				371,763				5,042		5.44
Debt securities			1,352,293				15,408		4.58				1,294,994				13,695		4.25				1,133,845				10,166		3.60
Interest-bearing deposits in other banks			560,586				7,722		5.54				584,593				8,050		5.54				583,818				7,507		5.16
Equity securities and other investments			78,964				1,138		5.80				76,269				900		4.75				137,868				1,118		3.25
Total interest-earning assets			11,757,271				191,247		6.54				11,519,228				184,587		6.44				11,512,844				182,518		6.36
ACL			(115,978	)									(112,229	)									(102,559	)
Noninterest-earning assets			937,413										929,043										939,938
Total assets		$	12,578,706									$	12,336,042									$	12,350,223
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Interest-bearing demand and savings deposits		$	4,570,329			$	45,619		4.01	%		$	4,639,445			$	46,784		4.06	%		$	3,919,745			$	32,957		3.37	%
Certificates and other time deposits			3,591,035				44,811		5.02				3,283,735				40,492		4.96				2,873,548				28,100		3.92
Advances from FHLB and Other			106,648				1,468		5.54				100,989				1,391		5.54				1,472,912				17,562		4.78
Subordinated debentures and subordinated notes			230,141				3,113		5.44				229,881				3,114		5.45				229,151				3,068		5.37
Total interest-bearing liabilities			8,498,153				95,011		4.50				8,254,050				91,781		4.47				8,495,356				81,687		3.86
Noninterest-bearing liabilities:
Noninterest-bearing deposits			2,346,908										2,355,315										2,175,002
Other liabilities			192,036										192,809										169,240
Total liabilities			11,037,097										10,802,174										10,839,598
Stockholders’ equity			1,541,609										1,533,868										1,510,625
Total liabilities and stockholders’ equity		$	12,578,706									$	12,336,042									$	12,350,223
Net interest rate spread2									2.04	%									1.97	%									2.50	%
Net interest income and margin3						$	96,236		3.29	%						$	92,806		3.24	%						$	100,831		3.51	%

¹ Includes average outstanding balances of LHFS of $58.5 million, $53.9 million and $23.4 million for the quarters ended June 30, 2024, March 31, 2024, and June 30, 2023, 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
(In thousands, except percentages)

		For the Six Months Ended
		June 30, 2024										June 30, 2023
		Average Outstanding Balance				Interest Earned/ Interest Paid			Average Yield/ Rate			Average Outstanding Balance				Interest Earned/ Interest Paid			Average Yield/ Rate
Assets
Interest-earning assets:
Loans1		$	9,314,148			$	317,908		6.86	%		$	9,213,742			$	305,486		6.69	%
LHI, MW			350,252				11,013		6.32				366,000				9,948		5.48
Debt securities			1,323,644				29,103		4.42				1,192,823				21,154		3.58
Interest-bearing deposits in other banks			572,589				15,772		5.54				531,373				13,041		4.95
Equity securities and other investments			77,616				2,038		5.28				131,462				2,526		3.87
Total interest-earning assets			11,638,249				375,834		6.49				11,435,400				352,155		6.21
ACL			(114,104	)									(97,639	)
Noninterest-earning assets			933,229										944,883
Total assets		$	12,457,374									$	12,282,644
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Interest-bearing demand and savings deposits		$	4,604,887			$	92,403		4.04	%		$	4,033,975			$	62,814		3.14	%
Certificates and other time deposits			3,437,385				85,303		4.99				2,731,925				49,067		3.62
Advances from FHLB and Other			103,819				2,859		5.54				1,298,765				29,920		4.65
Subordinated debentures and subordinated notes			230,011				6,227		5.44				230,195				6,134		5.37
Total interest-bearing liabilities			8,376,102				186,792		4.48				8,294,860				147,935		3.60
Noninterest-bearing liabilities:
Noninterest-bearing deposits			2,351,112										2,322,790
Other liabilities			192,422										171,299
Total liabilities			10,919,636										10,788,949
Stockholders’ equity			1,537,738										1,493,695
Total liabilities and stockholders’ equity		$	12,457,374									$	12,282,644
Net interest rate spread2									2.01	%									2.61	%
Net interest income and margin3						$	189,042		3.27	%						$	204,220		3.60	%

¹ Includes average outstanding balances of LHFS of $56.2 million and $21.5 million for the six months ended June 30, 2024 and 2023, 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
		Jun 30, 2024			Mar 31, 2024			Dec 31, 2023			Sep 30, 2023			Jun 30, 2023
Average yield on interest-earning assets:
Loans1		6.90	%		6.83	%		6.88	%		6.92	%		6.85	%
LHI, MW		6.36			6.27			5.82			6.38			5.44
Total Loans		6.88			6.81			6.85			6.90			6.80
Debt securities		4.58			4.25			4.10			3.87			3.60
Interest-bearing deposits in other banks		5.54			5.54			5.51			5.43			5.16
Equity securities and other investments		5.80			4.75			8.28			4.94			3.25
Total interest-earning assets		6.54	%		6.44	%		6.51	%		6.51	%		6.36	%
Average rate on interest-bearing liabilities:
Interest-bearing demand and savings deposits		4.01	%		4.06	%		4.03	%		3.80	%		3.37	%
Certificates and other time deposits		5.02			4.96			4.85			4.55			3.92
Advances from FHLB		5.54			5.54			5.60			4.66			4.78
Subordinated debentures and subordinated notes		5.44			5.45			5.36			5.39			5.37
Total interest-bearing liabilities		4.50	%		4.47	%		4.43	%		4.21	%		3.86	%
Net interest rate spread2		2.04	%		1.97	%		2.08	%		2.30	%		2.50	%
Net interest margin3		3.29	%		3.24	%		3.31	%		3.46	%		3.51	%

  
¹Includes average outstanding balances of LHFS of $58.5 million, $53.9 million, $31.2 million, $28.3 million and $23.4 million for the three months ended June 30, 2024, March 31, 2024, December 31, 2023, September 30, 2023, and June 30, 2023, 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															For the Six Months Ended
		Jun 30, 2024			Mar 31, 2024			Dec 31, 2023			Sep 30, 2023			Jun 30, 2023			Jun 30, 2024			Jun 30, 2023
Average cost of interest-bearing deposits		4.46	%		4.43	%		4.38	%		4.12	%		3.61	%		4.44	%		3.33	%
Average costs of total deposits, including noninterest-bearing		3.46			3.42			3.37			3.15			2.73			3.44			2.48

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

LHI and Deposit Portfolio Composition

	Jun 30, 2024							Mar 31, 2024							Dec 31, 2023							Sep 30, 2023							Jun 30, 2023
	(In thousands, except percentages)
LHI1
Commercial and Industrial (“C&I”)	$	2,798,260			30.4	%		$	2,785,987			30.1	%		$	2,752,063			29.9	%		$	2,841,024			30.7	%		$	2,850,084			30.7	%
Real Estate:
Owner occupied commercial (“OOCRE”)		806,285			8.7				788,376			8.5				794,088			8.6				697,299			7.5				671,602			7.2
Non-owner occupied commercial (“NOOCRE”)		2,369,848			25.7				2,352,993			25.5				2,350,725			25.5				2,398,060			26.1				2,509,731			27.1
Construction and land		1,536,580			16.7				1,568,257			16.9				1,734,254			18.8				1,705,053			18.4				1,659,700			17.9
Farmland		30,512			0.3				30,979			0.3				31,114			0.3				59,684			0.6				51,663			0.6
1-4 family residential		917,402			10.0				969,401			10.5				937,119			10.2				933,225			10.1				923,442			10.0
Multi-family residential		748,740			8.1				751,607			8.1				605,817			6.6				603,395			6.5				592,473			6.4
Consumer		9,245			0.1				8,882			0.1				10,149			0.1				9,845			0.1				11,189			0.1
Total LHI	$	9,216,872			100	%		$	9,256,482			100	%		$	9,215,329			100	%		$	9,247,585			100	%		$	9,269,884			100	%
MW		568,047							449,531							377,796							390,767							436,255
Total LHI1	$	9,784,919						$	9,706,013						$	9,593,125						$	9,638,352						$	9,706,139
Total LHFS		57,046							64,762							79,072							41,313							29,876
Total Loans	$	9,841,965						$	9,770,775						$	9,672,197						$	9,679,665						$	9,736,015
Deposits
Noninterest-bearing	$	2,416,727			22.5	%		$	2,349,211			22.1	%		$	2,218,036			21.5	%		$	2,363,340			23.2	%		$	2,234,109			24.2	%
Interest-bearing transaction		523,272			4.9				724,171			6.8				927,193			8.9				739,098			7.2				676,653			7.3
Money market		3,268,286			30.5				3,326,742			31.2				3,284,324			31.8				3,096,498			30.4				2,816,769			30.5
Savings		187,896			1.8				169,201			1.6				136,868			1.3				100,474			1.0				96,831			1.0
Certificates and other time deposits		3,744,596			34.9				3,486,805			32.7				3,191,737			30.9				3,403,427			33.4				2,928,949			31.7
Correspondent money market accounts		584,067			5.4				597,690			5.6				580,037			5.6				493,681			4.8				480,598			5.3
Total deposits	$	10,724,844			100	%		$	10,653,820			100	%		$	10,338,195			100	%		$	10,196,518			100	%		$	9,233,909			100	%
Total Loans to Deposits Ratio		91.8	%						91.7	%						93.6	%						94.9	%						105.4	%
Total Loans to Deposit Ratio, excluding MW loans and LHFS		85.9	%						86.9	%						89.1	%						90.7	%						100.4	%

¹ Total LHI does not include deferred fees of $7.8 million, $6.9 million, $8.8 million, $10.1 million and $12.7 million at June 30, 2024, March 31, 2024, December 31, 2023, September 30, 2023 and June 30, 2023, respectively.

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

	For the Quarter Ended																				For the Six Months Ended
	Jun 30, 2024				Mar 31, 2024				Dec 31, 2023				Sep 30, 2023				Jun 30, 2023				Jun 30, 2024				Jun 30, 2023
	(In thousands, except percentages)
NPAs:
Nonaccrual loans	$	58,537			$	75,721			$	79,133			$	65,676			$	54,055			$	58,537			$	54,055
Nonaccrual PCD loans1		73				9,419				13,715				13,718				13,721				73				13,721
Accruing loans 90 or more days past due2		143				220				2,975				474				528				143				528
Total nonperforming loans held for investment (“NPLs”)		58,753				85,360				95,823				79,868				68,304				58,753				68,304
Other real estate owned		24,256				18,445				—				—				—				24,256				—
Total NPAs	$	83,009			$	103,805			$	95,823			$	79,868			$	68,304			$	83,009			$	68,304
Charge-offs:
1-4 family residential	$	(31	)		$	—			$	(21	)		$	—			$	—			$	(31	)		$	—
Multifamily		(198	)			—				(192	)			—				—				(198	)			—
OOCRE		—				(120	)			(364	)			(375	)			—				(120	)			(116	)
NOOCRE		(1,969	)			(4,293	)			(5,434	)			—				(8,215	)			(6,262	)			(8,215	)
C&I		(5,601	)			(946	)			(3,893	)			(1,929	)			(3,540	)			(6,547	)			(4,591	)
Consumer		(30	)			(71	)			(33	)			(49	)			(92	)			(101	)			(154	)
Total charge-offs	$	(7,829	)		$	(5,430	)		$	(9,937	)		$	(2,353	)		$	(11,847	)		$	(13,259	)		$	(13,076	)
Recoveries:
1-4 family residential	$	—			$	1			$	1			$	—			$	1			$	1			$	2
OOCRE		120				—				—				—				—				120				—
NOOCRE		—				—				—				200				150				—				150
C&I		361				96				387				308				106				457				470
Consumer		497				49				34				14				46				546				52
Total recoveries	$	978			$	146			$	422			$	522			$	303			$	1,124			$	674
Net charge-offs	$	(6,851	)		$	(5,284	)		$	(9,515	)		$	(1,831	)		$	(11,544	)		$	(12,135	)		$	(12,402	)
Provision for credit losses	$	8,250			$	7,500			$	9,500			$	8,627			$	15,000			$	15,750			$	24,385
ACL	$	113,431			$	112,032			$	109,816			$	109,831			$	102,150			$	113,431			$	102,150
Asset Quality Ratios:
NPAs to total assets		0.65	%			0.82	%			0.77	%			0.65	%			0.55	%			0.65	%			0.55	%
NPAs, excluding nonaccrual PCD loans, to total assets		0.65				0.74				0.66				0.54				0.44				0.65				0.44
NPAs to total loans and OREO		0.85				1.06				0.99				0.83				0.70				0.85				0.70
NPLs to total LHI		0.60				0.88				1.00				0.83				0.70				0.60				0.70
NPLs, excluding nonaccrual PCD loans, to total LHI		0.60				0.78				0.86				0.69				0.56				0.60				0.56
ACL to total LHI		1.16				1.15				1.14				1.14				1.05				1.16				1.05
ACL to total loans, excluding MW and LHFS		1.23				1.21				1.19				1.19				1.10				1.23				1.10
Net charge-offs to average loans outstanding3		0.28				0.22				0.40				0.08				0.48				0.25				0.26

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 purchase credit deteriorated 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 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
		Jun 30, 2024				Mar 31, 2024				Dec 31, 2023				Sep 30, 2023				Jun 30, 2023
		(Dollars in thousands, except per share data)
Tangible Common Equity
Total stockholders' equity		$	1,548,616			$	1,538,515			$	1,531,323			$	1,491,166			$	1,491,280
Adjustments:
Goodwill			(404,452	)			(404,452	)			(404,452	)			(404,452	)			(404,452	)
Core deposit intangibles			(23,619	)			(26,057	)			(28,495	)			(30,933	)			(33,371	)
Tangible common equity		$	1,120,545			$	1,108,006			$	1,098,376			$	1,055,781			$	1,053,457
Common shares outstanding			54,350				54,496				54,338				54,305				54,261
Book value per common share		$	28.49			$	28.23			$	28.18			$	27.46			$	27.48
Tangible book value per common share		$	20.62			$	20.33			$	20.21			$	19.44			$	19.41

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
		Jun 30, 2024				Mar 31, 2024				Dec 31, 2023				Sep 30, 2023				Jun 30, 2023
		(Dollars in thousands)
Tangible Common Equity
Total stockholders' equity		$	1,548,616			$	1,538,515			$	1,531,323			$	1,491,166			$	1,491,280
Adjustments:
Goodwill			(404,452	)			(404,452	)			(404,452	)			(404,452	)			(404,452	)
Core deposit intangibles			(23,619	)			(26,057	)			(28,495	)			(30,933	)			(33,371	)
Tangible common equity		$	1,120,545			$	1,108,006			$	1,098,376			$	1,055,781			$	1,053,457
Tangible Assets
Total assets		$	12,684,330			$	12,708,396			$	12,394,337			$	12,346,331			$	12,470,368
Adjustments:
Goodwill			(404,452	)			(404,452	)			(404,452	)			(404,452	)			(404,452	)
Core deposit intangibles			(23,619	)			(26,057	)			(28,495	)			(30,933	)			(33,371	)
Tangible Assets		$	12,256,259			$	12,277,887			$	11,961,390			$	11,910,946			$	12,032,545
Tangible Common Equity to Tangible Assets			9.14	%			9.02	%			9.18	%			8.86	%			8.76	%

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 Six Months Ended
		Jun 30, 2024				Mar 31, 2024				Dec 31, 2023				Sep 30, 2023				Jun 30, 2023				Jun 30, 2024				Jun 30, 2023
		(Dollars in thousands)
Net income available for common stockholders adjusted for amortization of core deposit intangibles
Net income		$	27,202			$	24,156			$	3,499			$	32,621			$	33,730			$	51,358			$	72,141
Adjustments:
Plus: Amortization of core deposit intangibles			2,438				2,438				2,438				2,438				2,438				4,876				4,876
Less: Tax benefit at the statutory rate			512				512				512				512				512				1,024				1,024
Net income available for common stockholders adjusted for amortization of core deposit intangibles		$	29,128			$	26,082			$	5,425			$	34,547			$	35,656			$	55,210			$	75,993
Average Tangible Common Equity
Total average stockholders' equity		$	1,541,609			$	1,533,868			$	1,510,286			$	1,508,170			$	1,510,625			$	1,537,738			$	1,493,695
Adjustments:
Average goodwill			(404,452	)			(404,452	)			(404,452	)			(404,452	)			(404,452	)			(404,452	)			(404,452	)
Average core deposit intangibles			(25,218	)			(27,656	)			(30,093	)			(32,540	)			(34,969	)			(26,437	)			(36,159	)
Average tangible common equity		$	1,111,939			$	1,101,760			$	1,075,741			$	1,071,178			$	1,071,204			$	1,106,849			$	1,053,084
Return on Average Tangible Common Equity (Annualized)			10.54	%			9.52	%			2.00	%			12.80	%			13.35	%			10.03	%			14.55	%

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, 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 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 provision (benefit) 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 Six Months Ended
		Jun 30, 2024			Mar 31, 2024			Dec 31, 2023			Sep 30, 2023			Jun 30, 2023			June 30, 2024			Jun 30, 2023
		(Dollars in thousands, except per share data)
Operating Earnings
Net income		$	27,202		$	24,156		$	3,499		$	32,621		$	33,730		$	51,358		$	72,141
Plus: Severance payments1			613			—			—			—			1,194			613			2,029
Plus: Loss on sale of AFS securities, net			—			6,304			—			—			—			6,304			5,321
Plus: Equity method investment write-down			—			—			29,417			—			—			—			—
Plus: FDIC special assessment			134			—			768			—			—			134			—
Operating pre-tax income			27,949			30,460			33,684			32,621			34,924			58,409			79,491
Less: Tax impact of adjustments			166			1,323			2,059			—			251			1,489			1,544
Plus: Nonrecurring tax adjustments			527			—			—			—			—			527			—
Operating earnings		$	28,310		$	29,137		$	31,625		$	32,621		$	34,673		$	57,447		$	77,947
Weighted average diluted shares outstanding			54,823			54,842			54,691			54,597			54,486			54,832			54,546
Diluted EPS		$	0.50		$	0.44		$	0.06		$	0.60		$	0.62		$	0.94		$	1.32
Diluted operating EPS		$	0.52		$	0.53		$	0.58		$	0.60		$	0.64		$	1.05		$	1.43

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

	For the Quarter Ended																				For the Six Months Ended
	Jun 30, 2024				Mar 31, 2024				Dec 31, 2023				Sep 30, 2023				Jun 30, 2023				Jun 30, 2024				Jun 30, 2023
	(Dollars in thousands)
Pre-Tax, Pre-Provision Operating Earnings
Net income	$	27,202			$	24,156			$	3,499			$	32,621			$	33,730			$	51,358			$	72,141
Plus: Provision for income taxes		8,221				7,237				6,004				9,282				9,725				15,458				20,737
Plus: Provision for credit losses and unfunded commitments		8,250				5,959				8,000				7,718				13,871				14,209				24,753
Plus: Severance payments		613				—				—				—				1,194				613				2,029
Plus: Loss on sale of AFS securities, net		—				6,304				—				—				—				6,304				5,321
Plus: Equity method investment write-down		—				—				29,417				—				—				—				—
Plus: FDIC special assessment		134				—				768				—				—				134				—
Pre-tax, pre-provision operating earnings	$	44,420			$	43,656			$	47,688			$	49,621			$	58,520			$	88,076			$	124,981
Average total assets	$	12,578,706			$	12,336,042			$	12,306,634			$	12,259,062			$	12,350,223			$	12,457,374			$	12,282,644
Pre-tax, pre-provision operating return on average assets1		1.42	%			1.42	%			1.54	%			1.61	%			1.90	%			1.42	%			2.05	%
Average loans	$	9,765,428			$	9,563,372			$	9,581,784			$	9,625,005			$	9,657,313			$	9,664,400			$	9,579,742
Pre-tax, pre-provision operating return on average loans1		1.83	%			1.84	%			1.97	%			2.05	%			2.43	%			1.83	%			2.63	%
Average total assets	$	12,578,706			$	12,336,042			$	12,306,634			$	12,259,062			$	12,350,223			$	12,457,374			$	12,282,644
Return on average assets1		0.87	%			0.79	%			0.11	%			1.06	%			1.10	%			0.83	%			1.18	%
Operating return on average assets1		0.91				0.95				1.02				1.06				1.13				0.93				1.28
Operating earnings adjusted for amortization of core deposit intangibles
Operating earnings	$	28,310			$	29,137			$	31,625			$	32,621			$	34,673			$	57,447			$	77,947
Adjustments:
Plus: Amortization of core deposit intangibles		2,438				2,438				2,438				2,438				2,438				4,876				4,876
Less: Tax benefit at the statutory rate		512				512				512				512				512				1,024				1,024
Operating earnings adjusted for amortization of core deposit intangibles	$	30,236			$	31,063			$	33,551			$	34,547			$	36,599			$	61,299			$	81,799
Average Tangible Common Equity
Total average stockholders' equity	$	1,541,609			$	1,533,868			$	1,510,286			$	1,508,170			$	1,510,625			$	1,537,738			$	1,493,695
Adjustments:
Less: Average goodwill		(404,452	)			(404,452	)			(404,452	)			(404,452	)			(404,452	)			(404,452	)			(404,452	)
Less: Average core deposit intangibles		(25,218	)			(27,656	)			(30,093	)			(32,540	)			(34,969	)			(26,437	)			(36,159	)
Average tangible common equity	$	1,111,939			$	1,101,760			$	1,075,741			$	1,071,178			$	1,071,204			$	1,106,849			$	1,053,084
Operating return on average tangible common equity1		10.94	%			11.34	%			12.37	%			12.80	%			13.70	%			11.14	%			15.66	%
Efficiency ratio		59.11	%			62.45	%			77.49	%			54.49	%			49.94	%			60.72	%			49.17	%
Operating efficiency ratio
Net interest income	$	96,236			$	92,806			$	95,533			$	99,361			$	100,831			$	189,042			$	204,220
Noninterest income		10,578				6,662				(17,792	)			9,674				13,692				17,240				27,223
Plus: Loss on sale of AFS securities, net		—				6,304				—				—				—				6,304				5,321
Plus: Equity method investment write-down		—				—				29,417				—				—				—				—
Operating noninterest income		10,578				12,966				11,625				9,674				13,692				23,544				32,544
Noninterest expense		63,141				62,116				60,238				59,414				57,197				125,257				113,812
Less: FDIC special assessment		134				—				768				—				—				134				—
Less: Severance payments		613				—				—				—				1,194				613				2,029
Operating noninterest expense	$	62,394			$	62,116			$	59,470			$	59,414			$	56,003			$	124,510			$	111,783
Operating efficiency ratio		58.41	%			58.73	%			55.50	%			54.49	%			48.90	%			58.57	%			47.21	%

¹ Annualized ratio for quarterly metrics.

FAQ

What was Veritex Holdings' (VBTX) net income for Q2 2024?

Veritex Holdings (VBTX) reported net income of $27.2 million for Q2 2024.

How did Veritex's (VBTX) diluted EPS change in Q2 2024 compared to Q1 2024?

Veritex's (VBTX) diluted EPS increased to $0.50 in Q2 2024, up from $0.44 in Q1 2024.

What was the net interest margin for Veritex (VBTX) in Q2 2024?

Veritex's (VBTX) net interest margin increased to 3.29% in Q2 2024, a 5 basis point improvement from the previous quarter.

How much did Veritex's (VBTX) total deposits grow in Q2 2024?

Veritex's (VBTX) total deposits grew by $71.0 million, or 2.67% annualized, in Q2 2024 compared to Q1 2024.

What was the dividend declared by Veritex Holdings (VBTX) for Q2 2024?

Veritex Holdings (VBTX) declared a quarterly cash dividend of $0.20 per share for Q2 2024.