Veritex Holdings, Inc. Reports Third Quarter Operating Results

Rhea-AI Summary

Veritex Holdings, Inc. announces Q3 2023 results with net income of $32.6 million and diluted EPS of $0.60. Total deposits increased by $962.6 million. ACL to total loans increased to 1.14%. Named one of the 'Best Companies to Work For'.

Positive

• Veritex Holdings, Inc. reports positive Q3 2023 results with net income of $32.6 million and diluted EPS of $0.60. Total deposits increased by $962.6 million, showing strong growth. ACL to total loans also increased to 1.14%, indicating improved credit quality. The company was named one of the 'Best Companies to Work For', which reflects a positive work environment and potential for growth.

Negative

• None.

DALLAS, Oct. 24, 2023 (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 September 30, 2023.

“Despite the challenging markets, Veritex continues to focus on strengthening our balance sheet and adding to capital”, said C. Malcolm Holland, III. “Our year long deposit centric strategy is gaining momentum shown by the positive trends in our balance sheet ratios.”

		Quarter to Date								Year to Date
		Q3 2023				Q2 2023				Q3 2023				Q3 2022
		(Dollars in thousands, except per share data) (unaudited)
Financial Results
Net income		$	32,621			$	33,730			$	104,762			$	106,418
Diluted EPS			0.60				0.62				1.92				1.98
Book value per common share			27.46				27.48				27.46				26.15
Return on average assets2			1.06	%			1.10	%			1.14	%			1.33	%
Return on average equity2			8.58				8.96				9.35				10.02
Efficiency ratio			54.49				49.94				50.88				49.05
Financial Operating Results1
Operating earnings		$	32,621			$	34,673			$	110,489			$	107,494
Diluted operating EPS			0.60				0.64				2.02				2.00
Tangible book value per common share			19.44				19.41				19.44				17.91
Pre-tax, pre-provision operating earnings			49,621				58,520				174,523				152,719
Pre-tax, pre-provision operating return on average assets2			1.61	%			1.90	%			1.90	%			1.90	%
Pre-tax, pre-provision operating return on average loans2			2.05				2.43				2.43				2.54
Operating return on average assets2			1.06				1.13				1.20				1.34
Return on average tangible common equity2			12.80				13.35				13.95				15.40
Operating return on average tangible common equity2			12.80				13.70				14.68				15.55
Operating efficiency ratio			54.49				48.90				49.53				48.59

¹ 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.
² Annualized ratio.

Other Third Quarter Metrics and Company Highlights

• Total deposits increased by $962.6 million, or 41.68% annualized, to $10.2 billion as of September 30, 2023 compared to $9.2 billion as of June 30, 2023;
• Loan to deposit ratio decreased to 94.5% as of September 30, 2023 compared to 105.1% as of June 30, 2023;
• Allowance for credit losses (“ACL”) to total loans increased to 1.14% as of September 30, 2023, or an increase of 9 bps and 20 bps from June 30, 2023 and September 30, 2022, respectively;
• Annualized net charge-offs to average loans outstanding were 8 bps for the three months ended September 30, 2023 compared to 48 bps and 12 bps for the three months ended June 30, 2023 and September 30, 2022, respectively;
• Total Commercial Real Estate (“CRE”) / Risk Based Capital (“RBC”) decreased to 317.2% as of September 30, 2023 compared to 327.2% as of June 30, 2023;
• Total unfunded Acquisition, Development, and Construction (“ADC”) decreased to $1.15 billion, or approximately 16.3%, as of September 30, 2023 compared to $1.37 billion as of June 30, 2023;
• Common equity tier 1 capital increased 35 bps to 10.11% as of September 30, 2023 compared to 9.76% as of June 30, 2023 driven by earnings and a decrease in risk-weighted assets;
• 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; and
• Declared quarterly cash dividend of $0.20 per share of outstanding common stock payable on November 24, 2023.
  

Results of Operations for the Three Months Ended September 30, 2023

Net Interest Income

For the three months ended September 30, 2023, net interest income before provision for credit losses was $99.3 million and net interest margin was 3.46% compared to $100.8 million and 3.51%, respectively, for the three months ended June 30, 2023. The $1.5 million decrease, or 1.5%, in net interest income before provision for credit losses was primarily due to a $8.1 million increase in interest expense on certificates and other time deposits and a $7.0 million increase in interest expense on transaction and savings deposits driven by an increase in funding costs on deposits. The decrease in net interest income was partially offset by a $9.0 million decrease in interest expense on advances from the Federal Home Loan Bank (“FHLB”), a $3.6 million increase in interest income on loans driven by an increase in loan yields and average balances, a $762 thousand increase in interest income on debt securities and a $573 thousand increase in equity securities and other investments during the three months ended September 30, 2023. Net interest margin decreased 5 bps compared to the three months ended June 30, 2023, primarily due to the increase in funding costs on deposits during three months ended September 30, 2023, partially offset by an increase in loan yields and debt securities.

Compared to the three months ended September 30, 2022, net interest income before provision for credit losses for the three months ended September 30, 2023 decreased by $1.7 million, or 1.7%. The decrease was primarily due to a $32.3 million increase in certificates and other time deposits, a $27.0 million increase in transaction and savings deposits and a $6.0 million increase in advances from the FHLB driven by an increase in funding costs. The decrease was partially offset by a $58.2 million increase in interest income on loans driven by an increase in loan yields and average balances and a $5.2 million increase in deposits in financial institutions and fed funds sold. Net interest margin decreased 31 bps from 3.77% for the three months ended September 30, 2022. The decrease was primarily due to the increase in funding costs on deposits during the three months ended September 30, 2023, partially offset by an increase in loan yields and debt securities.

Noninterest Income

Noninterest income for the three months ended September 30, 2023 was $9.7 million, a decrease of $4.0 million, or 29.3%, compared to the three months ended June 30, 2023. The decrease was primarily due to a $2.4 million decrease in government guaranteed loan income primarily driven by a decrease in U.S. Department of Agriculture (“USDA”) loans sold. In addition, the decrease was due to a $759 thousand decrease in customer swap income and a $621 thousand decrease in equity method investment income. This decrease was partially offset by a $178 thousand increase in other income.

Compared to the three months ended September 30, 2022, noninterest income for the three months ended September 30, 2023 decreased by $3.3 million, or 25.7%. The decrease was primarily due to a $3.2 million decrease in customer swap income, a $1.2 million decrease in loan fees driven by a $1.2 million decrease in syndication fees and a $1.0 million decrease in other noninterest income. The decrease was partially offset by a $1.2 million increase in government guaranteed loan income, primarily driven by an increase in USDA loans sold through our wholly owned subsidiary North Avenue Capital, LLC, and a $922 thousand increase in equity method investment income.

Noninterest Expense

Noninterest expense was $59.4 million for the three months ended September 30, 2023, compared to $57.2 million for the three months ended June 30, 2023, an increase of $2.2 million, or 3.9%. The increase was primarily due to a $2.3 million increase in salaries and employee benefits and a $415 thousand increase in professional and regulatory fees driven by FDIC assessment fees. The increase is partially offset by a decrease of $274 thousand in marketing expense and a $168 thousand decrease in data processing and software expense.

Compared to the three months ended September 30, 2022, noninterest expense for the three months ended September 30, 2023 increased by $8.4 million, or 16.5%. The increase was primarily driven by a $3.6 million increase in professional and regulatory fees driven by FDIC assessment fees that increased when the Company crossed $10 billion in total assets, a $2.3 million increase in other noninterest expenses, a $1.2 million increase in salaries and employee benefits, a $1.0 million increase in data processing and software expenses and a $508 thousand increase in marketing expenses.

Financial Condition

Total loans held for investment (“LHI”) was $9.64 billion at September 30, 2023, a decrease of $67.8 million, or 2.8% annualized, compared to June 30, 2023. The decrease was the result of the state of the economy and banking environment as a result of higher interest rates.

Total deposits were $10.20 billion at September 30, 2023, an increase of $962.6 million, or 41.7% annualized, compared to June 30, 2023. The increase was primarily the result of an increase of $474.5 million in certificates and other time deposits, an increase of $345.8 million in interest-bearing deposits, an increase of $129.2 million in non-interest bearing deposits and an increase of $13.1 million in correspondent money market account balances.

Credit Quality

Nonperforming assets (“NPAs”) totaled $79.9 million, or 0.65% of total assets, at September 30, 2023, compared to $68.3 million, or 0.55% of total assets, at June 30, 2023. The Company had net charge-offs of $1.8 million for the three months ended September 30, 2023. Annualized net charge-offs were down to 8 bps for the three months ended September 30, 2023, compared to 48 bps and 12 bps for the three months ended June 30, 2023 and September 30, 2022, respectively.

ACL as a percentage of LHI was 1.14%, 1.05% and 0.94% at September 30, 2023, June 30, 2023 and September 30, 2022, respectively. The Company recorded a provision for credit losses of $8.6 million for the three months ended September 30, 2023, a $15.0 million provision for credit losses for the three months ended June 30, 2023 and a $6.7 million provision for credit losses for the three months ended September 30, 2022. The recorded provision for credit losses for the three months ended September 30, 2023, compared to the three months ended June 30, 2023, 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 $909 thousand for the three months ended September 30, 2023, a $1.1 million benefit for unfunded commitments for the three months ended June 30, 2023, and a $850 thousand provision for unfunded commitments for the three months ended September 30, 2022. The recorded benefit for unfunded commitments for the three months ended September 30, 2023, compared to the three months ended June 30, 2023, was attributable to a decrease in unfunded commitment balances partially offset by changes in economic factors.

Dividend Information

After the close of the market on Tuesday, October 24, 2023, 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 November 24, 2023 to stockholders of record as of the close of business on November 10, 2023.

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, 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, October 25, 2023, at 8:30 a.m. Central Time. Participants may pre-register for the call by visiting https://edge.media-server.com/mmc/p/nzdfo4ub/ 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/BI9b72154b2c424063aae6950d635afeec. 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; 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 Nine Months Ended
		Sep 30, 2023				Jun 30, 2023				Mar 31, 2023				Dec 31, 2022				Sep 30, 2022				Sep 30, 2023				Sep 30, 2022
		(Dollars and shares in thousands, except per share data)
Per Share Data (Common Stock):
Basic EPS		$	0.60			$	0.62			$	0.71			$	0.74			$	0.80			$	1.93			$	2.01
Diluted EPS			0.60				0.62				0.70				0.73				0.79				1.92				1.98
Book value per common share			27.46				27.48				27.54				26.83				26.15				27.46				26.15
Tangible book value per common share1			19.44				19.41				19.43				18.64				17.91				19.44				17.91
Dividends paid per common share outstanding2			0.20				0.20				0.20				0.20				0.20				0.60				0.60
Common Stock Data:
Shares outstanding at period end			54,305				54,261				54,229				54,030				53,988				54,305				53,988
Weighted average basic shares outstanding for the period			54,300				54,247				54,149				54,011				53,979				54,233				52,886
Weighted average diluted shares outstanding for the period			54,597				54,486				54,606				54,780				54,633				54,563				53,655
Summary of Credit Ratios:
ACL to total LHI			1.14	%			1.05	%			1.02	%			0.96	%			0.94	%			1.14	%			0.94	%
NPAs to total assets			0.65				0.55				0.35				0.36				0.26				0.65				0.26
NPAs, excluding nonaccrual purchase credit deteriorated (“PCD”) loans, to total assets3			0.54				0.44				0.25				0.25				0.26				0.54				0.26
Net charge-offs to average loans outstanding4			0.08				0.48				0.04				0.24				0.12				0.20				0.13
Summary Performance Ratios:
Return on average assets4			1.06	%			1.10	%			1.28	%			1.35	%			1.50	%			1.14	%			1.33	%
Return on average equity4			8.58				8.96				10.55				11.03				11.82				9.35				10.02
Return on average tangible common equity1, 4			12.80				13.35				15.81				16.75				17.82				13.95				15.40
Efficiency ratio			54.49				49.94				48.42				47.63				44.71				50.88				49.05
Net interest margin			3.46				3.51				3.69				3.87				3.77				3.55				3.48
Selected Performance Metrics - Operating:
Diluted operating EPS1		$	0.60			$	0.64			$	0.79			$	0.74			$	0.80			$	2.02			$	2.00
Pre-tax, pre-provision operating return on average assets1, 4			1.61	%			1.90	%			2.20	%			2.15	%			2.20	%			1.90	%			1.90	%
Pre-tax, pre-provision operating return on average loans1, 4			2.05				2.43				2.83				2.78				2.88				2.43				2.54
Operating return on average assets1,4			1.06				1.13				1.43				1.36				1.51				1.20				1.34
Operating return on average tangible common equity1,4			12.80				13.70				17.68				16.95				17.94				14.68				15.55
Operating efficiency ratio1			54.49				48.90				45.70				47.11				44.37				49.53				48.59
Veritex Holdings, Inc. Capital Ratios:
Average stockholders' equity to average total assets			12.30	%			12.23	%			12.09	%			12.20	%			12.69	%			12.21	%			13.23	%
Tangible common equity to tangible assets1			8.86				8.76				8.66				8.60				8.58				8.86				8.58
Tier 1 capital to average assets (leverage)			10.10				9.80				9.67				9.82				9.79				10.10				9.79
Common equity tier 1 capital			10.11				9.76				9.32				9.09				9.09				10.11				9.09
Tier 1 capital to risk-weighted assets			10.37				10.01				9.56				9.34				9.35				10.37				9.35
Total capital to risk-weighted assets			12.95				12.51				11.99				11.63				11.68				12.95				11.68

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)
		Sep 30, 2023				Jun 30, 2023				Mar 31, 2023				Dec 31, 2022				Sep 30, 2022
		(unaudited)				(unaudited)				(unaudited)								(unaudited)
ASSETS
Cash and cash equivalents		$	713,408			$	663,921			$	808,395			$	436,077			$	433,897
Debt securities, net			1,060,629				1,144,020				1,150,959				1,282,460				1,303,004
Other investments			80,869				138,894				137,621				122,450				115,551
Loans held for sale (“LHFS”)			41,313				29,876				42,816				20,641				17,644
LHI, mortgage warehouse (“MW”)			390,767				436,255				437,501				446,227				523,805
LHI, excluding MW			9,237,447				9,257,183				9,237,159				9,036,424				8,513,254
Total loans			9,669,527				9,723,314				9,717,476				9,503,292				9,054,703
ACL			(109,831	)			(102,150	)			(98,694	)			(91,052	)			(85,037	)
Bank-owned life insurance			84,867				84,375				84,962				84,496				84,030
Bank premises, furniture and equipment, net			106,118				105,986				107,540				108,824				108,720
Intangible assets, net of accumulated amortization			44,294				48,293				51,086				53,213				56,238
Goodwill			404,452				404,452				404,452				404,452				404,452
Other assets			291,998				259,263				245,690				250,149				238,896
Total assets		$	12,346,331			$	12,470,368			$	12,609,487			$	12,154,361			$	11,714,454
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Noninterest-bearing deposits		$	2,363,340			$	2,234,109			$	2,212,389			$	2,640,617			$	2,811,412
Interest-bearing transaction and savings deposits			3,936,070				3,590,253				3,492,011				3,514,729				3,437,898
Certificates and other time deposits			3,403,427				2,928,949				2,896,870				2,086,642				1,667,364
Correspondent money market deposits			493,681				480,598				433,468				881,246				831,770
Total deposits			10,196,518				9,233,909				9,034,738				9,123,234				8,748,444
Accounts payable and other liabilities			229,116				190,900				171,985				177,579				173,198
Advances from FHLB			200,000				1,325,000				1,680,000				1,175,000				1,150,000
Subordinated debentures and subordinated notes			229,531				229,279				229,027				228,775				228,524
Securities sold under agreements to repurchase			—				—				—				—				2,389
Total liabilities			10,855,165				10,979,088				11,115,750				10,704,588				10,302,555
Commitments and contingencies
Stockholders’ equity:
Common stock			609				609				609				607				606
Additional paid-in capital			1,314,459				1,311,687				1,308,345				1,306,852				1,303,171
Retained earnings			451,513				429,753				406,873				379,299				350,195
Accumulated other comprehensive loss			(107,833	)			(83,187	)			(54,508	)			(69,403	)			(74,491	)
Treasury stock			(167,582	)			(167,582	)			(167,582	)			(167,582	)			(167,582	)
Total stockholders’ equity			1,491,166				1,491,280				1,493,737				1,449,773				1,411,899
Total liabilities and stockholders’ equity		$	12,346,331			$	12,470,368			$	12,609,487			$	12,154,361			$	11,714,454

VERITEX HOLDINGS, INC. AND SUBSIDIARIES Financial Highlights (In thousands, except per share data)
		For the Quarter Ended																				For the Nine Months Ended
		Sep 30, 2023				Jun 30, 2023				Mar 31, 2023				Dec 31, 2022				Sep 30, 2022				Sep 30, 2023				Sep 30, 2022
		(unaudited)				(unaudited)				(unaudited)				(unaudited)				(unaudited)				(unaudited)				(unaudited)
Interest income:
Loans, including fees		$	167,368			$	163,727			$	151,707			$	136,846			$	109,199			$	482,802			$	262,833
Debt securities			10,928				10,166				10,988				10,880				10,462				32,082				27,856
Deposits in financial institutions and Fed Funds sold			7,128				7,507				5,534				3,401				1,898				20,169				2,874
Equity securities and other investments			1,691				1,118				1,408				1,087				1,666				4,217				3,633
Total interest income			187,115				182,518				169,637				152,214				123,225				539,270				297,196
Interest expense:
Transaction and savings deposits			39,936				32,957				29,857				24,043				12,897				102,750				18,742
Certificates and other time deposits			36,177				28,100				20,967				8,543				3,919				85,244				6,764
Advances from FHLB			8,523				17,562				12,358				10,577				2,543				38,443				4,924
Subordinated debentures and subordinated notes			3,118				3,068				3,066				2,954				2,826				9,252				8,206
Total interest expense			87,754				81,687				66,248				46,117				22,185				235,689				38,636
Net interest income			99,361				100,831				103,389				106,097				101,040				303,581				258,560
Provision for credit losses1			8,627				15,000				9,385				11,800				6,650				33,012				15,150
(Benefit) provision for unfunded commitments			(909	)			(1,129	)			1,497				(523	)			850				(541	)			1,343
Net interest income after provisions			91,643				86,960				92,507				94,820				93,540				271,110				242,067
Noninterest income:
Service charges and fees on deposit accounts			5,159				5,272				5,017				5,173				5,217				15,448				14,966
Loan fees			1,564				1,520				2,064				2,477				2,786				5,148				7,965
Loss on sales of debt securities			—				—				(5,321	)			—				—				(5,321	)			—
Gain on sales of mortgage LHFS			21				40				6				4				16				67				546
Government guaranteed loan income, net			1,772				4,144				9,688				7,808				572				15,604				6,252
Equity method investment (loss) income			(136	)			485				(1,521	)			(5,416	)			(1,058	)			(1,172	)			275
Customer swap income			202				961				217				2,273				3,358				1,380				5,625
Other income			1,092				1,270				3,381				2,007				2,130				5,743				2,867
Total noninterest income			9,674				13,692				13,531				14,326				13,021				36,897				38,496
Noninterest expense:
Salaries and employee benefits			30,949				28,650				31,865				33,690				29,714				91,464				84,151
Occupancy and equipment			4,881				4,827				4,973				5,116				4,615				14,681				13,628
Professional and regulatory fees			7,283				6,868				4,389				4,401				3,718				18,540				9,741
Data processing and software expense			4,541				4,709				4,720				4,197				3,509				13,970				9,816
Marketing			2,353				2,627				1,779				1,841				1,845				6,759				5,338
Amortization of intangibles			2,437				2,468				2,495				2,495				2,494				7,400				7,484
Telephone and communications			362				355				478				358				389				1,195				1,126
Merger and acquisition (“M&A”) expense			—				—				—				—				384				—				1,379
Other			6,608				6,693				5,916				5,261				4,323				19,217				13,053
Total noninterest expense			59,414				57,197				56,615				57,359				50,991				173,226				145,716
Income before income tax expense			41,903				43,455				49,423				51,787				55,570				134,781				134,847
Income tax expense			9,282				9,725				11,012				11,890				12,248				30,019				28,429
Net income		$	32,621			$	33,730			$	38,411			$	39,897			$	43,322			$	104,762			$	106,418
Net income available to common stockholders		$	32,621			$	33,730			$	38,411			$	39,897			$	43,322			$	104,762			$	106,418
Basic EPS		$	0.60			$	0.62			$	0.71			$	0.74			$	0.80			$	1.93			$	2.01
Diluted EPS		$	0.60			$	0.62			$	0.70			$	0.73			$	0.79			$	1.92			$	1.98
Weighted average basic shares outstanding			54,300				54,247				54,149				54,011				53,979				54,233				52,886
Weighted average diluted shares outstanding			54,597				54,486				54,606				54,780				54,633				54,563				53,655

¹ Includes provision for credit losses on available for sale (“AFS”) securities of $885 thousand for the three months ended March 31, 2023 and June 30, 2023.

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

		For the Quarter Ended
		September 30, 2023										June 30, 2023										September 30, 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
		(In thousands, except percentages)
Assets
Interest-earning assets:
Loans1		$	9,267,366			$	161,615		6.92	%		$	9,285,550			$	158,685		6.85	%		$	8,280,537			$	104,550		5.01	%
LHI, MW			357,639				5,753		6.38				371,763				5,042		5.44				448,556				4,649		4.11
Debt securities			1,121,716				10,928		3.87				1,133,845				10,166		3.60				1,362,365				10,462		3.05
Interest-bearing deposits in other banks			520,785				7,128		5.43				583,818				7,507		5.16				346,296				1,898		2.17
Equity securities and other investments			135,714				1,691		4.94				137,868				1,118		3.25				203,528				1,666		3.25
Total interest-earning assets			11,403,220				187,115		6.51				11,512,844				182,518		6.36				10,641,282				123,225		4.59
ACL			(105,320	)									(102,559	)									(81,888	)
Noninterest-earning assets			961,162										939,938										901,463
Total assets		$	12,259,062									$	12,350,223									$	11,460,857
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Interest-bearing demand and savings deposits		$	4,168,876			$	39,936		3.80	%		$	3,919,745			$	32,957		3.37	%		$	4,164,164			$	12,897		1.23	%
Certificates and other time deposits			3,151,704				36,177		4.55				2,873,548				28,100		3.92				1,656,347				3,919		0.94
Advances from FHLB and Other			725,543				8,523		4.66				1,472,912				17,562		4.78				904,065				2,543		1.12
Subordinated debentures and subordinated notes			229,389				3,118		5.39				229,151				3,068		5.37				231,012				2,826		4.85
Total interest-bearing liabilities			8,275,512				87,754		4.21				8,495,356				81,687		3.86				6,955,588				22,185		1.27
Noninterest-bearing liabilities:
Noninterest-bearing deposits			2,272,207										2,175,002										2,925,462
Other liabilities			203,173										169,240										125,991
Total liabilities			10,750,892										10,839,598										10,007,041
Stockholders’ equity			1,508,170										1,510,625										1,453,816
Total liabilities and stockholders’ equity		$	12,259,062									$	12,350,223									$	11,460,857
Net interest rate spread2									2.30	%									2.50	%									3.32	%
Net interest income and margin3						$	99,361		3.46	%						$	100,831		3.51	%						$	101,040		3.77	%

¹ Includes average outstanding balances of LHFS of $28,284, $23,374 and $14,023 for the quarters ended September 30, 2023, June 30, 2023, and September 30, 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 SUBSIDIARY Financial Highlights (In thousands except percentages)
		Nine Months Ended
		September 30, 2023										September 30, 2022
		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		$	9,231,814			$	467,101		6.76	%		$	7,586,302			$	251,186		4.43	%
LHI, MW			363,182				15,701		5.78				449,906				11,647		3.46
Debt securities			1,168,860				32,082		3.67				1,274,712				27,856		2.92
Interest-bearing deposits in other banks			527,805				20,169		5.11				422,905				2,874		0.91
Equity securities and other investments			132,895				4,217		4.24				187,002				3,633		2.60
Total interest-earning assets			11,424,556				539,270		6.31				9,920,827				297,196		4.01
ACL			(100,228	)									(78,015	)
Noninterest-earning assets			950,369										886,357
Total assets		$	12,274,697									$	10,729,169
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Interest-bearing demand and savings deposits		$	4,079,436			$	102,750		3.37	%		$	3,804,506			$	18,742		0.66	%
Certificates and other time deposits			2,873,388				85,244		3.97				1,539,861				6,764		0.59
Advances from FHLB and Other			1,105,592				38,443		4.65				837,254				4,924		0.79
Subordinated debentures and subordinated notes			229,923				9,252		5.38				231,640				8,206		4.74
Total interest-bearing liabilities			8,288,339				235,689		3.80				6,413,261				38,636		0.81
Noninterest-bearing liabilities:
Noninterest-bearing deposits			2,305,745										2,797,110
Other liabilities			182,040										98,898
Total liabilities			10,776,124										9,309,269
Stockholders’ equity			1,498,573										1,419,900
Total liabilities and stockholders’ equity		$	12,274,697									$	10,729,169
Net interest rate spread2									2.51	%									3.20	%
Net interest income and margin3						$	303,581		3.55	%						$	258,560		3.48	%

¹ Includes average outstanding balances of loans held for sale of $23,810 and $12,973 for the nine months ended September 30, 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															For the Year Ended
		Sep 30, 2023			Jun 30, 2023			Mar 31, 2023			Dec 31, 2022			Sep 30, 2022			Sep 30, 2023			Sep 30, 2022
Average yield on interest-earning assets:
Loans1		6.92	%		6.85	%		6.51	%		5.98	%		5.01	%		6.76	%		4.43	%
LHI, MW		6.38			5.44			5.52			5.20			4.11			5.78			3.46
Debt securities		3.87			3.60			3.56			3.36			3.05			3.67			2.92
Interest-bearing deposits in other banks		5.43			5.16			4.69			3.81			2.17			5.11			0.91
Equity securities and other investments		4.94			3.25			4.57			3.62			3.25			4.24			2.60
Total interest-earning assets		6.51	%		6.36	%		6.06	%		5.55	%		4.59	%		6.31	%		4.01	%
Average rate on interest-bearing liabilities:
Interest-bearing demand and savings deposits		3.80	%		3.37	%		2.92	%		2.21	%		1.23	%		3.37	%		0.66	%
Certificates and other time deposits		4.55			3.92			3.28			1.90			0.94			3.97			0.59
Advances from FHLB		4.66			4.78			4.46			3.91			1.12			4.65			0.79
Subordinated debentures and subordinated notes		5.39			5.37			5.38			5.12			4.85			5.38			4.74
Total interest-bearing liabilities		4.21	%		3.86	%		3.32	%		2.47	%		1.27	%		3.80	%		0.81	%
Net interest rate spread2		2.30	%		2.50	%		2.74	%		3.08	%		3.32	%		2.51	%		3.20	%
Net interest margin3		3.46	%		3.51	%		3.69	%		3.87	%		3.77	%		3.55	%		3.48	%

¹Includes average outstanding balances of loans held for sale of $28,284, $23,374, $19,679, $15,296 and $14,023 for the three months ended September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022 and September 30, 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															For the Year Ended
		Sep 30, 2023			Jun 30, 2023			Mar 31, 2023			Dec 31, 2022			Sep 30, 2022			Sep 30, 2023			Sep 30, 2022
Average cost of interest-bearing deposits		4.12	%		3.61	%		3.06	%		2.12	%		1.15	%		3.62	%		0.64	%
Average costs of total deposits, including noninterest-bearing		3.15			2.73			2.24			1.46			0.76			2.03			0.31

VERITEX HOLDINGS, INC. AND SUBSIDIARIES Financial Highlights (Unaudited)
LHI and Deposit Portfolio Composition
		Sep 30, 2023							Jun 30, 2023							Mar 31, 2023							Dec 31, 2022							Sep 30, 2022
		(In thousands, except percentages)
LHI1
Commercial and Industrial (“C&I”)		$	2,841,024			30.7	%		$	2,850,084			30.7	%		$	2,895,957			31.3	%		$	2,942,348			32.4	%		$	2,743,769			32.2	%
Real Estate:
Owner occupied commercial (“OOCRE”)			697,299			7.5				671,602			7.2				631,563			6.8				715,829			7.9				677,705			7.9
Non-owner occupied commercial (“NOOCRE”)			2,398,060			25.9				2,509,731			27.1				2,505,344			27.1				2,341,379			25.9				2,273,305			26.6
Construction and land			1,705,053			18.4				1,659,700			17.9				1,831,349			19.8				1,787,400			19.7				1,673,997			19.6
Farmland			59,684			0.6				51,663			0.6				51,680			0.6				43,500			0.5				43,569			0.5
1-4 family residential			933,225			10.1				923,442			10.0				896,252			9.7				894,456			9.9				858,693			10.1
Multi-family residential			603,395			6.7				592,473			6.4				432,209			4.6				322,679			3.6				252,244			3.0
Consumer			9,845			0.1				11,189			0.1				8,316			0.1				7,806			0.1				7,465			0.1
Total LHI		$	9,247,585			100	%		$	9,269,884			100	%		$	9,252,670			100	%		$	9,055,397			100	%		$	8,530,747			100	%
MW			390,767							436,255							437,501							446,227							523,805
Total LHI1		$	9,638,352						$	9,706,139						$	9,690,171						$	9,501,624						$	9,054,552
Deposits
Noninterest-bearing		$	2,363,340			23.2	%		$	2,234,109			24.2	%		$	2,212,389			24.5	%		$	2,640,617			28.9	%		$	2,811,412			32.1	%
Interest-bearing transaction			739,098			7.2				676,653			7.3				866,609			9.6				622,814			6.8				603,729			6.9
Money market			3,096,498			30.4				2,816,769			30.5				2,518,922			27.9				2,773,622			30.4				2,701,762			30.9
Savings			100,474			1.0				96,831			1.0				106,480			1.2				118,293			1.3				132,407			1.5
Certificates and other time deposits			3,403,427			33.4				2,928,949			31.7				2,896,870			32.0				2,086,642			22.9				1,667,364			19.1
Correspondent money market accounts			493,681			4.8				480,598			5.2				433,468			4.8				881,246			9.7				831,770			9.5
Total deposits		$	10,196,518			100	%		$	9,233,909			100	%		$	9,034,738			100	%		$	9,123,234			100	%		$	8,748,444			100	%
Loan to Deposit Ratio			94.5	%						105.1	%						107.3	%						104.1	%						103.5	%
Loan to Deposit Ratio, excluding MW			90.7	%						100.4	%						102.4	%						99.3	%						97.5	%

¹ Total LHI does not include deferred fees of $10.1 million, $12.7 million, $15.5 million, $19.0 million and $17.5 million at September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022 and September 30, 2022, respectively.

VERITEX HOLDINGS, INC. AND SUBSIDIARIES Financial Highlights (Unaudited)
Asset Quality
	For the Quarter Ended																				For the Nine Months Ended
	Sep 30, 2023				Jun 30, 2023				Mar 31, 2023				Dec 31, 2022				Sep 30, 2022				Sep 30, 2023				Sep 30, 2022
	(In thousands, except percentages)
NPAs:
Nonaccrual loans	$	65,676			$	54,055			$	31,452			$	30,364			$	30,592			$	65,676			$	30,592
Nonaccrual PCD loans1		13,718				13,721				12,784				13,178				—				13,718				—
Accruing loans 90 or more days past due2		474				528				296				125				—				474				—
Total nonperforming loans held for investment (“NPLs”)		79,868				68,304				44,532				43,667				30,592				79,868				30,592
Other real estate owned		—				—				—				—				—				—				—
Total NPAs	$	79,868			$	68,304			$	44,532			$	43,667			$	30,592			$	79,868			$	30,592
Charge-offs:
OOCRE	$	(375	)		$	—			$	(116	)		$	—			$	(1,061	)		$	(491	)		$	(2,646	)
NOOCRE		—				(8,215	)			—				(1,019	)			(838	)			(8,215	)			(1,391	)
C&I		(1,929	)			(3,540	)			(1,051	)			(5,449	)			(460	)			(6,520	)			(4,282	)
Consumer		(49	)			(92	)			(62	)			(41	)			(19	)			(203	)			(1,244	)
Total charge-offs		(2,353	)			(11,847	)			(1,229	)			(6,509	)			(2,378	)			(15,429	)			(9,563	)
Recoveries:
1-4 family residential		—				1				1				24				4				2				7
OOCRE		—				—				—				26				—				—				245
NOOCRE		200				150				—				229				3				350				496
C&I		308				106				364				415				177				778				893
Consumer		14				46				6				30				5				66				55
Total recoveries		522				303				371				724				189				1,196				1,696
Net charge-offs	$	(1,831	)		$	(11,544	)		$	(858	)		$	(5,785	)		$	(2,189	)		$	(14,233	)		$	(7,867	)
ACL	$	109,831			$	102,150			$	98,694			$	91,052			$	85,037			$	109,831			$	85,037
Asset Quality Ratios:
NPAs to total assets		0.65	%			0.55	%			0.35	%			0.36	%			0.26	%			0.65	%			0.26	%
NPAs, excluding nonaccrual PCD loans, to total assets		0.54				0.44				0.25				0.25				0.26				0.54				0.26
NPLs to total LHI		0.83				0.71				0.47				0.48				0.35				0.83				0.38
NPLs, excluding nonaccrual PCD loans, to total LHI		0.69				0.56				0.33				0.32				0.34				0.69				0.34
ACL to total LHI		1.14				1.05				1.02				0.96				0.94				1.14				0.94
Net charge-offs to average loans outstanding3		0.08				0.48				0.04				0.24				0.12				0.20				0.13

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 generally accepted accounting principles as in effect from time to time in the United States (“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
		Sep 30, 2023				Jun 30, 2023				Mar 31, 2023				Dec 31, 2022				Sep 30, 2022
		(Dollars in thousands, except per share data)
Tangible Common Equity
Total stockholders' equity		$	1,491,166			$	1,491,280			$	1,493,737			$	1,449,773			$	1,411,899
Adjustments:
Goodwill			(404,452	)			(404,452	)			(404,452	)			(404,452	)			(404,452	)
Core deposit intangibles			(30,933	)			(33,371	)			(35,808	)			(38,247	)			(40,684	)
Tangible common equity		$	1,055,781			$	1,053,457			$	1,053,477			$	1,007,074			$	966,763
Common shares outstanding			54,305				54,261				54,229				54,030				53,988
Book value per common share		$	27.46			$	27.48			$	27.54			$	26.83			$	26.15
Tangible book value per common share		$	19.44			$	19.41			$	19.43			$	18.64			$	17.91

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
		Sep 30, 2023				Jun 30, 2023				Mar 31, 2023				Dec 31, 2022				Sep 30, 2022
		(Dollars in thousands)
Tangible Common Equity
Total stockholders' equity		$	1,491,166			$	1,491,280			$	1,493,737			$	1,449,773			$	1,411,899
Adjustments:
Goodwill			(404,452	)			(404,452	)			(404,452	)			(404,452	)			(404,452	)
Core deposit intangibles			(30,933	)			(33,371	)			(35,808	)			(38,247	)			(40,684	)
Tangible common equity		$	1,055,781			$	1,053,457			$	1,053,477			$	1,007,074			$	966,763
Tangible Assets
Total assets		$	12,346,331			$	12,470,368			$	12,609,487			$	12,154,361			$	11,714,454
Adjustments:
Goodwill			(404,452	)			(404,452	)			(404,452	)			(404,452	)			(404,452	)
Core deposit intangibles			(30,933	)			(33,371	)			(35,808	)			(38,247	)			(40,684	)
Tangible Assets		$	11,910,946			$	12,032,545			$	12,169,227			$	11,711,662			$	11,269,318
Tangible Common Equity to Tangible Assets			8.86	%			8.76	%			8.66	%			8.60	%			8.58	%

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 Nine Months Ended
		Sep 30, 2023				Jun 30, 2023				Mar 31, 2023				Dec 31, 2022				Sep 30, 2022				Sep 30, 2023				Sep 30, 2022
		(Dollars in thousands)
Net income available for common stockholders adjusted for amortization of core deposit intangibles
Net income		$	32,621			$	33,730			$	38,411			$	39,897			$	43,322			$	104,762			$	106,418
Adjustments:
Plus: Amortization of core deposit intangibles			2,438				2,438				2,438				2,438				2,438				7,314				7,314
Less: Tax benefit at the statutory rate			512				512				512				512				512				1,536				1,536
Net income available for common stockholders adjusted for amortization of core deposit intangibles		$	34,547			$	35,656			$	40,337			$	41,823			$	45,248			$	110,540			$	112,196
Average Tangible Common Equity
Total average stockholders' equity		$	1,508,170			$	1,510,625			$	1,476,576			$	1,434,818			$	1,453,816			$	1,498,573			$	1,419,900
Adjustments:
Average goodwill			(404,452	)			(404,452	)			(404,452	)			(404,452	)			(404,452	)			(404,452	)			(404,308	)
Average core deposit intangibles			(32,540	)			(34,969	)			(37,361	)			(39,792	)			(42,230	)			(34,939	)			(41,470	)
Average tangible common equity		$	1,071,178			$	1,071,204			$	1,034,763			$	990,574			$	1,007,134			$	1,059,182			$	974,122
Return on Average Tangible Common Equity (Annualized)			12.80	%			13.35	%			15.81	%			16.75	%			17.82	%			13.95	%			15.40	%

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 Nine Months Ended
		Sep 30, 2023			Jun 30, 2023			Mar 31, 2023			Dec 31, 2022			Sep 30, 2022			Sep 30, 2023			Sep 30, 2022
		(Dollars in thousands, except per share data)
Operating Earnings
Net income		$	32,621		$	33,730		$	38,411		$	39,897		$	43,322		$	104,762		$	106,418
Plus: Severance payments1			—			1,194			756			630			—			1,950			—
Plus: Loss on sale of debt securities AFS, net			—			—			5,321			—			—			5,321			—
Plus: M&A expenses			—			—			—			—			384			—			1,379
Operating pre-tax income			32,621			34,924			44,488			40,527			43,706			112,033			107,797
Less: Tax impact of adjustments			—			251			1,293			132			81			1,544			303
Operating earnings		$	32,621		$	34,673		$	43,195		$	40,395		$	43,625		$	110,489		$	107,494
Weighted average diluted shares outstanding			54,597			54,486			54,606			54,780			54,633			54,563			53,655
Diluted EPS		$	0.60		$	0.62		$	0.70		$	0.73		$	0.79		$	1.92		$	1.98
Diluted operating EPS		$	0.60		$	0.64		$	0.79		$	0.74		$	0.80		$	2.02		$	2.00

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

		For the Quarter Ended																				For the Nine Months Ended
		Sep 30, 2023				Jun 30, 2023				Mar 31, 2023				Dec 31, 2022				Sep 30, 2022				Sep 30, 2023				Sep 30, 2022
		(Dollars in thousands)
Pre-Tax, Pre-Provision Operating Earnings
Net income		$	32,621			$	33,730			$	38,411			$	39,897			$	43,322			$	104,762			$	106,418
Plus: Provision for income taxes			9,282				9,725				11,012				11,890				12,248				30,019				28,429
Plus: Provision for credit losses and unfunded commitments			7,718				13,871				10,882				11,277				7,500				32,471				16,493
Plus: Severance payments			—				1,194				756				630				—				1,950				—
Plus: Loss on sale of debt securities AFS, net			—				—				5,321				—				—				5,321				—
Plus: M&A expenses			—				—				—				—				384				—				1,379
Pre-tax, pre-provision operating earnings		$	49,621			$	58,520			$	66,382			$	63,694			$	63,454			$	174,523			$	152,719
Average total assets		$	12,259,062			$	12,350,223			$	12,214,313			$	11,761,044			$	11,460,857			$	12,274,697			$	10,729,169
Pre-tax, pre-provision operating return on average assets1			1.61	%			1.90	%			2.20	%			2.15	%			2.20	%			1.90	%			1.90	%
Average loans		$	9,625,005			$	9,657,313			$	9,501,309			$	9,103,552			$	8,729,093			$	9,594,996			$	8,036,208
Pre-tax, pre-provision operating return on average loans1			2.05	%			2.43	%			2.83	%			2.78	%			2.88	%			2.43	%			2.54	%
Average total assets		$	12,259,062			$	12,350,223			$	12,214,313			$	11,761,044			$	11,460,857			$	12,274,697			$	10,729,169
Return on average assets1			1.06	%			1.10	%			1.28	%			1.35	%			1.50	%			1.14	%			1.33	%
Operating return on average assets1			1.06				1.13				1.43				1.36				1.51				1.20				1.34
Operating earnings adjusted for amortization of core deposit intangibles
Operating earnings		$	32,621			$	34,673			$	43,195			$	40,395			$	43,625			$	110,489			$	107,494
Adjustments:
Plus: Amortization of core deposit intangibles			2,438				2,438				2,438				2,438				2,438				7,314				7,314
Less: Tax benefit at the statutory rate			512				512				512				512				512				1,536				1,536
Operating earnings adjusted for amortization of core deposit intangibles		$	34,547			$	36,599			$	45,121			$	42,321			$	45,551			$	116,267			$	113,272
Average Tangible Common Equity
Total average stockholders' equity		$	1,508,170			$	1,510,625			$	1,476,576			$	1,434,818			$	1,453,816			$	1,498,573			$	1,419,900
Adjustments:
Less: Average goodwill			(404,452	)			(404,452	)			(404,452	)			(404,452	)			(404,452	)			(404,452	)			(404,308	)
Less: Average core deposit intangibles			(32,540	)			(34,969	)			(37,361	)			(39,792	)			(42,230	)			(34,939	)			(41,470	)
Average tangible common equity		$	1,071,178			$	1,071,204			$	1,034,763			$	990,574			$	1,007,134			$	1,059,182			$	974,122
Operating return on average tangible common equity1			12.80	%			13.70	%			17.68	%			16.95	%			17.94	%			14.68	%			15.55	%
Efficiency ratio			54.49	%			49.94	%			48.42	%			47.63	%			44.71	%			50.88	%			49.05	%
Net interest income		$	99,361			$	100,831			$	103,389			$	106,097			$	101,040			$	303,581			$	258,560
Noninterest income			9,674				13,692				13,531				14,326				13,021				36,897				38,496
Plus: Loss on sale of AFS securities, net			—				—				5,321				—				—				5,321				—
Operating noninterest income			9,674				13,692				18,852				14,326				13,021				42,218				38,496
Noninterest expense			59,414				57,197				56,615				57,359				50,991				173,226				145,716
Less: Severance payments			—				1,194				756				630				—				1,950				—
Less: M&A expenses			—				—				—				—				384				—				1,379
Operating noninterest expense		$	59,414			$	56,003			$	55,859			$	56,729			$	50,607			$	171,276			$	144,337
Operating efficiency ratio			54.49	%			48.90	%			45.70	%			47.11	%			44.37	%			49.53	%			48.59	%

¹ Annualized ratio for quarterly metrics.

FAQ

What were Veritex Holdings' Q3 2023 net income and diluted EPS?

Veritex Holdings reported a net income of $32.6 million and diluted EPS of $0.60 for Q3 2023.

How much did total deposits increase by in Q3 2023?

Total deposits increased by $962.6 million in Q3 2023.

What is the ACL to total loans ratio for Veritex Holdings?

The ACL to total loans ratio for Veritex Holdings is 1.14%.

What recognition did Veritex Holdings receive?

Veritex Holdings was named one of the 'Best Companies to Work For'.