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Veritex Holdings, Inc. Reports Second Quarter Operating Results
来源: Nasdaq GlobeNewswire / 25 7月 2023 16:00:01 America/Chicago
DALLAS, July 25, 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 June 30, 2023.
“I am incredibly pleased with our second quarter and year to date results,” said C. Malcolm Holland, III. “We increased our deposits by $200 million with only 1% in brokered, grew capital by $32 million, expanded our CET1 ratio by 44 basis points and decreased our commercial real estate exposure. We continue to see positive results in all these areas as we progress through the start of the third quarter.”
Quarter to Date Year to Date Financial Highlights Q2 2023 Q1 2023 Q2 2023 Q2 2022 (Dollars in thousands, except per share data)
(unaudited)GAAP Net income $ 33,730 $ 38,411 $ 72,141 $ 63,096 Diluted EPS 0.62 0.70 1.32 1.19 Book value per common share 27.48 27.54 27.48 26.50 Return on average assets2 1.10 % 1.28 % 1.18 % 1.23 % Efficiency ratio 49.94 48.42 49.17 51.76 Return on average equity2 8.96 10.55 9.74 9.07 Non-GAAP1 Operating earnings $ 34,673 $ 43,274 $ 77,947 $ 63,869 Diluted operating EPS 0.64 0.79 1.43 1.20 Tangible book value per common share 19.41 19.43 19.41 18.20 Pre-tax, pre-provision operating earnings 58,520 66,461 124,981 89,265 Pre-tax, pre-provision operating return on average assets2 1.90 % 2.21 % 2.05 % 1.74 % Pre-tax, pre-provision operating return on average loans2 2.43 2.84 2.63 2.34 Operating return on average assets2 1.13 1.44 1.28 1.24 Operating efficiency ratio 48.90 45.63 47.21 51.22 Return on average tangible common equity2 13.35 15.81 14.55 14.17 Operating return on average tangible common equity2 13.70 17.72 15.66 14.34 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 Second Quarter Results
- Total deposits increased by $199.2 million, or 8.8% annualized;
- Loan to deposit ratio has decreased 3% from March 31, 2023;
- Uninsured and uncollateralized deposits decreased to 33.3% as of June 30, 2023 compared to 36.5% as of March 31, 2023;
- Common Equity Tier 1 increased 44 basis points to 9.76% driven by a decrease in risk-weighted assets;
- Acquisition, development, and construction (“ADC”) loans decreased 9.3% from March 31, 2023 and as a percentage of risk-based capital (“RBC”) decreased from 129.2% to 115.1%;
- Total ADC/CRE loans decreased 0.2% from March 31, 2023 and as a percentage of RBC decreased from 333.7% to 327.2%;
- ACL to total loans increased to 1.05%;
- Non-performing assets (“NPAs”) to total assets increased to 0.55%, or 20 bps, from March 31, 2023;
- Annualized net charge-offs to average loans outstanding were 48 bps for the second quarter of 2023 compared to 4 bps for the three months ended March 31, 2023; and
- Declared quarterly cash dividend of $0.20 per share of outstanding common stock payable on August 25, 2023.
Results of Operations for the Three Months Ended June 30, 2023
Net Interest Income
For the three months ended June 30, 2023, net interest income before provision for credit losses was $100.8 million and net interest margin was 3.51% compared to $103.4 million and 3.69%, respectively, for the three months ended March 31, 2023. The $2.6 million decrease in net interest income before provision for credit losses was primarily due to a $7.1 million increase in interest expense on certificates and other time deposits, a $5.2 million increase in advances from the Federal Home Loan Bank (“FHLB”), a $3.1 million increase in transaction and savings deposits driven by an increase in funding costs on deposits, and an $822 thousand decrease in interest income on debt securities. The decrease was partially offset by a $12.0 million increase in interest income on loans driven by an increase in loan yields and average balances and a $2.0 million increase in interest income on deposits in financial institutions and fed funds sold during the three months ended June 30, 2023. Net interest margin decreased 18 basis points compared to the three months ended March 31, 2023, primarily due to the increase in funding costs on deposits and FHLB borrowing costs during three months ended June 30, 2023, partially offset by an increase in loan yields and average balances.
Compared to the three months ended June 30, 2022, net interest income before provision for credit losses for the three months ended June 30, 2023 increased by $16.4 million, or 19.4%. The increase was primarily due to a $81.5 million increase in interest income on loans driven by an increase in average balances and loan yields and a $6.8 million increase in deposits in financial institutions and fed funds sold, partially offset by a $28.9 million increase in transaction and savings deposits, a $26.6 million increase in certificates and other time deposits and a $16.4 million increase in advances from FHLB driven by an increase in funding costs. Net interest margin increased 9 basis points to 3.51% for the three months ended June 30, 2023 from 3.42% for the three months ended June 30, 2022. The increase was primarily due to the increase in average balances and loan yields during the three months ended June 30, 2023, partially offset by an increase in funding costs.
Noninterest Income
Noninterest income for the three months ended June 30, 2023 was $13.7 million, an increase of $161 thousand, or 1.2%, compared to the three months ended March 31, 2023. The increase was primarily due to a $2.0 million increase in equity method investment income and a loss on sales of investment securities in the first quarter of 2023 of $5.3 million. The increase was partially offset by a $5.5 million decrease in government guaranteed loan income primarily driven by a decrease in USDA loans sold.
Compared to the three months ended June 30, 2022, noninterest income for the three months ended June 30, 2023 increased by $3.3 million, or 31.9%. The increase was primarily due to a $3.4 million increase in government guaranteed loan income, primarily driven by an increase in USDA loans sold through NAC and a $1.6 million increase in other noninterest income. The increase was partially offset by a $865 thousand decrease in loan fees driven by a $562 thousand decrease in syndication fees, a $481 thousand decrease in equity method investment income, and a decrease of $360 thousand in customer swap income.
Noninterest Expense
Noninterest expense was $57.2 million for the three months ended June 30, 2023, compared to $56.6 million for the three months ended March 31, 2023, an increase of $582 thousand, or 1.0%. The increase was primarily due to a $2.5 million increase in professional and regulatory fees driven by FDIC assessment fees that increased when the Company crossed $10 billion in total assets, an increase of $848 thousand in marketing expense, and a $777 thousand increase in other noninterest expense. The increase is partially offset by a $3.2 million decrease in salaries and employee benefits.
Compared to the three months ended June 30, 2022, noninterest expense for the three months ended June 30, 2023 increased by $9.0 million, or 18.8%. The increase was primarily driven by a $4.0 million increase in professional and regulatory fees driven by FDIC assessment fees that increased when the Company crossed $10 billion in total assets, a $1.7 million increase in salaries and employee benefits, a $1.7 million increase in other noninterest expenses, a $1.3 million increase in data processing and software expenses and a $331 thousand increase in occupancy and equipment expenses.
Financial Condition
Total LHI was $9.71 billion at June 30, 2023, an increase of $16.0 million, or 0.7% annualized, compared to March 31, 2023. The increase was the result of the continued execution, and success of our loan growth strategy, including our continued investment in talent.
Total deposits were $9.23 billion at June 30, 2023, an increase of $199.2 million, or 8.8% annualized, compared to March 31, 2023. The increase was primarily the result of an increase of $98.2 million in interest-bearing deposits, an increase of $32.1 million in certificates and other time deposits, an increase of $21.7 million in non-interest bearing deposits, and an increase of $47.1 million in correspondent money market account balances. As of June 30, 2023, uninsured deposits were 33.26% of total deposits compared to 38.92% as of March 31, 2023.
Credit Quality
Nonperforming assets totaled $68.3 million, or 0.55% of total assets, at June 30, 2023, compared to $44.5 million, or 0.35% of total assets, at March 31, 2023. The Company had net charge-offs of $11.5 million for the quarter.
The Company recorded a provision for credit losses of $15.0 million for the three months ended June 30, 2023, a $9.4 million provision for credit losses for the three months ended March 31, 2023 and a $9.0 million provision for credit losses for the three months ended June 30, 2022. The recorded provision for credit losses for the three months ended June 30, 2023, compared to the three months ended March 31, 2023, was primarily attributable to an increase in general reserves as a result of changes in economic factors and loan growth. The Company recorded a benefit for unfunded commitments of $1.1 million for the three months ended June 30, 2023, a $1.5 million provision for unfunded commitments for the three months ended March 31, 2023, and no provision for unfunded commitments for the three months ended June 30, 2022. The recorded benefit for unfunded commitments for the three months ended June 30, 2023, compared to the three months ended March 31, 2023, was attributable to a decrease in unfunded commitment balances partially offset by changes in economic factors. Allowance for credit loss (“ACL”) as a percentage of LHI was 1.05%, 1.02% and 0.94% at June 30, 2023, March 31, 2023 and June 30, 2022, respectively.
Dividend Information
After the close of the market on Tuesday, July 25, 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 August 25, 2023 to stockholders of record as of the close of business on August 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, July 26, 2023, at 8:30 a.m. Central Time. Participants may pre-register for the call by visiting https://edge.media-server.com/mmc/p/xu9w726g and will receive a unique PIN, which can be used when dialing in for the call.
Participants may also register via teleconference at: https://register.vevent.com/register/BI4c4f56cfcc834a4f9ccbaba9c815983a. 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.
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 Six Months
EndedJun 30,
2023Mar 31,
2023Dec 31,
2022Sep 30,
2022Jun 30,
2022Jun 30,
2023Jun 30,
2022(Dollars and shares in thousands, except per share data) Per Share Data (Common Stock): Basic EPS $ 0.62 $ 0.71 $ 0.74 $ 0.80 $ 0.55 $ 1.33 $ 1.21 Diluted EPS 0.62 0.70 0.73 0.79 0.54 1.32 1.19 Book value per common share 27.48 27.54 26.83 26.15 26.50 27.48 26.50 Tangible book value per common share1 19.41 19.43 18.64 17.91 18.20 19.41 18.20 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 54,261 54,229 54,030 53,988 53,951 54,261 53,951 Weighted average basic shares outstanding for the period 54,247 54,149 54,011 53,979 53,949 54,199 52,331 Weighted average diluted shares outstanding for the period 54,486 54,606 54,780 54,633 54,646 54,546 53,121 Summary of Credit Ratios: ACL to total LHI 1.05 % 1.02 % 0.96 % 0.94 % 0.94 % 1.05 % 0.94 % NPAs to total assets 0.55 0.35 0.36 0.26 0.40 0.55 0.40 NPAs, excluding nonaccrual purchase credit deteriorated (“PCD”) loans, to total assets3 0.44 0.25 0.25 0.26 0.40 0.44 0.40 Net charge-offs to average loans outstanding4 0.48 0.04 0.24 0.12 0.04 0.26 0.14 Summary Performance Ratios: Return on average assets4 1.10 % 1.28 % 1.35 % 1.50 % 1.11 % 1.18 % 1.23 % Return on average equity4 8.96 10.55 11.03 11.82 8.21 9.74 9.07 Return on average tangible common equity1, 4 13.35 15.81 16.75 17.82 12.68 14.55 14.17 Efficiency ratio 49.94 48.42 47.63 44.71 50.76 49.17 51.76 Net interest margin 3.51 3.69 3.87 3.77 3.42 3.60 3.32 Selected Performance Metrics - Operating: Diluted operating EPS1 $ 0.64 $ 0.79 $ 0.74 $ 0.80 $ 0.55 $ 1.43 $ 1.20 Pre-tax, pre-provision operating return on average assets1, 4 1.90 % 2.21 % 2.15 % 2.20 % 1.76 % 2.05 % 1.74 % Pre-tax, pre-provision operating return on average loans1, 4 2.43 2.84 2.78 2.88 2.35 2.63 2.34 Operating return on average assets1,4 1.13 1.44 1.36 1.51 1.12 1.28 1.24 Operating return on average tangible common equity1,4 13.70 17.72 16.95 17.94 12.77 15.66 14.34 Operating efficiency ratio1 48.90 45.63 47.11 44.37 50.45 47.21 51.22 Veritex Holdings, Inc. Capital Ratios: Average stockholders' equity to average total assets 12.23 % 12.09 % 12.20 % 12.69 % 13.51 % 12.16 % 13.54 % Tangible common equity to tangible assets1 8.76 8.66 8.60 8.58 9.04 8.76 9.04 Tier 1 capital to average assets (leverage) 9.80 9.67 9.82 9.79 10.14 9.80 10.14 Common equity tier 1 capital 9.76 9.32 9.09 9.09 9.25 9.76 9.25 Tier 1 capital to risk-weighted assets 10.01 9.56 9.34 9.35 9.52 10.01 9.52 Total capital to risk-weighted assets 12.51 11.99 11.63 11.68 11.95 12.51 11.95 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, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 (unaudited) (unaudited) (unaudited) (unaudited) ASSETS Cash and cash equivalents $ 663,921 $ 808,395 $ 436,077 $ 433,897 $ 410,716 Debt securities, net 1,144,020 1,150,959 1,282,460 1,303,004 1,354,403 Other investments 138,894 137,621 122,450 115,551 202,685 Loans held for sale 29,876 42,816 20,641 17,644 14,210 LHI, MW 436,255 437,501 446,227 523,805 629,291 LHI, excluding MW 9,257,183 9,237,159 9,036,424 8,513,254 7,923,131 Total loans 9,723,314 9,717,476 9,503,292 9,054,703 8,566,632 ACL, loans (102,150 ) (98,694 ) (91,052 ) (85,037 ) (80,576 ) Bank-owned life insurance 84,375 84,962 84,496 84,030 84,097 Bank premises, furniture and equipment, net 105,986 107,540 108,824 108,720 108,769 Other real estate owned (“OREO”) — — — — 1,032 Intangible assets, net of accumulated amortization 48,293 51,086 53,213 56,238 59,011 Goodwill 404,452 404,452 404,452 404,452 404,452 Other assets 259,263 245,690 250,149 238,896 193,590 Total assets $ 12,470,368 $ 12,609,487 $ 12,154,361 $ 11,714,454 $ 11,304,811 LIABILITIES AND STOCKHOLDERS’ EQUITY Deposits: Noninterest-bearing deposits $ 2,234,109 $ 2,212,389 $ 2,640,617 $ 2,811,412 $ 2,947,830 Interest-bearing transaction and savings deposits 3,590,253 3,492,011 3,514,729 3,437,898 3,233,803 Certificates and other time deposits 2,928,949 2,896,870 2,086,642 1,667,364 1,562,626 Correspondent money market deposits 480,598 433,468 881,246 831,770 773,447 Total deposits 9,233,909 9,034,738 9,123,234 8,748,444 8,517,706 Accounts payable and other liabilities 190,900 171,985 177,579 173,198 126,116 Advances from FHLB 1,325,000 1,680,000 1,175,000 1,150,000 1,000,000 Subordinated debentures and subordinated notes 229,279 229,027 228,775 228,524 228,272 Securities sold under agreements to repurchase — — — 2,389 3,275 Total liabilities 10,979,088 11,115,750 10,704,588 10,302,555 9,875,369 Commitments and contingencies Stockholders’ equity: Common stock 609 609 607 606 606 Additional paid-in capital 1,311,687 1,308,345 1,306,852 1,303,171 1,300,170 Retained earnings 429,753 406,873 379,299 350,195 317,664 Accumulated other comprehensive loss (83,187 ) (54,508 ) (69,403 ) (74,491 ) (21,416 ) Treasury stock (167,582 ) (167,582 ) (167,582 ) (167,582 ) (167,582 ) Total stockholders’ equity 1,491,280 1,493,737 1,449,773 1,411,899 1,429,442 Total liabilities and stockholders’ equity $ 12,470,368 $ 12,609,487 $ 12,154,361 $ 11,714,454 $ 11,304,811 VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(In thousands, except per share data)For the Quarter Ended For the Six Months Ended Jun 30,
2023Mar 31,
2023Dec 31,
2022Sep 30,
2022Jun 30,
2022Jun 30,
2023Jun 30,
2022(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Interest income: Loans, including fees $ 163,727 $ 151,707 $ 136,846 $ 109,199 $ 82,191 $ 315,434 $ 153,634 Debt securities 10,166 10,988 10,880 10,462 9,632 21,154 17,394 Deposits in financial institutions and Fed Funds sold 7,507 5,534 3,401 1,898 714 13,041 976 Equity securities and other investments 1,118 1,408 1,087 1,666 1,057 2,526 1,967 Total interest income 182,518 169,637 152,214 123,225 93,594 352,155 173,971 Interest expense: Transaction and savings deposits 32,957 29,857 24,043 12,897 4,094 62,814 5,845 Certificates and other time deposits 28,100 20,967 8,543 3,919 1,465 49,067 2,845 Advances from FHLB 17,562 12,358 10,577 2,543 834 29,920 2,381 Subordinated debentures and subordinated notes 3,068 3,066 2,954 2,826 2,721 6,134 5,380 Total interest expense 81,687 66,248 46,117 22,185 9,114 147,935 16,451 Net interest income 100,831 103,389 106,097 101,040 84,480 204,220 157,520 Provision for credit losses1 15,000 9,385 11,800 6,650 9,000 24,385 8,500 (Benefit) provision for unfunded commitments (1,129 ) 1,497 (523 ) 850 — 368 493 Net interest income after provisions 86,960 92,507 94,820 93,540 75,480 179,467 148,527 Noninterest income: Service charges and fees on deposit accounts 5,272 5,017 5,173 5,217 5,039 10,289 9,749 Loan fees 1,520 2,064 2,477 2,786 2,385 3,584 5,179 Loss on sales of investment securities — (5,321 ) — — — (5,321 ) — Gain on sales of mortgage loans held for sale 40 6 4 16 223 46 530 Government guaranteed loan income, net 4,144 9,688 7,808 572 789 13,832 5,680 Equity method investment income (loss) 485 (1,521 ) (5,416 ) (1,058 ) 966 (1,036 ) 1,333 Customer swap income 961 217 2,273 3,358 1,321 1,178 2,267 Other income (loss) 1,270 3,381 2,007 2,130 (345 ) 4,651 737 Total noninterest income 13,692 13,531 14,326 13,021 10,378 27,223 25,475 Noninterest expense: Salaries and employee benefits 28,650 31,865 33,690 29,714 26,924 60,515 54,437 Occupancy and equipment 4,827 4,973 5,116 4,615 4,496 9,800 9,013 Professional and regulatory fees 6,868 4,389 4,401 3,718 2,865 11,257 6,023 Data processing and software expense 4,709 4,720 4,197 3,509 3,386 9,429 6,307 Marketing 2,627 1,779 1,841 1,845 2,306 4,406 3,493 Amortization of intangibles 2,468 2,495 2,495 2,494 2,495 4,963 4,990 Telephone and communications 355 478 358 389 352 833 737 Merger and acquisition (“M&A”) expense — — — 384 295 — 995 Other 6,693 5,916 5,261 4,323 5,034 12,609 8,730 Total noninterest expense 57,197 56,615 57,359 50,991 48,153 113,812 94,725 Income before income tax expense 43,455 49,423 51,787 55,570 37,705 92,878 79,277 Income tax expense 9,725 11,012 11,890 12,248 8,079 20,737 16,181 Net income $ 33,730 $ 38,411 $ 39,897 $ 43,322 $ 29,626 $ 72,141 $ 63,096 Net income available to common stockholders $ 33,730 $ 38,411 $ 39,897 $ 43,322 $ 29,626 $ 72,141 $ 63,096 Basic EPS $ 0.62 $ 0.71 $ 0.74 $ 0.80 $ 0.55 $ 1.33 $ 1.21 Diluted EPS $ 0.62 $ 0.70 $ 0.73 $ 0.79 $ 0.54 $ 1.32 $ 1.19 Weighted average basic shares outstanding 54,247 54,149 54,011 53,979 53,949 54,199 52,331 Weighted average diluted shares outstanding 54,486 54,606 54,780 54,633 54,646 54,546 53,121 1 Includes provision for credit losses on loans of $23.5 million and available for sale (“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, 2023 March 31, 2023 June 30, 2022 Average
Outstanding
BalanceInterest
Earned/
Interest
PaidAverage
Yield/
RateAverage
Outstanding
BalanceInterest
Earned/
Interest
PaidAverage
Yield/
RateAverage
Outstanding
BalanceInterest
Earned/
Interest
PaidAverage
Yield/
Rate(In thousands, except percentages) Assets Interest-earning assets: Loans1 $ 9,285,550 $ 158,685 6.85 % $ 9,141,137 $ 146,801 6.51 % $ 7,558,966 $ 78,262 4.15 % LHI, MW 371,763 5,042 5.44 360,172 4,906 5.52 479,187 3,929 3.29 Debt securities 1,133,845 10,166 3.60 1,252,457 10,988 3.56 1,318,502 9,632 2.93 Interest-bearing deposits in other banks 583,818 7,507 5.16 478,345 5,534 4.69 369,847 714 0.77 Equity securities and other investments 137,868 1,118 3.25 124,985 1,408 4.57 167,327 1,057 2.53 Total interest-earning assets 11,512,844 182,518 6.36 11,357,096 169,637 6.06 9,893,829 93,594 3.79 ACL, loans (102,559 ) (92,664 ) (74,268 ) Noninterest-earning assets 939,938 949,881 892,102 Total assets $ 12,350,223 $ 12,214,313 $ 10,711,663 Liabilities and Stockholders’ Equity Interest-bearing liabilities: Interest-bearing demand and savings deposits $ 3,919,745 $ 32,957 3.37 % $ 4,150,995 $ 29,857 2.92 % $ 3,770,098 $ 4,094 0.44 % Certificates and other time deposits 2,873,548 28,100 3.92 2,588,728 20,967 3.28 1,459,690 1,465 0.40 Advances from FHLB and Other 1,472,912 17,562 4.78 1,122,683 12,358 4.46 828,769 834 0.40 Subordinated debentures and subordinated notes 229,151 3,068 5.37 231,251 3,066 5.38 232,043 2,721 4.70 Total interest-bearing liabilities 8,495,356 81,687 3.86 8,093,657 66,248 3.32 6,290,600 9,114 0.58 Noninterest-bearing liabilities: Noninterest-bearing deposits 2,175,002 2,470,700 2,870,692 Other liabilities 169,240 173,380 102,994 Total liabilities 10,839,598 10,737,737 9,264,286 Stockholders’ equity 1,510,625 1,476,576 1,447,377 Total liabilities and stockholders’ equity $ 12,350,223 $ 12,214,313 $ 10,711,663 Net interest rate spread2 2.50 % 2.74 % 3.21 % Net interest income and margin3 $ 100,831 3.51 % $ 103,389 3.69 % $ 84,480 3.42 % 1 Includes average outstanding balances of loans held for sale of $23,374, $19,679 and $12,112 for the quarters ended June 30, 2023, March 31, 2023, and June 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)Six Months Ended June 30, 2023 June 30, 2022 Average
Outstanding
BalanceInterest
Earned/
Interest PaidAverage
Yield/ RateAverage
Outstanding
BalanceInterest
Earned/
Interest PaidAverage
Yield/ RateAssets Interest-earning assets: Loans1 $ 9,213,742 $ 305,486 6.69 % $ 7,233,431 $ 146,636 4.09 % LHI, WH 366,000 9,948 5.48 450,592 6,998 3.13 Debt securities 1,192,823 21,154 3.58 1,230,159 17,394 2.85 Interest-bearing deposits in other banks 531,373 13,041 4.95 461,844 976 0.43 Equity securities and other investments 131,462 2,526 3.87 178,602 1,967 2.22 Total interest-earning assets 11,435,400 352,155 6.21 9,554,628 173,971 3.67 ACL (97,639 ) (76,046 ) Noninterest-earning assets 944,883 878,679 Total assets $ 12,282,644 $ 10,357,261 Liabilities and Stockholders’ Equity Interest-bearing liabilities: Interest-bearing demand and savings deposits $ 4,033,975 $ 62,814 3.14 % $ 3,621,697 $ 5,845 0.33 % Certificates and other time deposits 2,731,925 49,067 3.62 1,480,654 2,845 0.39 Advances from FHLB and Other 1,298,765 29,920 4.65 803,295 2,381 0.60 Subordinated debentures and subordinated notes 230,195 6,134 5.37 231,959 5,380 4.68 Total interest-bearing liabilities 8,294,860 147,935 3.60 6,137,605 16,451 0.54 Noninterest-bearing liabilities: Noninterest-bearing deposits 2,322,790 2,731,869 Other liabilities 171,299 85,126 Total liabilities 10,788,949 8,954,600 Stockholders’ equity 1,493,695 1,402,661 Total liabilities and stockholders’ equity $ 12,282,644 $ 10,357,261 Net interest rate spread2 2.61 % 3.13 % Net interest income and margin3 $ 204,220 3.60 % $ 157,520 3.32 % 1 Includes average outstanding balances of loans held for sale of $21,537 and $12,440 for the six months ended June 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 Jun 30,
2023Mar 31,
2023Dec 31,
2022Sep 30,
2022Jun 30,
2022Average yield on interest-earning assets: Loans1 6.85 % 6.51 % 5.98 % 5.01 % 4.15 % LHI, MW 5.44 5.52 5.20 4.11 3.29 Debt securities 3.60 3.56 3.36 3.05 2.93 Interest-bearing deposits in other banks 5.16 4.69 3.81 2.17 0.77 Equity securities and other investments 3.25 4.57 3.62 3.25 2.53 Total interest-earning assets 6.36 % 6.06 % 5.55 % 4.59 % 3.79 % Average rate on interest-bearing liabilities: Interest-bearing demand and savings deposits 3.37 % 2.92 % 2.21 % 1.23 % 0.44 % Certificates and other time deposits 3.92 3.28 1.90 0.94 0.40 Advances from FHLB 4.78 4.46 3.91 1.12 0.40 Subordinated debentures and subordinated notes 5.37 5.38 5.12 4.85 4.70 Total interest-bearing liabilities 3.86 % 3.32 % 2.47 % 1.27 % 0.58 % Net interest rate spread2 2.50 % 2.74 % 3.08 % 3.32 % 3.21 % Net interest margin3 3.51 % 3.69 % 3.87 % 3.77 % 3.42 %
1Includes average outstanding balances of loans held for sale of $23,374, $19,679, $15,296, $14,023 and $12,112 for the three months ended June 30, 2023, March 31, 2023, December 31, 2022, September 30, 2022 and June 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 Jun 30,
2023Mar 31,
2023Dec 31,
2022Sep 30,
2022Jun 30,
2022Average cost of interest-bearing deposits 3.61 % 3.06 % 2.12 % 1.15 % 0.43 % Average costs of total deposits, including noninterest-bearing 2.73 2.24 1.46 0.76 0.28 VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(Unaudited)LHI and Deposit Portfolio Composition
Jun 30,
2023Mar 31,
2023Dec 31,
2022Sep 30,
2022Jun 30,
2022(In thousands, except percentages) LHI1 Commercial and Industrial (“C&I”) $ 2,850,084 30.7 % $ 2,895,957 31.3 % $ 2,942,348 32.4 % $ 2,743,769 32.2 % $ 2,457,742 31.0 % Real Estate: Owner occupied commercial (“OOCRE”) 671,602 7.2 631,563 6.8 715,829 7.9 677,705 7.9 646,723 8.1 Non-owner occupied commercial (“NOOCRE”) 2,509,731 27.1 2,505,344 27.1 2,341,379 25.9 2,273,305 26.6 2,203,970 27.8 Construction and land 1,659,700 17.9 1,831,349 19.8 1,787,400 19.7 1,673,997 19.6 1,532,997 19.3 Farmland 51,663 0.6 51,680 0.6 43,500 0.5 43,569 0.5 47,319 0.6 1-4 family residential 923,442 10.0 896,252 9.7 894,456 9.9 858,693 10.1 765,260 9.6 Multi-family residential 592,473 6.4 432,209 4.6 322,679 3.6 252,244 3.0 276,632 3.5 Consumer 11,189 0.1 8,316 0.1 7,806 0.1 7,465 0.1 7,520 0.1 Total LHI $ 9,269,884 100 % $ 9,252,670 100 % $ 9,055,397 100 % $ 8,530,747 100 % $ 7,938,163 100 % MW 436,255 437,501 446,227 523,805 629,291 Total LHI1 $ 9,706,139 $ 9,690,171 $ 9,501,624 $ 9,054,552 $ 8,567,454 Deposits Noninterest-bearing $ 2,234,109 24.2 % $ 2,212,389 24.5 % $ 2,640,617 28.9 % $ 2,811,412 32.1 % $ 2,947,830 34.6 % Interest-bearing transaction 676,653 7.3 866,609 9.6 622,814 6.8 603,729 6.9 660,557 7.8 Money market 2,816,769 30.5 2,518,922 27.9 2,773,622 30.4 2,701,762 30.9 2,443,748 28.7 Savings 96,831 1.0 106,480 1.2 118,293 1.3 132,407 1.5 129,498 1.5 Certificates and other time deposits 2,928,949 31.7 2,896,870 32.0 2,086,642 22.9 1,667,364 19.1 1,562,626 18.3 Correspondent money market accounts 480,598 5.2 433,468 4.8 881,246 9.7 831,770 9.5 773,447 9.1 Total deposits $ 9,233,909 100 % $ 9,034,738 100 % $ 9,123,234 100 % $ 8,748,444 100 % $ 8,517,706 100 % Loan to Deposit Ratio 105.1 % 107.3 % 104.1 % 103.5 % 100.6 % Loan to Deposit Ratio, excluding MW 100.4 % 102.4 % 99.3 % 97.5 % 93.2 % 1 Total LHI does not include deferred fees of $12.7 million, $15.5 million, $19.0 million, $17.5 million and $15.0 million at June 30, 2023, March 31, 2023, December 31, 2022, September 30, 2022 and June 30, 2022, respectively.
VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(Unaudited)
Asset QualityFor the Quarter Ended Six Months Ended Jun 30,
2023Mar 31,
2023Dec 31,
2022Sep 30,
2022Jun 30,
2022June 30,
2023Jun 30,
2022(In thousands, except percentages) NPAs: Nonaccrual loans $ 54,055 $ 31,452 $ 30,364 $ 30,592 $ 42,242 $ 54,055 $ 42,242 Nonaccrual PCD loans1 13,721 12,784 13,178 — — 13,721 — Accruing loans 90 or more days past due2 528 296 125 — 1,753 528 1,753 Total nonperforming loans held for investment (“NPLs”) 68,304 44,532 43,667 30,592 43,995 68,304 43,995 OREO — — — — 1,032 — 1,032 Total NPAs $ 68,304 $ 44,532 $ 43,667 $ 30,592 $ 45,027 $ 68,304 $ 45,027 Charge-offs: OOCRE $ — $ (116 ) $ — $ (1,061 ) $ (244 ) $ (116 ) $ (1,585 ) NOOCRE (8,215 ) — (1,019 ) (838 ) — (8,215 ) (553 ) C&I (3,540 ) (1,051 ) (5,449 ) (460 ) (528 ) (4,591 ) (3,822 ) Consumer (92 ) (62 ) (41 ) (19 ) (1,091 ) (154 ) (1,225 ) Total charge-offs (11,847 ) (1,229 ) (6,509 ) (2,378 ) (1,863 ) (13,076 ) (7,185 ) Recoveries: 1-4 family residential 1 1 24 4 3 2 3 OOCRE — — 26 — 245 — 245 NOOCRE 150 — 229 3 93 150 493 C&I 106 364 415 177 572 470 716 Consumer 46 6 30 5 41 52 50 Total recoveries 303 371 724 189 954 674 1,507 Net charge-offs $ (11,544 ) $ (858 ) $ (5,785 ) $ (2,189 ) $ (909 ) $ (12,402 ) $ (5,678 ) ACL $ 102,150 $ 98,694 $ 91,052 $ 85,037 $ 80,576 $ 102,150 $ 80,576 Asset Quality Ratios: NPAs to total assets 0.55 % 0.35 % 0.36 % 0.26 % 0.40 % 0.55 % 0.40 % NPAs, excluding nonaccrual PCD loans, to total assets 0.44 0.25 0.25 0.26 0.40 0.44 0.40 NPLs to total LHI 0.71 0.47 0.48 0.35 0.55 0.71 0.55 NPLs, excluding nonaccrual PCD loans, to total LHI 0.56 0.33 0.32 0.34 0.51 0.56 0.51 ACL to total LHI 1.05 1.02 0.96 0.94 0.94 1.05 0.94 Net charge-offs to average loans outstanding3 0.48 0.04 0.24 0.12 0.04 0.26 0.14 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 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 (Dollars in thousands, except per share data) Tangible Common Equity Total stockholders' equity $ 1,491,280 $ 1,493,737 $ 1,449,773 $ 1,411,899 $ 1,429,442 Adjustments: Goodwill (404,452 ) (404,452 ) (404,452 ) (404,452 ) (404,452 ) Core deposit intangibles (33,371 ) (35,808 ) (38,247 ) (40,684 ) (43,122 ) Tangible common equity $ 1,053,457 $ 1,053,477 $ 1,007,074 $ 966,763 $ 981,868 Common shares outstanding 54,261 54,229 54,030 53,988 53,951 Book value per common share $ 27.48 $ 27.54 $ 26.83 $ 26.15 $ 26.50 Tangible book value per common share $ 19.41 $ 19.43 $ 18.64 $ 17.91 $ 18.20 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, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 (Dollars in thousands) Tangible Common Equity Total stockholders' equity $ 1,491,280 $ 1,493,737 $ 1,449,773 $ 1,411,899 $ 1,429,442 Adjustments: Goodwill (404,452 ) (404,452 ) (404,452 ) (404,452 ) (404,452 ) Core deposit intangibles (33,371 ) (35,808 ) (38,247 ) (40,684 ) (43,122 ) Tangible common equity $ 1,053,457 $ 1,053,477 $ 1,007,074 $ 966,763 $ 981,868 Tangible Assets Total assets $ 12,470,368 $ 12,609,487 $ 12,154,361 $ 11,714,454 $ 11,304,811 Adjustments: Goodwill (404,452 ) (404,452 ) (404,452 ) (404,452 ) (404,452 ) Core deposit intangibles (33,371 ) (35,808 ) (38,247 ) (40,684 ) (43,122 ) Tangible Assets $ 12,032,545 $ 12,169,227 $ 11,711,662 $ 11,269,318 $ 10,857,237 Tangible Common Equity to Tangible Assets 8.76 % 8.66 % 8.60 % 8.58 % 9.04 % 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 Six Months Ended Jun 30,
2023Mar 31,
2023Dec 31,
2022Sep 30,
2022Jun 30,
2022June 30,
2023Jun 30,
2022(Dollars in thousands) Net income available for common stockholders adjusted for amortization of core deposit intangibles Net income $ 33,730 $ 38,411 $ 39,897 $ 43,322 $ 29,626 $ 72,141 $ 63,096 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 $ 35,656 $ 40,337 $ 41,823 $ 45,248 $ 31,552 $ 75,993 $ 66,948 Average Tangible Common Equity Total average stockholders' equity $ 1,510,625 $ 1,476,576 $ 1,434,818 $ 1,453,816 $ 1,447,377 $ 1,493,695 $ 1,402,661 Adjustments: Average goodwill (404,452 ) (404,452 ) (404,452 ) (404,452 ) (404,452 ) (404,452 ) (404,234 ) Average core deposit intangibles (34,969 ) (37,361 ) (39,792 ) (42,230 ) (44,720 ) (36,159 ) (45,932 ) Average tangible common equity $ 1,071,204 $ 1,034,763 $ 990,574 $ 1,007,134 $ 998,205 $ 1,053,084 $ 952,495 Return on Average Tangible Common Equity (Annualized) 13.35 % 15.81 % 16.75 % 17.82 % 12.68 % 14.55 % 14.17 % 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, 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 Six Months Ended Jun 30,
2023Mar 31,
2023Dec 31,
2022Sep 30,
2022Jun 30,
2022June 30,
2023Jun 30,
2022(Dollars in thousands, except per share data) Operating Earnings Net income $ 33,730 $ 38,411 $ 39,897 $ 43,322 $ 29,626 $ 72,141 $ 63,096 Plus: Severance payments1 1,194 835 630 — — 2,029 — Plus: Loss on sale of debt securities AFS, net — 5,321 — — — 5,321 — Plus: M&A expenses — — — 384 295 — 995 Operating pre-tax income 34,924 44,567 40,527 43,706 29,921 79,491 64,091 Less: Tax impact of adjustments 251 1,293 132 81 66 1,544 222 Operating earnings $ 34,673 $ 43,274 $ 40,395 $ 43,625 $ 29,855 $ 77,947 $ 63,869 Weighted average diluted shares outstanding 54,486 54,606 54,780 54,633 54,646 54,546 53,121 Diluted EPS $ 0.62 $ 0.70 $ 0.73 $ 0.79 $ 0.54 $ 1.32 $ 1.19 Diluted operating EPS $ 0.64 $ 0.79 $ 0.74 $ 0.80 $ 0.55 $ 1.43 $ 1.20 1 Severance payments relate to certain restructurings made during the periods disclosed.
For the Quarter Ended Six Months Ended Jun 30,
2023Mar 31,
2023Dec 31,
2022Sep 30,
2022Jun 30,
2022June 30,
2023Jun 30,
2022(Dollars in thousands) Pre-Tax, Pre-Provision Operating Earnings Net income $ 33,730 $ 38,411 $ 39,897 $ 43,322 $ 29,626 $ 72,141 $ 63,096 Plus: Provision for income taxes 9,725 11,012 11,890 12,248 8,079 20,737 16,181 Plus: Provision for credit losses and unfunded commitments 13,871 10,882 11,277 7,500 9,000 24,753 8,993 Plus: Severance payments 1,194 835 630 — — 2,029 — Plus: Loss on sale of debt securities AFS, net — 5,321 — — — 5,321 — Plus: M&A expenses — — — 384 295 — 995 Pre-tax, pre-provision operating earnings $ 58,520 $ 66,461 $ 63,694 $ 63,454 $ 47,000 $ 124,981 $ 89,265 Average total assets $ 12,350,223 $ 12,214,313 $ 11,761,044 $ 11,460,857 $ 10,711,663 $ 12,282,644 $ 10,357,261 Pre-tax, pre-provision operating return on average assets1 1.90 % 2.21 % 2.15 % 2.20 % 1.76 % 2.05 % 1.74 % Average loans $ 9,657,313 $ 9,501,309 $ 9,103,552 $ 8,729,093 $ 8,038,153 $ 9,579,742 $ 7,684,023 Pre-tax, pre-provision operating return on average loans1 2.43 % 2.84 % 2.78 % 2.88 % 2.35 % 2.63 % 2.34 % Average total assets $ 12,350,223 $ 12,214,313 $ 11,761,044 $ 11,460,857 $ 10,711,663 $ 12,282,644 $ 10,357,261 Return on average assets1 1.10 % 1.28 % 1.35 % 1.50 % 1.11 % 1.18 % 1.23 % Operating return on average assets1 1.13 1.44 1.36 1.51 1.12 1.28 1.24 Operating earnings adjusted for amortization of core deposit intangibles Operating earnings $ 34,673 $ 43,274 $ 40,395 $ 43,625 $ 29,855 $ 77,947 $ 63,869 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 $ 36,599 $ 45,200 $ 42,321 $ 45,551 $ 31,781 $ 81,799 $ 67,721 Average Tangible Common Equity Total average stockholders' equity $ 1,510,625 $ 1,476,576 $ 1,434,818 $ 1,453,816 $ 1,447,377 $ 1,493,695 $ 1,402,661 Adjustments: Less: Average goodwill (404,452 ) (404,452 ) (404,452 ) (404,452 ) (404,452 ) (404,452 ) (404,234 ) Less: Average core deposit intangibles (34,969 ) (37,361 ) (39,792 ) (42,230 ) (44,720 ) (36,159 ) (45,932 ) Average tangible common equity $ 1,071,204 $ 1,034,763 $ 990,574 $ 1,007,134 $ 998,205 $ 1,053,084 $ 952,495 Operating return on average tangible common equity1 13.70 % 17.72 % 16.95 % 17.94 % 12.77 % 15.66 % 14.34 % Efficiency ratio 49.94 % 48.42 % 47.63 % 44.71 % 50.76 % 49.17 % 51.76 % Net interest income $ 100,831 $ 103,389 $ 106,097 $ 101,040 $ 84,480 $ 204,220 $ 157,520 Noninterest income 13,692 13,531 14,326 13,021 10,378 27,223 25,475 Plus: Loss on sale of AFS securities, net — 5,321 — — — 5,321 — Operating noninterest income 13,692 18,852 14,326 13,021 10,378 32,544 25,475 Noninterest expense 57,197 56,615 57,359 50,991 48,153 113,812 94,725 Less: Severance payments 1,194 835 630 — — 2,029 — Less: M&A expenses — — — 384 295 — 995 Operating noninterest expense $ 56,003 $ 55,780 $ 56,729 $ 50,607 $ 47,858 $ 111,783 $ 93,730 Operating efficiency ratio 48.90 % 45.63 % 47.11 % 44.37 % 50.45 % 47.21 % 51.22 % 1 Annualized ratio for quarterly metrics.
Media and Investor Relations: investorrelations@veritexbank.com
