• Veritex Holdings, Inc. Reports Fourth Quarter and Year-End 2021 Operating Results

    Source: Nasdaq GlobeNewswire / 25 Jan 2022 16:01:02   America/New_York

    DALLAS, Jan. 25, 2022 (GLOBE NEWSWIRE) -- Veritex Holdings, Inc. (“Veritex” or the “Company”) (Nasdaq: VBTX), the holding company for Veritex Community Bank, today announced the results for the fourth quarter and full year of 2021.

    “We reported strong fourth quarter and 2021 results as the Texas economy continues to improve and we remained focused on our organic growth strategy," said President and Chief Executive Officer, Malcolm C. Holland, III. "Deposit growth remained strong and loan balances increased for the sixth quarter in a row with loan balances, excluding our mortgage warehouse and PPP loans, growing approximately 16% during 2021.”

    "We remained laser focused and delivered on one of our main strategies as a company....be transformative and deliver top tier financial results. With our 49% investment in Thrive Mortgage, LLC ("Thrive"), which has contributed $6 million of increased noninterest income since July 2021, and our acquisition of North Avenue Capital, LLC ("NAC"), the nation’s leader in USDA lending, which has contributed $1.3 million of increased noninterest income since November 1, 2021, we transformed, delivered and positioned Veritex to further diversify revenue streams as we continue to organically grow."

    "Asset quality continues to improve, with loss rates driven by economic forecasts approaching pre-pandemic levels, leading to a release in credit reserves. Nonperforming assets ("NPAs") to total assets improved 26 basis points to 0.51% during the fourth quarter, the lowest level since December 31, 2019."

    "Business momentum, continued organic growth, investment in talent, revenue diversification, improving credit metrics, a recovering economy, maintaining our strong culture and pursuit of opportunities to further scale have me excited for 2022 and the future of this Company."

    Financial Highlights Quarter to Date Year to Date
      Q4 2021 Q3 2021  2021   2020 
      (Dollars in thousands, except per share data)
    (unaudited)
    GAAP        
    Net income $41,506  $36,835  $139,584  $73,883 
    Diluted EPS  0.82   0.73   2.77   1.48 
    Book value per common share  26.64   26.09   26.64   24.39 
    Return on average assets2  1.68%  1.56%  1.49%  0.87%
    Efficiency ratio  48.53   47.55   49.45   50.90 
    Return on average equity2  12.65   11.32   11.01   6.34 
    Non-GAAP1        
    Operating earnings $42,410  $35,072  $139,647  $77,980 
    Diluted operating EPS  0.84   0.70   2.77   1.56 
    Tangible book value per common share  17.49   17.53   17.49   15.70 
    Pre-tax, pre-provision operating earnings  48,640   43,858   171,205   162,447 
    Pre-tax, pre-provision operating return on average assets2  1.97%  1.85%  1.83%  1.91%
    Operating return on average assets2  1.72   1.48   1.49   0.91 
    Operating efficiency ratio  47.64   48.51   49.27   47.69 
    Return on average tangible common equity2  20.06   17.72   17.57   11.16 
    Operating return on average tangible common equity2  20.48   16.92   17.58   11.72 

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

    Other Fourth Quarter and 2021 Highlights:

    • Total loans held for investment ("LHI"), excluding Paycheck Protection Program ("PPP") and mortgage warehouse ("MW") loans, grew $150.1 million, from the third quarter of 2021, or 9.1% annualized, and grew $918.1 million, or 15.7%, year-over-year;
    • Total deposits grew $184.9 million for the fourth quarter of 2021, or 10.3% annualized, with the average cost of total deposits decreasing to 0.18% for the three months ended December 31, 2021 from 0.20% for the three months ended September 30, 2021. Total deposits grew $850.8 million, or 13.1%, year-over-year;
    • NPAs to total assets decreased to 0.51% , or 26 basis points from September 30, 2021, and decreased 48 basis points from December 31, 2020;
    • Announced the completion of the Company’s 49% investment in Thrive during the third quarter of 2021 and recognized $5.8 million of equity method investment income, which includes $1.9 million of PPP loan forgiveness income;
    • Closed the acquisition of NAC on November 1, 2021; and
    • Declared quarterly cash dividend of $0.20 per share of outstanding common stock payable on February 25, 2022.

    Result of Operations for the Three Months Ended December 31, 2021

    Net Interest Income

    For the three months ended December 31, 2021, net interest income before provision for credit losses was $76.7 million and net interest margin was 3.37% compared to $71.3 million and 3.26%, respectively, for the three months ended September 30, 2021. The $5.4 million increase in net interest income before provision for credit losses was primarily due to a $3.0 million increase in interest income on loans driven by an increase in average balances and the recognition of $2.1 million of prepayment penalty income on debt securities during three months ended December 31, 2021. Net interest margin increased 11 basis points from the three months ended September 30, 2021 primarily due to the increase in yields earned on debt securities as a result of the recognition of $2.1 million of prepayment penalty income during three months ended December 31, 2021. The average cost of interest-bearing deposits decreased 4 basis points to 0.26% for the three months ended December 31, 2021 from 0.30% for the three months ended September 30, 2021.

    Net interest income before provision for credit losses increased by $9.9 million from $66.8 million to $76.7 million and net interest margin increased 8 basis points from 3.29% to 3.37% for the three months ended December 31, 2021 as compared to the same period in 2020. The increase in net interest income before provision for credit losses was primarily due to a $4.6 million increase in interest income on loans driven by an increase in average balances, the recognition of $2.1 million of prepayment penalty income on debt securities and a $2.3 million decrease in interest expenses on certificates and other time deposits during the three months ended December 31, 2021 compared to the three months ended December 31, 2020. Net interest margin increased 8 basis points compared to the three months ended December 31, 2020 primarily due to an increase in yields earned on debt securities as a result of the recognition of $2.1 million of prepayment penalty income and decreases in the average rate paid on interest-bearing demand and savings deposits and certificates and other time deposits for the three months ended December 31, 2021. As a result, the average cost of interest-bearing deposits decreased to 0.26% for the three months ended December 31, 2021 from 0.55% for the three months ended December 31, 2020.

    Noninterest Income

    Noninterest income for the three months ended December 31, 2021 was $16.2 million, an increase of $523 thousand, or 3.3% compared to the three months ended September 30, 2021. The increase in noninterest income was primarily due to a $1.1 million increase in government guaranteed loan income, net, and a $951 thousand increase in loan fees. These increases were partially offset by a $3.2 million decrease in equity method investment income.

    Compared to the three months ended December 31, 2020, noninterest income for the three months ended December 31, 2021 grew $7.1 million, or 79.2%. The increase was primarily due to a $3.0 million increase in government guaranteed loan income, a $2.0 million increase in loan fees, a $1.2 million increase in equity method investment income and a $811 thousand increase in service charges and fees on deposit accounts.

    Noninterest Expense

    Noninterest expense was $45.1 million for the three months ended December 31, 2021, compared to $41.3 million for the three months ended September 30, 2021, an increase of $3.8 million, or 9.1%. The increase was primarily driven by a $2.4 million increase in salaries and employee benefits and a $826 thousand increase in merger and acquisition expenses incurred as a result of the acquisition of NAC in November of 2021.

    Noninterest expense was $45.1 million for the three months ended December 31, 2021, compared to $47.4 million for the three months ended December 31, 2020, a decrease of $2.3 million, or 4.8%. The decrease in noninterest expense was primarily due to debt extinguishment costs of $9.7 million incurred in the three months ended December 31, 2020 with no corresponding expense in the same period in 2021. The decrease was partially offset by an increase of $5.4 million in salaries and employee benefits, a $826 thousand increase in merger and acquisition expenses incurred related to the acquisition of NAC, a $498 thousand increase in marketing expense and a $359 thousand increase in data processing and software expense.

    Financial Condition

    Total LHI, excluding MW and PPP, were $6.8 billion at December 31, 2021, an increase of $150.1 million, or 9.1% annualized, compared to September 30, 2021, and an increase of $918.1 million, or 15.7%, compared to December 31, 2020. These increases were the result of the continued execution and success of our loan growth strategy.

    Total deposits were $7.4 billion at December 31, 2021, an increase of $184.9 million, or 10.3% annualized, compared to September 30, 2021 and an increase of $850.8 million, or 13.1%, compared to December 31, 2020. The increase from September 30, 2021 was primarily the result of increase of $207.8 million in non-interest bearing demand deposits and an increase of $48.0 million in interest-bearing transaction and savings deposits accounts. The increase from December 31, 2020 was primarily the result of increases of $413.6 million, $317.9 million and $119.3 million in non-interest bearing demand deposits, interest-bearing transaction and savings deposits accounts and certificates and other time deposits, respectively.

    Asset Quality

    NPAs decreased to $50.1 million, or 0.51% of total assets, at December 31, 2021, compared to $74.0 million, or 0.77% of total assets, at September 30, 2021. The Company had net charge-offs of $12.7 million for the quarter, which were substantially reserved against in prior quarters under our allowance for credit loss model.

    The Company recorded a benefit for credit losses of $3.3 million for the three months ended December 31, 2021, compared to no provision for credit losses for the three months ended September 30, 2021 and December 31, 2020. The benefit for credit losses reported for the three months ended December 31, 2021, compared to the three months ended September 30, 2021 and December 31, 2020, was attributable to improvement in the Texas economic forecasts used in the Current Expected Credit Losses (“CECL”) model in the fourth quarter of 2021 to reflect the expected impact of the COVID-19 pandemic as of December 31, 2021, as compared to our Texas economic forecasts and expected impact of the COVID-19 pandemic as of September 30, 2021 and December 31, 2020. During the three months ended December 31, 2021, we recorded a $1.0 million benefit for unfunded commitments, which was also attributable to improvement in the Texas economic forecasts.

    Allowance for credit losses ("ACL") as a percentage of LHI, excluding MW and PPP loans, was 1.15%, 1.42% and 1.80% at December 31, 2021, September 30, 2021 and December 31, 2020, respectively.

    Dividend Information

    On January 25, 2022, 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 February 25, 2022 to stockholders of record as of the close of business on February 11, 2022.

    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, diluted operating earnings per share, operating return on average assets, operating return on average tangible common equity and operating efficiency ratio. Veritex has included in this earnings release information related to these non-GAAP financial measures for the applicable periods presented. Please refer to “Reconciliation of Non-GAAP Financial Measures” after the financial highlights at the end of this earnings release for a reconciliation of these non-GAAP financial measures.

    Conference Call

    The Company will host an investor conference call to review the results on Wednesday, January 26, 2021 at 8:30 a.m. Central Time. Participants may pre-register for the call by visiting https://edge.media-server.com/mmc/p/rcmgsdby and will receive a unique PIN number, which can be used when dialing in for the call. This will allow attendees to enter the call immediately. Alternatively, participants may call toll-free at (877) 703-9880.

    The call and corresponding presentation slides will be webcast live on the home page of the Company's website, www.veritexbank.com. An audio replay will be available one hour after the conclusion of the call at (855) 859-2056, Conference #9296970. This replay, as well as the webcast, will be available until February 2, 2021.

    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 contains certain “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 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 date of Veritex’s quarterly cash dividend, the impact of certain changes in Veritex’s accounting policies, standards and interpretations, the effects of the COVID-19 pandemic and actions taken in response thereto, 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,” “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. Further, certain important factors could affect future results and cause actual results to differ materially from those expressed in the forward-looking statements, including, but not limited to, that the businesses of the Company and NAC will not be integrated successfully, that the cost savings and any synergies from the acquisition may not be fully realized or may take longer to realize than expected, disruption from the acquisition making it more difficult to maintain relationships with employees, customers or other parties with whom the Company or NAC have business relationships, diversion of management time on acquisition-related issues, the reaction to the transaction of the companies’ customers, employees and counterparties and other factors, many of which are beyond the control of the Company and NAC. Further, certain important factors could affect future results and cause actual results to differ materially from those expressed in the forward-looking statements, including, but not limited to, that the businesses of the Company and NAC will not be integrated successfully, that the cost savings and any synergies from the acquisition may not be fully realized or may take longer to realize than expected, disruption from the acquisition making it more difficult to maintain relationships with employees, customers or other parties with whom the Company or NAC have business relationships, diversion of management time on acquisition-related issues, the reaction to the transaction of the companies’ customers, employees and counterparties and other factors, many of which are beyond the control of the Company and NAC. 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, 2020 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 update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by law. All forward-looking statements, expressed or implied, included in this earnings release are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that Veritex or persons acting on Veritex’s behalf may issue.


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

      For the Quarter Ended For the Year Ended
      Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Dec 31, 2021 Dec 31, 2020
      (Dollars and shares in thousands, except per-share data)
    Per Share Data (Common Stock):              
    Basic EPS $0.84  $0.75  $0.60  $0.64  $0.46  $2.83  $1.48 
    Diluted EPS  0.82   0.73   0.59   0.64   0.46   2.77   1.48 
    Book value per common share  26.64   26.09   25.72   24.96   24.39   26.64   24.39 
    Tangible book value per common share1  17.49   17.53   17.16   16.34   15.70   17.49   15.70 
    Dividends paid per common share outstanding2  0.20   0.20   0.20   0.17   0.17   0.77   0.68 
                   
    Common Stock Data:              
    Shares outstanding at period end  49,372   49,229   49,498   49,433   49,340   49,372   49,340 
    Weighted average basic shares outstanding for the period  49,329   49,423   49,476   49,394   49,571   49,405   49,884 
    Weighted average diluted shares outstanding for the period  50,441   50,306   50,331   49,998   49,837   50,352   50,036 
                   
    Summary of Credit Ratios:              
    ACL to total LHI, excluding MW and PPP loans  1.15%  1.42%  1.59%  1.76%  1.80%  1.15%  1.80%
    NPAs to total assets  0.51   0.77   0.85   0.92   0.99   0.51   0.99 
    Net charge-offs to average loans outstanding  0.19   0.09   0.09   —   0.28   0.38   0.36 
                   
    Summary Performance Ratios:              
    Return on average assets3  1.68%  1.56%  1.27%  1.44%  1.04%  1.49%  0.87%
    Return on average equity3  12.65   11.32   9.42   10.53   7.58   11.01   6.34 
    Return on average tangible common equity1, 3  20.06   17.72   15.18   17.17   12.84   17.57   11.16 
    Efficiency ratio  48.53   47.55   52.42   49.62   62.52   49.45   50.90 
    Net interest margin  3.37%  3.26%  3.11%  3.22%  3.29%  3.24%  3.39%
                   
    Selected Performance Metrics - Operating:              
    Diluted operating EPS1 $0.84  $0.70  $0.60  $0.64  $0.60  $2.77  $1.56 
    Pre-tax, pre-provision operating return on average assets1, 2  1.97%  1.85%  1.66%  1.82%  1.75%  1.83%  1.91%
    Operating return on average assets1, 3  1.72   1.48   1.29   1.46   1.35   1.49   0.91 
    Operating return on average tangible common equity1, 3  20.48   16.92   15.42   17.39   16.44   17.58   11.72 
    Operating efficiency ratio1  47.64   48.51   51.63   49.62   49.49   49.27   47.69 
                   
    Veritex Holdings, Inc. Capital Ratios:              
    Average stockholders' equity to average total assets  13.30%  13.75%  13.46%  13.69%  13.67%  13.54%  13.66%
    Tangible common equity to tangible assets1  9.28   9.43   9.51   9.17   9.23   9.28   9.23 
    Tier 1 capital to average assets (leverage)  9.05   9.54   9.38   9.50   9.43   9.05   9.43 
    Common equity tier 1 capital  8.58   8.75   9.03   9.27   9.30   8.58   9.30 
    Tier 1 capital to risk-weighted assets  8.89   9.06   9.36   9.61   9.66   8.89   9.66 
    Total capital to risk-weighted assets  11.60   12.31   12.86   13.38   13.56   11.60   13.56 

    1 Refer to "Reconciliation of Non-GAAP Financial Measures" after the financial highlights for a reconciliation of this non-GAAP financial measure to its most directly comparable GAAP measure.
    2 Dividend amount represents dividend paid per common share subsequent to each respective quarter end.
    3 Annualized ratio for quarterly metrics.


    VERITEX HOLDINGS, INC. AND SUBSIDIARIES
    Financial Highlights
    (in thousands)

      Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020
      (unaudited) (unaudited) (unaudited) (unaudited)  
    ASSETS          
    Cash and cash equivalents $379,784  $229,712  $390,027  $468,029  $230,825 
    Debt securities  1,052,494   1,103,745   1,125,877   1,077,860   1,055,201 
    Other investments  190,591   191,786   87,558   87,226   87,192 
               
    Loans held for sale  26,007   18,896   12,065   19,864   21,414 
    LHI PPP loans, carried at fair value  53,369   135,842   291,401   407,353   358,042 
    LHI, MW  565,645   615,045   559,939   599,001   577,594 
    LHI, excluding MW and PPP  6,766,009   6,615,905   6,272,087   5,963,493   5,847,862 
    Total loans  7,411,030   7,385,688   7,135,492   6,989,711   6,804,912 
    ACL  (77,754)  (93,771)  (99,543)  (104,936)  (105,084)
    Bank-owned life insurance  83,194   83,781   83,304   83,318   82,855 
    Bank premises, furniture and equipment, net  109,271   116,063   123,504   114,585   115,063 
    Other real estate owned ("OREO")  —   —   2,467   2,337   2,337 
    Intangible assets, net of accumulated amortization  66,017   54,682   57,143   59,236   61,733 
    Goodwill  403,771   370,840   370,840   370,840   370,840 
    Other assets  138,851   129,774   72,856   89,304   114,997 
    Total assets $9,757,249  $9,572,300  $9,349,525  $9,237,510  $8,820,871 
    LIABILITIES AND STOCKHOLDERS’ EQUITY          
    Deposits:          
    Noninterest-bearing deposits $2,510,723  $2,302,925  $2,388,068  $2,171,719  $2,097,099 
    Interest-bearing transaction and savings deposits  3,276,312   3,228,306   3,112,974   3,189,693   2,958,456 
    Certificates and other time deposits  1,576,580   1,647,521   1,477,860   1,543,158   1,457,291 
    Total deposits  7,363,615   7,178,752   6,978,902   6,904,570   6,512,846 
    Accounts payable and other liabilities  69,160   66,571   55,499   55,902   61,928 
    Advances from Federal Home Loan Bank ("FHLB")  777,562   777,601   777,640   777,679   777,718 
    Subordinated debentures and subordinated notes  227,764   262,761   262,766   262,774   262,778 
    Securities sold under agreements to repurchase  4,069   2,455   1,811   2,777   2,225 
    Total liabilities  8,442,170   8,288,140   8,076,618   8,003,702   7,617,495 
    Commitments and contingencies          
    Stockholders’ equity:          
    Common stock  560   559   558   557   555 
    Additional paid-in capital  1,142,758   1,137,889   1,134,603   1,131,324   1,126,437 
    Retained earnings  275,273   243,633   216,704   195,661   172,232 
    Accumulated other comprehensive income  64,070   69,661   77,189   62,413   56,225 
    Treasury stock  (167,582)  (167,582)  (156,147)  (156,147)  (152,073)
    Total stockholders’ equity  1,315,079   1,284,160   1,272,907   1,233,808   1,203,376 
    Total liabilities and stockholders’ equity $9,757,249  $9,572,300  $9,349,525  $9,237,510  $8,820,871 



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

      For the Quarter Ended For the Year Ended
      Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Dec 31, 2021 Dec 31, 2020
    Interest income:              
    Loans, including fees $74,174  $71,139  $67,814 $67,399  $69,597  $280,526  $286,583
    Debt securities  9,553   7,613   7,529  7,437   7,652   32,132   30,726
    Deposits in financial institutions and Fed Funds sold  165   130   167  127   99   589   1,221
    Equity securities and other investments  1,004   898   672  663   752   3,237   3,320
    Total interest income  84,896   79,780   76,182  75,626   78,100   316,484   321,850
    Interest expense:              
    Transaction and savings deposits  1,629   1,588   1,661  1,980   2,105   6,858   13,233
    Certificates and other time deposits  1,661   1,934   2,423  3,061   3,919   9,079   23,678
    Advances from FHLB  1,847   1,848   1,829  1,812   2,222   7,336   10,609
    Subordinated debentures and subordinated notes  3,018   3,134   3,138  3,138   3,088   12,428   8,532
    Total interest expense  8,155   8,504   9,051  9,991   11,334   35,701   56,052
    Net interest income  76,741   71,276   67,131  65,635   66,766   280,783   265,798
    (Benefit) provision for credit losses  (3,349)  —   —  —   —   (3,349)  56,640
    (Benefit) provision for unfunded commitments  (1,040)  (448)  577  (570)  902   (1,481)  9,029
    Net interest income after provisions  81,130   71,724   66,554  66,205   65,864   285,613   200,129
    Noninterest income:              
    Service charges and fees on deposit accounts  4,782   4,484   3,847  3,629   3,971   16,742   13,703
    Loan fees  2,697   1,746   1,823  1,341   684   7,607   4,556
    (Loss) gain on sales of investment securities  —   (188)  —  —   (256)  (188)  2,615
    Gain on sales of mortgage loans held for sale  293   407   385  507   317   1,592   1,239
    Government guaranteed loan income, net  3,423   2,341   3,448  6,548   448   15,760   14,150
    Equity method investment income  1,238   4,522   —  —   —   5,760   —
    Other  3,717   2,315   2,953  2,147   3,848   11,132   11,081
    Total noninterest income  16,150   15,627   12,456  14,172   9,012   58,405   47,344
    Noninterest expense:              
    Salaries and employee benefits  25,401   22,964   23,451  22,932   20,011   94,748   79,453
    Occupancy and equipment  4,398   4,536   4,233  4,096   4,116   17,263   16,363
    Professional and regulatory fees  3,017   3,401   3,086  3,441   3,578   12,945   11,729
    Data processing and software expense  2,597   2,494   2,536  2,319   2,238   9,946   9,213
    Marketing  1,443   1,151   1,841  909   945   5,344   3,651
    Amortization of intangibles  2,494   2,509   2,517  2,537   2,558   10,057   10,790
    Telephone and communications  380   380   337  337   340   1,434   1,312
    Merger and acquisition expense  826   —   —  —   —   826   —
    COVID expenses  —   —   —  —   —   —   1,377
    Debt extinguishment costs  —   —   —  —   9,746   —   11,307
    Other  4,521   3,886   3,716  3,026   3,841   15,149   14,192
    Total noninterest expense  45,077   41,321   41,717  39,597   47,373   167,712   159,387
    Income before income tax expense  52,203   46,030   37,293  40,780   27,503   176,306   88,086
    Income tax expense  10,697   9,195   7,837  8,993   4,702   36,722   14,203
    Net income $41,506  $36,835  $29,456 $31,787  $22,801  $139,584  $73,883
                   
    Basic EPS $0.84  $0.75  $0.60 $0.64  $0.46  $2.83  $1.48
    Diluted EPS $0.82  $0.73  $0.59 $0.64  $0.46  $2.77  $1.48
    Weighted average basic shares outstanding  49,329   49,423   49,476  49,394   49,571   49,405   49,884
    Weighted average diluted shares outstanding  50,441   50,306   50,331  49,998   49,837   50,352   50,036

     



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

      For the Quarter Ended
      December 31, 2021 September 30, 2021 December 31, 2020
      Average
    Outstanding
    Balance    		 Interest
    Earned/
    Interest
    Paid    		 Average
    Yield/
    Rate    		 Average
    Outstanding
    Balance    		 Interest
    Earned/
    Interest
    Paid    		 Average
    Yield/
    Rate    		 Average
    Outstanding
    Balance    		 Interest
    Earned/
    Interest
    Paid    		 Average
    Yield/
    Rate
      (Dollars in thousands)
    Assets                  
    Interest-earning assets:                  
    Loans1 $6,777,397  $70,334 4.12% $6,384,856  $66,911 4.16% $5,798,692  $65,259 4.48%
    LHI, MW  483,850   3,629 2.98   465,945   3,697 3.15   446,027   3,355 2.99 
    PPP loans  83,553   211 1.00   210,092   531 1.00   390,509   983 1.00 
    Debt securities  1,092,089   9,553 3.47   1,119,952   7,613 2.70   1,076,031   7,652 2.83 
    Interest-earning deposits in other banks  417,266   165 0.16   336,289   130 0.15   258,687   99 0.15 
    Equity securities and other investments  191,031   1,004 2.09   167,242   898 2.13   95,706   752 3.13 
    Total interest-earning assets  9,045,186   84,896 3.72   8,684,376   79,780 3.64   8,065,652   78,100 3.85 
    ACL  (95,218)      (99,482)      (121,162)    
    Noninterest-earning assets  838,703       800,576       805,651     
    Total assets $9,788,671      $9,385,470      $8,750,141     
                       
    Liabilities and Stockholders’ Equity                  
    Interest-bearing liabilities:                  
    Interest-bearing demand and savings deposits $3,357,958   1,629 0.19% $3,201,409  $1,588 0.20% $2,862,084   2,105 0.29%
    Certificates and other time deposits  1,615,066   1,661 0.41   1,519,824   1,934 0.50   1,467,250   3,919 1.06 
    Advances from FHLB  777,577   1,847 0.94   777,617   1,848 0.94   885,014   2,222 1.00 
    Subordinated debentures and subordinated notes  259,191   3,018 4.62   264,714   3,134 4.70   259,581   3,088 4.73 
    Total interest-bearing liabilities  6,009,792   8,155 0.54   5,763,564   8,504 0.59   5,473,929   11,334 0.82 
                       
    Noninterest-bearing liabilities:                  
    Noninterest-bearing deposits  2,413,443       2,271,197       2,011,995     
    Other liabilities  63,760       60,181       67,943     
    Total liabilities  8,486,995       8,094,942       7,553,867     
    Stockholders’ equity  1,301,676       1,290,528       1,196,274     
    Total liabilities and stockholders’ equity $9,788,671      $9,385,470      $8,750,141     
                       
    Net interest rate spread2     3.18%     3.05%     3.03%
    Net interest income and margin3   $76,741 3.37%   $71,276 3.26%   $66,766 3.29%

    1 Includes average outstanding balances of loans held for sale of $8,987, $8,542 and $11,938 for the three months ended December 31, 2021, September 30, 2021 and December 31, 2020, respectively, and average balances of LHI, excluding MW and PPP loans.
    2 Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
    3 Net interest margin is equal to net interest income divided by average interest-earning assets.


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

      For the Year Ended December 31,
       2021   2020 
      Average
    Outstanding
    Balance    		 Interest
    Earned/
    Interest
    Paid    		 Average
    Yield/
    Rate    		 Average
    Outstanding
    Balance    		 Interest
    Earned/
    Interest
    Paid    		 Average
    Yield/
    Rate
      (Dollars in thousands)
    Assets            
    Interest-earning assets:            
    Loans1 $6,285,510  $263,583 4.19% $5,770,228  $273,999 4.97%
    LHI, MW  468,001   14,219 3.04   318,657   9,672 3.04 
    PPP loans  272,770   2,724 1.00   290,851   2,912 1.00 
    Debt securities  1,092,967   32,132 2.94   1,083,633   30,726 2.84 
    Interest-earning deposits in other banks  410,785   589 0.14   276,970   1,221 0.44 
    Equity securities and other investments  133,594   3,237 2.42   100,556   3,320 3.30 
    Total interest-earning assets  8,663,627   316,484 3.65   7,840,895   321,850 4.10 
    ACL  (101,383)      (98,527)    
    Noninterest-earning assets  799,334       782,907     
    Total assets $9,361,578      $8,525,275     
                 
    Liabilities and Stockholders’ Equity            
    Interest-bearing liabilities:            
    Interest-bearing demand and savings deposits $3,198,225   6,858 0.21  $2,726,462   13,233 0.49 
    Certificates and other time deposits  1,540,188   9,079 0.59   1,550,995   23,678 1.53 
    Advances from FHLB  777,635   7,336 0.94   1,024,142   10,609 1.04 
    Subordinated debentures and subordinated notes  263,535   12,428 4.72   172,594   8,532 4.94 
    Total interest-bearing liabilities  5,779,583   35,701 0.62   5,474,193   56,052 1.02 
                 
    Noninterest-bearing liabilities:            
    Noninterest-bearing deposits  2,256,546       1,825,806     
    Other liabilities  57,457       60,303     
    Total liabilities  8,093,586       7,360,302     
    Stockholders’ equity  1,267,992       1,164,973     
    Total liabilities and stockholders’ equity $9,361,578      $8,525,275     
                 
    Net interest rate spread2     3.03%     3.08%
    Net interest income and margin3   $280,783 3.24%   $265,798 3.39%

    1Includes average outstanding balances of loans held for sale of $12,093 and $15,315 for the twelve months ended December 31, 2021 and 2020, respectively, and average balances of LHI, excluding MW and PPP loans.
    2 Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
    3 Net interest margin is equal to net interest income divided by average interest-earning assets.



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

    Yield Trend

      For the Quarter Ended
      Dec 31,
    2021    		 Sep 30,
    2021    		 Jun 30,
    2021    		 Mar 31,
    2021    		 Dec 31,
    2020
    Average yield on interest-earning assets:          
    Loans1 4.12% 4.16% 4.16% 4.31% 4.48%
    LHI, MW 2.98  3.15  3.06  3.03  2.99 
    PPP loans 1.00  1.00  1.00  1.00  1.00 
    Debt securities 3.47  2.70  2.76  2.84  2.83 
    Interest-bearing deposits in other banks 0.16  0.15  0.12  0.15  0.15 
    Equity securities and other investments 2.09  2.13  3.08  3.08  3.13 
    Total interest-earning assets 3.72% 3.64% 3.53% 3.71% 3.85%
               
    Average rate on interest-bearing liabilities:          
    Interest-bearing demand and savings deposits 0.19% 0.20% 0.21% 0.26% 0.29%
    Certificates and other time deposits 0.41  0.50  0.64  0.82  1.06 
    Advances from FHLB 0.94  0.94  0.94  0.94  1.00 
    Subordinated debentures and subordinated notes 4.62  4.70  4.75  4.80  4.73 
    Total interest-bearing liabilities 0.54% 0.59% 0.63% 0.72% 0.82%
               
    Net interest rate spread2 3.18% 3.05% 2.90% 2.99% 3.03%
    Net interest margin3 3.37% 3.26% 3.11% 3.22% 3.29%

    1 Includes average outstanding balances of loans held for sale of $8,987, $8,542, $14,364, $16,602 and $11,938 for the three months ended December 31, 2021, September 30, 2021, June 30, 2021, March 31, 2021 and December 31, 2020, respectively, and average balances of LHI, excluding MW and PPP loans.
    2 Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
    3 Net interest margin is equal to net interest income divided by average interest-earning assets.


    Supplemental Yield Trend

      For the Quarter Ended
      Dec 31,
    2021    		 Sep 30,
    2021    		 Jun 30,
    2021    		 Mar 31,
    2021    		 Dec 31,
    2020
    Average cost of interest-bearing deposits 0.26% 0.30% 0.35% 0.45% 0.55%
    Average costs of total deposits, including noninterest-bearing 0.18  0.20  0.23  0.31  0.38 



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

    LHI and Deposit Portfolio Composition

      Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020
      (Dollars in thousands)
    LHI1                    
    Commercial $2,006,876  29.6% $1,793,740  27.1% $1,771,100  28.2% $1,632,040  27.4% $1,559,546  26.7%
    Real Estate:                    
    Owner occupied commercial ("OOCRE")  665,537  9.8   711,476  10.7   744,899  11.9   733,310  12.3   717,472  12.3 
    Non-owner occupied commercial ("NOOCRE")  2,120,309  31.3   2,194,438  33.1   1,986,538  31.6   1,970,945  33.0   1,904,132  32.5 
    Construction and land  1,062,144  15.7   936,174  14.1   871,765  13.9   723,444  12.1   693,030  11.8 
    Farmland  55,827  0.8   73,550  1.1   13,661  0.2   14,751  0.2   13,844  0.2 
    1-4 family residential  542,566  8.0   543,518  8.2   513,635  8.2   492,609  8.3   524,344  9.0 
    Multi-family residential  310,241  4.6   356,885  5.4   367,445  5.9   386,844  6.5   424,962  7.3 
    Consumer  11,998  0.2   14,266  0.2   10,530  0.1   12,431  0.2   13,000  0.2 
    Total LHI $6,775,498  100% $6,624,047  100% $6,279,573  100% $5,966,374  100% $5,850,330  100%
                         
    MW  565,645     615,045     559,939     599,001     577,594   
    PPP loans  53,369     135,842     291,401     407,353     358,042   
                         
    Total LHI1 $7,394,512    $7,374,934    $7,130,913    $6,972,728    $6,785,966   
                         
    Deposits                    
    Noninterest-bearing $2,510,723  34.1% $2,302,925  32.1% $2,388,068  34.3% $2,171,719  31.6% $2,097,099  32.2%
    Interest-bearing transaction  579,408  7.9   514,537  7.2   451,307  6.5   463,343  6.7   453,110  7.0 
    Money market  2,568,843  34.9   2,585,926  36.0   2,539,061  36.4   2,602,903  37.7   2,398,526  36.8 
    Savings  128,061  1.7   127,843  1.8   122,606  1.8   123,447  1.8   106,820  1.6 
    Certificates and other time deposits  1,576,580  21.4   1,647,521  22.9   1,477,860  21.2   1,543,158  22.2   1,457,291  22.4 
    Total deposits $7,363,615  100% $7,178,752  100% $6,978,902  100% $6,904,570  100% $6,512,846  100%
                         
    Loan to Deposit Ratio  100.4%    102.7%    102.2%    101.0%    104.2%  
    Loan to Deposit Ratio, excluding MW and PPP loans  92.0%    92.3%    90.0%    86.4%    89.8%  

    1 Total LHI does not include deferred fees of $8.1 million September 30, 2021 and deferred costs of $9.5 million, $7.5 million, $2.9 million and $2.5 million at December 31, 2021, June 30, 2021, March 31, 2021 and December 31, 2020, respectively.



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

    Asset Quality

     For the Quarter Ended For the Year Ended
     Dec 31,
    2021    		 Sep 30,
    2021    		 Jun 30,
    2021    		 Mar 31,
    2021    		 Dec 31,
    2020    		 Dec 31,
    2021    		 Dec 31,
    2020
     (Dollars in thousands)
    NPAs:             
    Nonaccrual loans$49,687  $72,317  $76,994  $73,594  $81,096  $49,687  $81,096 
    Accruing loans 90 or more days past due1 441   1,711   462   9,093   4,204   441   4,204 
    Total nonperforming loans held for investment ("NPLs") 50,128   74,028   77,456   82,687   85,300   50,128   85,300 
    OREO —   —   2,467   2,337   2,337   —   2,337 
    Total NPAs$50,128  $74,028  $79,923  $85,024  $87,637  $50,128  $87,637 
                  
    Charge-offs:             
    Residential$—  $(64) $(300) $(15) $(18) $(379) $(18)
    OOCRE (898)  (813)  (689)  —   —   (2,400)  (2,421)
    NOOCRE (7,936)  —   —   —   (2,865)  (7,936)  (2,865)
    Commercial (4,114)  (5,508)  (5,608)  (346)  (13,699)  (15,576)  (15,507)
    Consumer (44)  (17)  (20)  (18)  (26)  (99)  (162)
    Total charge-offs (12,992)  (6,402)  (6,617)  (379)  (16,608)  (26,390)  (20,973)
                  
    Recoveries:             
    Residential 6   26   29   3   49   64   57 
    OOCRE —   —   500   —   —   500   — 
    Commercial 61   596   659   226   52   1,542   102 
    Consumer 257   8   36   2   —   303   287 
    Total recoveries 324   630   1,224   231   101   2,409   446 
                  
    Net charge-offs$(12,668) $(5,772) $(5,393) $(148) $(16,507) $(23,981) $(20,527)
                  
    CECL transition adjustment$—  $—  $—  $—  $—  $—  $39,137 
                  
    ACL at end of period$77,754  $93,771  $99,543  $104,936  $105,084  $77,754  $105,084 
                  
    Asset Quality Ratios:             
    NPAs to total assets 0.51%  0.77%  0.85%  0.92%  0.99%  0.51%  0.99%
    NPLs to total LHI, excluding MW and PPP loans 0.74   1.12   1.23   1.39   1.46   0.74   1.46 
    ACL to total LHI, excluding MW and PPP loans 1.15   1.42   1.59   1.76   1.80   1.15   1.80 
    Net charge-offs to average loans outstanding 0.19   0.09   0.09   —   0.28   0.38   0.36 

    1 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.


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

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

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

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

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

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

      As of
      Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020
      (Dollars in thousands, except per share data)
    Tangible Common Equity          
    Total stockholders' equity $1,315,079  $1,284,160  $1,272,907  $1,233,808  $1,203,376 
    Adjustments:          
    Goodwill  (403,771)  (370,840)  (370,840)  (370,840)  (370,840)
    Core deposit intangibles  (47,998)  (50,436)  (52,873)  (55,311)  (57,758)
    Tangible common equity $863,310  $862,884  $849,194  $807,657  $774,778 
    Common shares outstanding  49,372   49,229   49,498   49,433   49,340 
               
    Book value per common share $26.64  $26.09  $25.72  $24.96  $24.39 
    Tangible book value per common share $17.49  $17.53  $17.16  $16.34  $15.70 


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

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

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

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

      As of
      Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020
      (Dollars in thousands)
    Tangible Common Equity          
    Total stockholders' equity $1,315,079  $1,284,160  $1,272,907  $1,233,808  $1,203,376 
    Adjustments:          
    Goodwill  (403,771)  (370,840)  (370,840)  (370,840)  (370,840)
    Core deposit intangibles  (47,998)  (50,436)  (52,873)  (55,311)  (57,758)
    Tangible common equity $863,310  $862,884  $849,194  $807,657  $774,778 
    Tangible Assets          
    Total assets $9,757,249  $9,572,300  $9,349,525  $9,237,510  $8,820,871 
    Adjustments:          
    Goodwill  (403,771)  (370,840)  (370,840)  (370,840)  (370,840)
    Core deposit intangibles  (47,998)  (50,436)  (52,873)  (55,311)  (57,758)
    Tangible Assets $9,305,480  $9,151,024  $8,925,812  $8,811,359  $8,392,273 
    Tangible Common Equity to Tangible Assets  9.28%  9.43%  9.51%  9.17%  9.23%



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

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

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

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

      For the Quarter Ended For the Year Ended
      Dec 31,
    2021    		 Sep 30,
    2021    		 Jun 30,
    2021    		 Mar 31,
    2021    		 Dec 31,
    2020    		 Dec 31,
    2021    		 Dec 31,
    2020
      (Dollars in thousands)
    Net income available for common stockholders adjusted for amortization of core deposit intangibles              
    Net income $41,506  $36,835  $29,456  $31,787  $22,801  $139,584  $73,883 
    Adjustments:              
    Plus: Amortization of core deposit intangibles  2,438   2,438   2,438   2,447   2,451   9,761   9,804 
    Less: Tax benefit at the statutory rate  512   512   512   514   515   2,050   2,060 
    Net income available for common stockholders adjusted for amortization of core deposit intangibles $43,432  $38,761  $31,382  $33,720  $24,737  $147,295  $81,627 
                   
    Average Tangible Common Equity              
    Total average stockholders' equity $1,301,676  $1,290,528  $1,254,371  $1,224,294  $1,196,274  $1,267,992  $1,164,973 
    Adjustments:              
    Average goodwill  (393,220)  (370,840)  (370,840)  (370,840)  (370,840)  (376,480)  (370,840)
    Average core deposit intangibles  (49,596)  (52,043)  (54,471)  (56,913)  (59,010)  (53,233)  (62,803)
    Average tangible common equity $858,860  $867,645  $829,060  $796,541  $766,424  $838,279  $731,330 
    Return on Average Tangible Common Equity (Annualized)  20.06%  17.72%  15.18%  17.17%  12.84%  17.57%  11.16%



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

    Operating Earnings, Pre-tax, Pre-provision Operating Earnings and performance metrics calculated using Operating Earnings and Pre-tax, Pre-provision Operating Earnings, including Diluted Operating Earnings per Share, Operating Return on Average Assets, Pre-tax, Pre-Provision Operating Return on Average Assets, Operating Return on Average 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 (gain) on sale of securities, net, plus debt extinguishment costs, less Thrive PPP loan forgiveness income, plus merger and acquisition expenses, less tax impact of adjustments, plus nonrecurring tax adjustments. We calculate (b) diluted operating earnings per share as operating earnings as described in clause (a) divided by weighted average diluted shares outstanding. We calculate (c) pre-tax, pre-provision operating earnings as operating earnings as described in clause (a) plus provision for income taxes, plus benefit (provision) for credit losses and unfunded commitments. We calculate (d) pre-tax, pre-provision operating return on average assets as pre-tax, pre-provision operating earnings as described in clause (a) divided by total average assets. We calculate (e) operating return on average assets as operating earnings as described in clause (a) divided by total average assets. We calculate (f) operating return on average tangible common equity as operating earnings as described in clause (a), adjusted for the amortization of intangibles and tax benefit at the statutory rate, divided by total average tangible common equity (average stockholders’ equity less average goodwill and average core deposit intangibles, net of accumulated amortization). We calculate (g) operating efficiency ratio as non interest expense plus adjustments to operating non interest expense divided by non interest income plus adjustments to operating non interest income, plus net interest income.

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

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

      For the Quarter Ended For the Year Ended
      Dec 31,
    2021    		 Sep 30,
    2021    		 Jun 30,
    2021    		 Mar 31,
    2021    		 Dec 31,
    2020    		 Dec 31,
    2021    		 Dec 31,
    2020
      (Dollars in thousands)
    Operating Earnings              
    Net income $41,506  $36,835 $29,456 $31,787 $22,801  $139,584 $73,883 
    Plus: Severance payments1  —   —  627  —  —   627  — 
    Plus: Loss (gain) on sale of securities available for sale, net  —   188  —  —  256   188  (2,615)
    Plus: Debt extinguishment costs2  —   —  —  —  9,746   —  11,307 
    Less: Thrive PPP loan forgiveness income3  —   1,912  —  —  —   1,912  — 
    Plus: Merger and acquisition expenses  826   —  —  —  —   826  — 
    Operating pre-tax income  42,332   35,111  30,083  31,787  32,803   139,313  82,575 
    Less: Tax impact of adjustments  (78)  39  131  —  2,100   92  1,823 
    Plus: Nonrecurring tax adjustments4  —   —  —  426  (973)  426  (2,772)
    Operating earnings $42,410  $35,072 $29,952 $32,213 $29,730  $139,647 $77,980 
                   
    Weighted average diluted shares outstanding  50,441   50,306  50,331  49,998  49,837   50,352  50,036 
    Diluted EPS $0.82  $0.73 $0.59 $0.64 $0.46  $2.77 $1.48 
    Diluted operating EPS $0.84  $0.70 $0.60 $0.64 $0.60  $2.77 $1.56 

    1 Severance payments relate to branch restructurings made during the three months ended June 30, 2021.
    2 Debt extinguishment costs relate to prepayment penalties paid in connection with the early payoff of FHLB structured advances.
    3 During the third quarter of 2021, Thrive’s PPP loan with another bank was 100% forgiven by the Small Business Administration. As a result of our 49% investment in Thrive, the $1.9 million represents our portion of the PPP loan forgiveness. PPP fee income is not taxable and as such has no tax impact.
    4 A nonrecurring tax adjustment of $426 thousand recorded in the first quarter of 2021 was due to a true-up of a deferred tax liability. A nonrecurring tax adjustment of $973 thousand recorded in the fourth quarter of 2020 was primarily due the reversal of acquired deferred tax liabilities resulting in a tax benefit of $1.2 million offset by tax expense of $281 thousand for the setup of an uncertain tax position liability relating to state tax exposure for tax years prior to the year ending December 31, 2020. A nonrecurring tax adjustment of $1,799 was recorded in the second quarter of 2020 as a result of the Company amending a prior year Green Bancorp, Inc. tax return to carry back a net operating loss ("NOL") incurred by Green Bancorp, Inc. on January 1, 2019. The Company was allowed to carry back this NOL as result of a provision in the Coronavirus Aid, Relief, and Economic Security Act, which permits NOL generated in tax years 2018, 2019 or 2020 to be carried back five years.

      For the Quarter Ended For the Year Ended
      Dec 31,
    2021    		 Sep 30,
    2021    		 Jun 30,
    2021    		 Mar 31,
    2021    		 Dec 31,
    2020    		 Dec 31,
    2021    		 Dec 31,
    2020
      (Dollars in thousands)
    Pre-Tax, Pre-Provision Operating Earnings              
    Net Income $41,506  $36,835  $29,456  $31,787  $22,801  $139,584  $73,883 
    Plus: Provision for income taxes  10,697   9,195   7,837   8,993   4,702   36,722   14,203 
    Plus: (Benefit) provision for credit losses and unfunded commitments  (4,389)  (448)  577   (570)  902   (4,830)  65,669 
    Plus: Severance payments  —   —   627   —   —   627   — 
    Plus: Loss (gain) on sale of securities, net  —   188   —   —   256   188   (2,615)
    Less: Thrive PPP loan forgiveness income  —   1,912   —   —   —   1,912   — 
    Plus: Debt extinguishment costs  —   —   —   —   9,746   —   11,307 
    Plus: Merger and acquisition expenses  826   —   —   —   —   826   — 
    Net pre-tax, pre-provision operating earnings $48,640  $43,858  $38,497  $40,210  $38,407  $171,205  $162,447 
                   
    Total average assets $9,788,671  $9,385,470  $9,321,279  $8,941,271  $8,750,141  $9,361,578  $8,525,275 
    Pre-tax, pre-provision operating return on average assets1  1.97%  1.85%  1.66%  1.82%  1.75%  1.83%  1.91%
                   
    Average Total Assets $9,788,671  $9,385,470  $9,321,279  $8,941,271  $8,750,141  $9,361,578  $8,525,275 
    Return on average assets1  1.68%  1.56%  1.27%  1.44%  1.04%  1.49%  0.87%
    Operating return on average assets1  1.72   1.48   1.29   1.46   1.35   1.49   0.91 
                   
    Operating earnings adjusted for amortization of core deposit intangibles              
    Operating earnings $42,410  $35,072  $29,952  $32,213  $29,730  $139,647  $77,980 
    Adjustments:              
    Plus: Amortization of core deposit intangibles  2,438   2,438   2,438   2,447   2,451   9,761   9,804 
    Less: Tax benefit at the statutory rate  512   512   512   514   515   2,050   2,060 
    Operating earnings adjusted for amortization of core deposit intangibles $44,336  $36,998  $31,878  $34,146  $31,666  $147,358  $85,724 
                   
    Average Tangible Common Equity              
    Total average stockholders' equity $1,301,676  $1,290,528  $1,254,371  $1,224,294  $1,196,274  $1,267,992  $1,164,973 
    Adjustments:              
    Average goodwill  (393,220)  (370,840)  (370,840)  (370,840)  (370,840)  (376,480)  (370,840)
    Average core deposit intangibles  (49,596)  (52,043)  (54,471)  (56,913)  (59,010)  (53,233)  (62,803)
    Average tangible common equity $858,860  $867,645  $829,060  $796,541  $766,424  $838,279  $731,330 
    Operating return on average tangible common equity1  20.48%  16.92%  15.42%  17.39%  16.44%  17.58%  11.72%
                   
    Efficiency ratio  48.53%  47.55%  52.42%  49.62%  62.52%  49.45%  50.90%
    Operating efficiency ratio              
    Net interest income $76,741  $71,276  $67,131  $65,635  $66,766  $280,783  $265,798 
    Noninterest income  16,150   15,627   12,456   14,172   9,012   58,405   47,344 
    Plus: Loss (gain) on sale of securities available for sale, net  —   188   —   —   256   188   (2,615)
    Less: Thrive's PPP loan forgiveness income  —   1,912   —   —   —   1,912   — 
    Operating noninterest income  16,150   13,903   12,456   14,172   9,268   56,681   49,959 
    Noninterest expense  45,077   41,321   41,717   39,597   47,373   167,712   159,387 
    Less: Severance payments  —   —   627   —   —   627   — 
    Less: Debt extinguishment costs  —   —   —   —   9,746   —   11,307 
    Less: Merger and acquisition expenses  826   —   —   —   —   826   — 
    Operating noninterest expense $44,251  $41,321  $41,090  $39,597  $37,627  $166,259  $148,080 
    Operating efficiency ratio  47.64%  48.51%  51.63%  49.62%  49.49%  49.27%  47.69%

    1 Annualized ratio for quarterly metrics.


    Media Contact:
LaVonda Renfro
972-349-6200
lrenfro@veritexbank.com

Investor Relations:
Susan Caudle
972-349-6132
scaudle@veritexbank.com

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