Veritex Holdings, Inc. Reports Second Quarter 2024 Operating Results


DALLAS, July 23, 2024 (GLOBE NEWSWIRE) -- Veritex Holdings, Inc. (“Veritex”, the “Company”, “we” or “our”) (Nasdaq: VBTX), the holding company for Veritex Community Bank, today announced the results for the quarter ended June 30, 2024.

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

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

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


Other Second Quarter Financial, Credit and Company Highlights

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

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

Net Interest Income

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

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

Noninterest Income

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

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

Noninterest Expense

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

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

Financial Condition

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

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

Credit Quality

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

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

Income Tax

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

Dividend Information

After the close of the market on Tuesday, July 23, 2024, Veritex’s Board of Directors declared a quarterly cash dividend of $0.20 per share on its outstanding shares of common stock. The dividend will be paid on or after August 23, 2024 to stockholders of record as of the close of business on August 9, 2024.

Non-GAAP Financial Measures

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

Conference Call

The Company will host an investor conference call and webcast to review the results on Wednesday, July 24, 2024, at 8:30 a.m. Central Time. Participants may pre-register for the call by visiting https://edge.media-server.com/mmc/p/kp9m28ir and will receive a unique PIN, which can be used when dialing in for the call.

Participants may also register via teleconference: https://register.vevent.com/register/BIc18141b3387848439444d3060b38d779. Once registration is completed, participants will be provided with a dial-in number containing a personalized conference code to access the call. All participants are instructed to dial-in 15 minutes prior to the start time.

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

About Veritex Holdings, Inc.

Headquartered in Dallas, Texas, Veritex is a bank holding company that conducts banking activities through its wholly owned subsidiary, Veritex Community Bank, with locations throughout the Dallas-Fort Worth metroplex and in the Houston metropolitan area. Veritex Community Bank is a Texas state chartered bank regulated by the Texas Department of Banking and the Board of Governors of the Federal Reserve System. For more information, visit www.veritexbank.com.

 

Media and Investor Relations:
investorrelations@veritexbank.com

Forward-Looking Statements

This earnings release includes “forward-looking statements”, within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on various facts and derived utilizing assumptions, current expectations, estimates and projections and are subject to known and unknown risks, uncertainties and other factors, which change over time and are beyond our control, that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.   Forward-looking statements include, without limitation, statements relating to the expected payment of Veritex Holdings, Inc.’s (“Veritex”) quarterly cash dividend; the impact of certain changes in Veritex’s accounting policies, standards and interpretations; turmoil in the banking industry, responsive measures to mitigate and manage such turmoil and related supervisory and regulatory actions and costs; and Veritex’s future financial performance, business and growth strategy, projected plans and objectives, as well as other projections based on macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact broader economic and industry trends, and any such variations may be material. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “seeks,” “targets,” “outlooks,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing words. We refer you to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Veritex’s Annual Report on Form 10-K for the year ended December 31, 2023 and any updates to those risk factors set forth in Veritex’s Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings with the Securities and Exchange Commission (“SEC”), which are available on the SEC’s website at www.sec.gov. If one or more events related to these or other risks or uncertainties materialize, or if Veritex’s underlying assumptions prove to be incorrect, actual results may differ materially from what Veritex anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made. Veritex does not undertake any obligation, and specifically declines any obligation, to supplement, update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by law. All forward-looking statements, expressed or implied, included in this earnings release are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that Veritex or persons acting on Veritex’s behalf may issue.


VERITEX HOLDINGS, INC. AND SUBSIDIARIES

Financial Highlights
(Unaudited)

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

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


VERITEX HOLDINGS, INC. AND SUBSIDIARIES

Financial Highlights
(In thousands)

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


VERITEX HOLDINGS, INC. AND SUBSIDIARIES

Financial Highlights
(In thousands, except per share data)

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

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


VERITEX HOLDINGS, INC. AND SUBSIDIARIES

Financial Highlights
(Unaudited)

  For the Quarter Ended
  June 30, 2024 March 31, 2024 June 30, 2023
  Average
Outstanding
Balance
 Interest
Earned/
Interest
Paid
 Average
Yield/
Rate
 Average
Outstanding
Balance
 Interest
Earned/
Interest
Paid
 Average
Yield/
Rate
 Average
Outstanding
Balance
 Interest
Earned/
Interest
Paid
 Average
Yield/
Rate
  (Dollars in thousands)
Assets                  
Interest-earning assets:                  
Loans1 $9,344,482  $160,323 6.90% $9,283,815  $157,585 6.83% $9,285,550  $158,685 6.85%
LHI, MW  420,946   6,656 6.36   279,557   4,357 6.27   371,763   5,042 5.44 
Debt securities  1,352,293   15,408 4.58   1,294,994   13,695 4.25   1,133,845   10,166 3.60 
Interest-bearing deposits in other banks  560,586   7,722 5.54   584,593   8,050 5.54   583,818   7,507 5.16 
Equity securities and other investments  78,964   1,138 5.80   76,269   900 4.75   137,868   1,118 3.25 
Total interest-earning assets  11,757,271   191,247 6.54   11,519,228   184,587 6.44   11,512,844   182,518 6.36 
ACL  (115,978)      (112,229)      (102,559)    
Noninterest-earning assets  937,413       929,043       939,938     
Total assets $12,578,706      $12,336,042      $12,350,223     
                   
Liabilities and Stockholders’ Equity                  
Interest-bearing liabilities:                  
Interest-bearing demand and savings deposits $4,570,329  $45,619 4.01% $4,639,445  $46,784 4.06% $3,919,745  $32,957 3.37%
Certificates and other time deposits  3,591,035   44,811 5.02   3,283,735   40,492 4.96   2,873,548   28,100 3.92 
Advances from FHLB and Other  106,648   1,468 5.54   100,989   1,391 5.54   1,472,912   17,562 4.78 
Subordinated debentures and subordinated notes  230,141   3,113 5.44   229,881   3,114 5.45   229,151   3,068 5.37 
Total interest-bearing liabilities  8,498,153   95,011 4.50   8,254,050   91,781 4.47   8,495,356   81,687 3.86 
                   
Noninterest-bearing liabilities:                  
Noninterest-bearing deposits  2,346,908       2,355,315       2,175,002     
Other liabilities  192,036       192,809       169,240     
Total liabilities  11,037,097       10,802,174       10,839,598     
Stockholders’ equity  1,541,609       1,533,868       1,510,625     
Total liabilities and stockholders’ equity $12,578,706      $12,336,042      $12,350,223     
                   
Net interest rate spread2     2.04%     1.97%     2.50%
Net interest income and margin3   $96,236 3.29%   $92,806 3.24%   $100,831 3.51%

1 Includes average outstanding balances of LHFS of $58.5 million, $53.9 million and $23.4 million for the quarters ended June 30, 2024, March 31, 2024, and June 30, 2023, respectively, and average balances of LHI, excluding MW.
2 Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
3 Net interest margin is equal to net interest income divided by average interest-earning assets.


VERITEX HOLDINGS, INC. AND SUBSIDIARIES

Financial Highlights
(In thousands, except percentages)

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

1 Includes average outstanding balances of LHFS of $56.2 million and $21.5 million for the six months ended June 30, 2024 and 2023, respectively, and average balances of LHI, excluding MW.
2 Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
3 Net interest margin is equal to net interest income divided by average interest-earning assets.


VERITEX HOLDINGS, INC. AND SUBSIDIARIES

Financial Highlights
(Unaudited)
Yield Trend

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

  
1Includes average outstanding balances of LHFS of $58.5 million, $53.9 million, $31.2 million, $28.3 million and $23.4 million for the three months ended June 30, 2024, March 31, 2024, December 31, 2023, September 30, 2023, and June 30, 2023, respectively, and average balances of LHI, excluding MW.
2 Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
3 Net interest margin is equal to net interest income divided by average interest-earning assets.

Supplemental Yield Trend

  For the Quarter Ended For the Six Months Ended
  Jun 30,
2024
 Mar 31,
2024
 Dec 31,
2023
 Sep 30,
2023
 Jun 30,
2023
 Jun 30,
2024
 Jun 30,
2023
Average cost of interest-bearing deposits 4.46% 4.43% 4.38% 4.12% 3.61% 4.44% 3.33%
Average costs of total deposits, including noninterest-bearing 3.46  3.42  3.37  3.15  2.73  3.44  2.48 


VERITEX HOLDINGS, INC. AND SUBSIDIARIES

Financial Highlights
(Unaudited)

LHI and Deposit Portfolio Composition

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

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


VERITEX HOLDINGS, INC. AND SUBSIDIARIES

Financial Highlights
(Unaudited)
Asset Quality

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

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


VERITEX HOLDINGS, INC. AND SUBSIDIARIES

Reconciliation of Non-GAAP Financial Measures
(Unaudited)

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

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

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

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

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

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


VERITEX HOLDINGS, INC. AND SUBSIDIARIES

Reconciliation of Non-GAAP Financial Measures
(Unaudited)

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

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

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

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


VERITEX HOLDINGS, INC. AND SUBSIDIARIES

Reconciliation of Non-GAAP Financial Measures
(Unaudited)

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

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

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

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


VERITEX HOLDINGS, INC. AND SUBSIDIARIES

Reconciliation of Non-GAAP Financial Measures
(Unaudited)

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

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

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

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

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


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

1 Annualized ratio for quarterly metrics.