Veritex Holdings, Inc. Reports Third Quarter 2024 Operating Results
DALLAS, Oct. 22, 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 September 30, 2024.
"We are pleased to announce both our third quarter results and updates on our balance sheet transformation over the past 2 years," said C. Malcolm Holland, III, the Company's Chairman and Chief Executive Officer. "My team has remained focused on growing granular, attractively priced deposits, increasing capital, managing concentrations and reducing credit risk exposure all while continuing to grow a fortress balance sheet through full relationship banking. I could not be more proud of our team of nearly 900 employees who embraced the challenges we set forth back in 2022 and each day going forward."
Quarter to Date
Year to Date
Financial Highlights
Q3 2024
Q2 2024
Q3 2024
Q3 2023
(Dollars in thousands, except per share data)(unaudited)
GAAP
Net income
$
31,001
$
27,202
$
82,359
$
104,762
Diluted EPS
0.56
0.50
1.50
1.92
Book value per common share
29.53
28.49
29.53
27.46
Return on average assets1
0.96
%
0.87
%
0.87
%
1.14
%
Return on average equity1
7.79
7.10
7.08
9.35
Net interest margin
3.30
3.29
3.28
3.55
Efficiency ratio
61.94
59.11
61.15
50.88
Non-GAAP2
Operating earnings
$
32,181
$
28,310
$
89,628
$
110,489
Diluted operating EPS
0.59
0.52
1.63
2.02
Tangible book value per common share
21.72
20.62
21.72
19.44
Pre-tax, pre-provision operating earnings
44,555
44,420
132,631
174,523
Pre-tax, pre-provision operating return on average assets1
1.38
%
1.42
%
1.41
%
1.90
%
Pre-tax, pre-provision operating return on average loans1
1.83
1.83
1.83
2.43
Operating return on average assets1
1.00
0.91
0.95
1.20
Return on average tangible common equity1
11.33
10.54
10.48
13.95
Operating return on average tangible common equity1
11.74
10.94
11.34
14.68
Operating efficiency ratio
60.63
58.41
59.28
49.53
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 Third Quarter Financial, Credit and Company Highlights
Return on average assets ("ROAA") increased 9 bps compared to June 30, 2024;
7.2% linked quarter revenue growth;
Nonperforming assets ("NPAs") decreased 13 bps from the prior quarter to 0.52% of total assets;
Total deposits grew $311.2 million, or 11.60% annualized, compared to June 30, 2024;
Common equity tier 1 capital grew 37 bps from the prior quarter to 10.86%;
Net interest margin ("NIM") expanded to 3.30%;
Loan to deposit ratio, excluding mortgage warehouse loans, decreased to 81.9% as of September 30, 2024, compared to 85.9% as of June 30, 2024 and 90.7% as of September 30, 2023;
Tangible book value per common share increased to $21.72;
Allowance for credit losses ("ACL") to total loans held for investment ("LHI") increased to 1.21%, compared to 1.16% as of June 30, 2024 and 1.14% as of September 30, 2023; and
Declared quarterly cash dividend of $0.20 per share of outstanding common stock payable on November 22, 2024.
Results of Operations for the Three Months Ended September 30, 2024
Net Interest Income
For the three months ended September 30, 2024, net interest income before provision for credit losses was $100.1 million and NIM was 3.30% compared to $96.2 million and 3.29%, respectively, for the three months ended June 30, 2024. The approximately $3.8 million increase, or 4.0%, in net interest income before provision for credit losses was primarily due to a $4.8 million increase in interest income on deposits in financial institutions and fed funds sold, a $1.4 million decrease in interest expense on advances from the Federal Home Loan Bank ("FHLB"), a $422 thousand increase in interest income on debt securities and a $282 thousand increase in interest income on loans. The increase was partially offset by a $1.6 million increase in interest expense on transactions and savings deposits and a $1.4 million increase in interest expense on certificates and other time deposits, during the three months ended September 30, 2024. NIM increased 1 basis point compared to the three months ended June 30, 2024, primarily due to a decrease in funding costs on deposits during the three months ended September 30, 2024, partially offset by a decrease in loan yields and average balances.
Compared to the three months ended September 30, 2023, net interest income before provision for credit losses for the three months ended September 30, 2024 increased by $701 thousand, or 0.7%. The increase was primarily due to a $8.5 million decrease in interest expense on advances from the FHLB, a $5.4 million increase in interest income on deposits in financial institutions and fed funds sold and a $4.9 million increase in interest income on debt securities. The increase was partially offset by a $10.1 million increase in interest expense on certificates and other time deposits, a $7.3 million increase in interest expense on transaction and savings deposits and a $690 thousand decrease in interest income on equity securities and other investments. Compared to the three months ended September 30, 2023, NIM decreased 16 bps from 3.46% for the three months ended September 30, 2024. The decrease was primarily due to the increase in funding costs on deposits during the three months ended September 30, 2024, partially offset by an increase in loan yields and an increase in average balances and yields on debt securities.
Noninterest Income
Noninterest income for the three months ended September 30, 2024 was $13.1 million, an increase of $2.5 million, or 23.9%, compared to the three months ended June 30, 2024. The increase was primarily due to a $1.6 million increase in other income, driven by a $1.2 million increase in other real estate owned ("OREO") income, a $1.1 million increase in loan fees and a $468 thousand increase in service charges and fees on deposits for the three months ended September 30, 2024. The increase was partially offset by a $540 thousand decrease in government guaranteed loan income.
Compared to the three months ended September 30, 2023, noninterest income for the three months ended September 30, 2024 increased by $3.4 million, or 35.5%. The increase was primarily due to a $2.2 million increase in other income, driven by a $1.2 million increase in OREO income, a $1.7 million increase in loan fees and a $283 thousand increase in service charges and fees on deposit accounts. The increase was partially offset by a $1.0 million decrease in government guaranteed loan income, primarily driven by a decrease in the Company's USDA sales.
Noninterest Expense
Noninterest expense was $70.1 million for the three months ended September 30, 2024, compared to $63.1 million for the three months ended June 30, 2024, an increase of $7.0 million, or 11.0%. The increase was primarily due to a $4.6 million increase in salaries and employee benefits primarily due to an increase in incentive accruals to 80% of target payout, a $1.9 million increase in other noninterest expense primarily driven by OREO expenses, a $805 thousand increase in marketing expenses and a $204 thousand increase in occupancy and equipment expense. The increase is partially offset by a decrease of $714 thousand in professional and regulatory fees compared to the three months ended June 30, 2024.
Compared to the three months ended September 30, 2023, noninterest expense for the three months ended September 30, 2024 increased by $10.7 million, or 18.0%. The increase was primarily due to a $6.4 million increase in salaries and employee benefits primarily due to the increase in incentive accruals aforementioned, a $5.6 million increase in other noninterest expense, a $727 thousand increase data processing and software expense, and a $428 thousand increase in marketing expenses. The increase was partially offset by a $2.4 million decrease in professional and regulatory fees compared to the three months ended September 30, 2023.
Financial Condition
Total LHI was $9.03 billion at September 30, 2024, a decrease of $180.5 million compared to June 30, 2024.
Total deposits were $11.04 billion at September 30, 2024, an increase of $311.2 million, or 11.6% linked quarter annualized. The increase was primarily the result of an increase of $227.2 million in noninterest bearing deposits and an increase of $225.3 million in interest-bearing transaction and savings deposits. The increase was partially offset by a decrease of $118.7 million in certificates and other time deposits and a decrease of $22.6 million in correspondent money market accounts.
Credit Quality
NPAs totaled $67.3 million, or 0.52% of total assets, of which $58.3 million represents LHI and $9.0 million represents OREO at September 30, 2024, compared to $83.0 million, or 0.65% of total assets, at June 30, 2024. The Company had net charge-offs of $269 thousand for the three months ended September 30, 2024. Annualized net charge-offs to average loans outstanding were 1bp, for the three months ended September 30, 2024, compared to 28 bps and 8 bps for the three months ended June 30, 2024 and September 30, 2023, respectively.
ACL as a percentage of LHI was 1.21%, 1.16% and 1.14% at September 30, 2024, June 30, 2024 and September 30, 2023, respectively. The Company recorded a provision for credit losses of $4.0 million, $8.3 million and $8.6 million for the three months ended September 30, 2024, June 30, 2024 and September 30, 2023, respectively. The recorded provision for credit losses for the three months ended September 30, 2024, compared to the three months ended June 30, 2024, was primarily attributable to an increase in general reserves as a result of changes in economic factors which now represents 97% of the total ACL as a percentage of LHI. The balance for unfunded commitments for the three months ended September 30, 2024 remained relatively stable compared to the three months ended June 30, 2024 and recorded no benefit or provision for unfunded commitments for the three months ended September 30, 2024. The Company recorded no benefit or provision for unfunded commitments for the three months ended June 30, 2024 and a $909 thousand benefit for unfunded commitments for the three months ended September 30, 2023.
Income Tax
Income tax expense for the three months ended September 30, 2024 totaled $8.1 million, a decrease of $154 thousand, or 1.9%, compared to the three months ended June 30, 2024. The Company's effective tax rate was approximately 20.6% for the three months ended September 30, 2024. The decrease was primarily due a $941 thousand change in the Company's valuation allowance slightly offset by a return to provision of $224 thousand and a net discrete tax expense of $501 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, October 22, 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 November 22, 2024 to stockholders of record as of the close of business on November 8, 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, October 23, 2024, at 8:30 a.m. Central Time. Participants may pre-register for the call by visiting http://edge.media-server.com/mmc/p/99msavdf 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/BI8a41df4f3f824d2888f9cf9a3e02c9b8. Once registration is completed, participants will be provided with a dial-in number containing a personalized conference code to access the call. All participants are instructed to dial-in 15 minutes prior to the start time.
A replay will be available within approximately two hours after the completion of the call, and made accessible for one week thereafter. You may access the replay via webcast through the investor relations section of Veritex's website.
About Veritex Holdings, Inc.
Headquartered in Dallas, Texas, Veritex is a bank holding company that conducts banking activities through its wholly owned subsidiary, Veritex Community Bank, with locations throughout the Dallas-Fort Worth metroplex and in the Houston metropolitan area. Veritex Community Bank is a Texas state chartered bank regulated by the Texas Department of Banking and the Board of Governors of the Federal Reserve System. For more information, visit www.veritexbank.com.
Forward-Looking Statements
This earnings release includes "forward-looking statements", within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on various facts and derived utilizing assumptions, current expectations, estimates and projections and are subject to known and unknown risks, uncertainties and other factors, which change over time and are beyond our control, that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements include, without limitation, statements relating to the expected payment of Veritex Holdings, Inc.'s ("Veritex") quarterly cash dividend; the impact of certain changes in Veritex's accounting policies, standards and interpretations; 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 SUBSIDIARIESFinancial Highlights(Unaudited)
For the Quarter Ended
For the Nine Months Ended
Sep 30, 2024
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Sep 30, 2023
Sep 30, 2024
Sep 30, 2023
(Dollars and shares in thousands, except per share data)
Per Share Data (Common Stock):
Basic EPS
$
0.57
$
0.50
$
0.44
$
0.06
$
0.60
$
1.51
$
1.93
Diluted EPS
0.56
0.50
0.44
0.06
0.60
1.50
1.92
Book value per common share
29.53
28.49
28.23
28.18
27.46
29.53
27.46
Tangible book value per common share1
21.72
20.62
20.33
20.21
19.44
21.72
19.44
Dividends paid per common share outstanding2
0.20
0.20
0.20
0.20
0.20
0.60
0.60
Common Stock Data:
Shares outstanding at period end
54,446
54,350
54,496
54,338
54,305
54,446
54,305
Weighted average basic shares outstanding for the period
54,409
54,457
54,444
54,327
54,300
54,437
54,233
Weighted average diluted shares outstanding for the period
54,932
54,823
54,842
54,691
54,597
54,866
54,563
Summary of Credit Ratios:
ACL to total LHI
1.21
%
1.16
%
1.15
%
1.14
%
1.14
%
1.21
%
1.14
%
NPAs to total assets
0.52
0.65
0.82
0.77
0.65
0.52
0.65
NPAs to total loans and OREO
0.70
0.85
1.06
0.99
0.83
0.70
0.83
Net charge-offs to average loans outstanding3
0.01
0.28
0.22
0.39
0.08
0.17
0.20
Summary Performance Ratios:
Return on average assets3
0.96
%
0.87
%
0.79
%
0.11
%
1.06
%
0.87
%
1.14
%
Return on average equity3
7.79
7.10
6.33
0.92
8.58
7.08
9.35
Return on average tangible common equity1,3
11.33
10.54
9.52
2.00
12.80
10.48
13.95
Efficiency ratio
61.94
59.11
62.45
77.49
54.49
61.15
50.88
Net interest margin
3.30
3.29
3.24
3.31
3.46
3.28
3.55
Selected Performance Metrics - Operating:
Diluted operating EPS1
$
0.59
$
0.52
$
0.53
$
0.58
$
0.60
$
1.63
$
2.02
Pre-tax, pre-provision operating return on average assets1,3
1.38
%
1.42
%
1.42
%
1.54
%
1.61
%
1.41
%
1.90
%
Pre-tax, pre-provision operating return on average loans1,3
1.83
1.83
1.84
1.97
2.05
1.83
2.43
Operating return on average assets1,3
1.00
0.91
0.95
1.02
1.06
0.95
1.20
Operating return on average tangible common equity1,3
11.74
10.94
11.34
12.37
12.80
11.34
14.68
Operating efficiency ratio1
60.63
58.41
58.73
55.50
54.49
59.28
49.53
Veritex Holdings, Inc. Capital Ratios:
Average stockholders' equity to average total assets
12.31
%
12.26
%
12.43
%
12.27
%
12.30
%
12.33
%
12.21
%
Tangible common equity to tangible assets1
9.37
9.14
9.02
9.18
8.86
9.37
8.86
Tier 1 capital to average assets (leverage)
10.06
10.06
10.12
10.03
10.10
10.06
10.10
Common equity tier 1 capital
10.86
10.49
10.37
10.29
10.11
10.86
10.11
Tier 1 capital to risk-weighted assets
11.13
10.75
10.63
10.56
10.37
11.13
10.37
Total capital to risk-weighted assets
13.91
13.45
13.33
13.18
12.95
13.91
12.95
Risk weighted assets
$
11,290,800
$
11,450,997
$
11,407,446
$
11,387,825
$
11,617,229
$
11,290,800
$
11,617,229
1 Refer 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.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 SUBSIDIARIESFinancial Highlights(In thousands)
Sep 30, 2024
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Sep 30, 2023
(unaudited)
(unaudited)
(unaudited)
(unaudited)
ASSETS
Cash and cash equivalents
$
1,100,790
$
651,837
$
740,769
$
629,063
$
713,408
Debt securities, net
1,423,610
1,349,354
1,344,930
1,257,042
1,060,629
Other investments
71,257
75,885
76,788
76,238
80,869
Loans held for sale ("LHFS")
48,496
57,046
64,762
79,072
41,313
LHI, mortgage warehouse ("MW")
630,650
568,047
449,531
377,796
390,767
LHI, excluding MW
9,028,575
9,209,094
9,249,551
9,206,544
9,237,447
Total loans
9,707,721
9,834,187
9,763,844
9,663,412
9,669,527
ACL
(117,162
)
(113,431
)
(112,032
)
(109,816
)
(109,831
)
Bank-owned life insurance
84,776
84,233
85,359
84,833
84,867
Bank premises, furniture and equipment, net
114,202
105,222
105,299
105,727
106,118
Other real estate owned ("OREO")
9,034
24,256
18,445
—
—
Intangible assets, net of accumulated amortization
32,825
35,817
38,679
41,753
44,294
Goodwill
404,452
404,452
404,452
404,452
404,452
Other assets
211,471
232,518
241,863
241,633
291,998
Total assets
$
13,042,976
$
12,684,330
$
12,708,396
$
12,394,337
$
12,346,331
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing deposits
$
2,643,894
$
2,416,727
$
2,349,211
$
2,218,036
$
2,363,340
Interest-bearing transaction and savings deposits
4,204,708
3,979,454
4,220,114
4,348,385
3,936,070
Certificates and other time deposits
3,625,920
3,744,596
3,486,805
3,191,737
3,403,427
Correspondent money market deposits
561,489
584,067
597,690
580,037
493,681
Total deposits
11,036,011
10,724,844
10,653,820
10,338,195
10,196,518
Accounts payable and other liabilities
168,415
180,585
186,027
195,036
229,116
Advances from FHLB
—
—
100,000
100,000
200,000
Subordinated debentures and subordinated notes
230,536
230,285
230,034
229,783
229,531
Total liabilities
11,434,962
11,135,714
11,169,881
10,863,014
10,855,165
Commitments and contingencies
Stockholders' equity:
Common stock
613
612
611
610
609
Additional paid-in capital
1,324,929
1,321,995
1,319,144
1,317,516
1,314,459
Retained earnings
493,921
473,801
457,499
444,242
451,513
Accumulated other comprehensive loss
(40,330
)
(76,713
)
(71,157
)
(63,463
)
(107,833
)
Treasury stock
(171,119
)
(171,079
)
(167,582
)
(167,582
)
(167,582
)
Total stockholders' equity
1,608,014
1,548,616
1,538,515
1,531,323
1,491,166
Total liabilities and stockholders' equity
$
13,042,976
$
12,684,330
$
12,708,396
$
12,394,337
$
12,346,331
VERITEX HOLDINGS, INC. AND SUBSIDIARIESFinancial Highlights(In thousands, except per share data)
For the Quarter Ended
For the Nine Months Ended
Sep 30, 2024
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Sep 30, 2023
Sep 30, 2024
Sep 30, 2023
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Interest income:
Loans, including fees
$
167,261
$
166,979
$
161,942
$
165,443
$
167,368
$
496,182
$
482,802
Debt securities
15,830
15,408
13,695
12,282
10,928
44,933
32,082
Deposits in financial institutions and Fed Funds sold
12,571
7,722
8,050
8,162
7,128
28,343
20,169
Equity securities and other investments
1,001
1,138
900
1,717
1,691
3,039
4,217
Total interest income
196,663
191,247
184,587
187,604
187,115
572,497
539,270
Interest expense:
Transaction and savings deposits
47,208
45,619
46,784
46,225
39,936
139,611
102,750
Certificates and other time deposits
46,230
44,811
40,492
40,165
36,177
131,533
85,244
Advances from FHLB
47
1,468
1,391
2,581
8,523
2,906
38,443
Subordinated debentures and subordinated notes
3,116
3,113
3,114
3,100
3,118
9,343
9,252
Total interest expense
96,601
95,011
91,781
92,071
87,754
283,393
235,689
Net interest income
100,062
96,236
92,806
95,533
99,361
289,104
303,581
Provision for credit losses
4,000
8,250
7,500
9,500
8,627
19,750
33,012
(Benefit) provision for unfunded commitments
—
—
(1,541
)
(1,500
)
(909
)
(1,541
)
(541
)
Net interest income after provisions
96,062
87,986
86,847
87,533
91,643
270,895
271,110
Noninterest income:
Service charges and fees on deposit accounts
5,442
4,974
4,896
4,800
5,159
15,312
15,448
Loan fees
3,278
2,207
2,510
1,200
1,564
7,995
5,148
Loss on sales of debt securities
—
—
(6,304
)
—
—
(6,304
)
(5,321
)
Government guaranteed loan income, net
780
1,320
2,614
4,378
1,772
4,714
15,604
Equity method investment (loss) income
—
—
—
(29,417
)
(136
)
—
(1,172
)
Customer swap income
271
326
449
258
202
1,046
1,380
Other income
3,335
1,751
2,497
