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Veritex Holdings, Inc. Reports First Quarter 2024 Operating Results
Источник: Nasdaq GlobeNewswire / 23 апр 2024 16:01:01 America/New_York
DALLAS, April 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 March 31, 2024.
“I am encouraged with the start of 2024. We continue to execute on our strategic positioning of our balance sheet with growth in deposits, capital and loans”, said C. Malcolm Holland, III. “Credit metrics remain stable and show positive trends as we gain momentum moving into the second quarter.”
Quarter to Date Q1 2024 Q4 2023 Q1 2023 (Dollars in thousands, except per share data)
(unaudited)GAAP Net income $ 24,156 $ 3,499 $ 38,411 Diluted EPS 0.44 0.06 0.70 Book value per common share 28.23 28.18 27.54 Return on average assets1 0.79 % 0.11 % 1.28 % Return on average equity1 6.33 0.92 10.55 Efficiency ratio 62.45 77.49 48.42 Non-GAAP2 Operating earnings $ 29,137 $ 31,625 $ 43,274 Diluted operating EPS 0.53 0.58 0.79 Tangible book value per common share 20.33 20.21 19.43 Pre-tax, pre-provision operating earnings 43,656 47,688 66,382 Pre-tax, pre-provision operating return on average assets1 1.42 % 1.54 % 2.20 % Pre-tax, pre-provision operating return on average loans1 1.84 1.97 2.83 Operating return on average assets1 0.95 1.02 1.44 Return on average tangible common equity1 9.52 2.00 15.81 Operating return on average tangible common equity1 11.34 12.37 17.72 Operating efficiency ratio 58.73 55.50 45.63 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 First Quarter Metrics and Company Highlights
- Total deposits grew $1.62 billion, or 18%, compared to March 31, 2023;
- Total loans grew $46.4 million, or 0.5%, compared to March 31, 2023;
- Loan to deposit ratio decreased to 91.7% as of March 31, 2024 compared to 93.6% as of December 31, 2023 and 107.7% as of March 31, 2023;
- Loan to deposit ratio, excluding mortgage warehouse loans, decreased to 86.9% as of March 31, 2024 compared to 89.1% as of December 31, 2023 and 102.4% as of March 31, 2023;
- Tangible book value per common share increased 0.6%, or $0.12, as of March 31, 2024 compared to December 31, 2023, and increased 4.63% or $0.90 as of March 31, 2023;
- Allowance for credit losses (“ACL”) to total loans increased to 1.15%, compared to 1.14% as of December 31, 2023 and 1.02% as of March 31, 2023;
- Pre-tax, pre-provision operating return on average assets was 1.42% as of March 31, 2024;
- Announced authorization of a stock buyback program on March 28, 2024 to purchase up to $50 million of outstanding common stock over the course of a year as the Company deems appropriate;
- Sold $120.1 million of lower-yielding available-for-sale (“AFS”) debt securities with a 3.11% average yield and reinvested the proceeds in higher yielding AFS securities with a 6.24% average yield; and
- Declared quarterly cash dividend of $0.20 per share of outstanding common stock payable on May 24, 2024.
Results of Operations for the Three Months Ended March 31, 2024
Net Interest Income
For the three months ended March 31, 2024, net interest income before provision for credit losses was $92.8 million and net interest margin was 3.24% compared to $95.5 million and 3.31%, respectively, for the three months ended December 31, 2023. The $2.7 million decrease, or 2.9%, in net interest income before provision for credit losses was primarily due to a $3.5 million decrease in interest income on loans driven by a decrease in loan yields, a $817 thousand decrease in interest income on equity securities and other investments and a $559 thousand increase in interest expense on transaction and savings deposits driven by an increase in funding costs on deposits. The decrease in net interest income was partially offset by a $1.4 million increase in interest income on debt securities and a $1.2 million decrease on advances from the Federal Home Loan Bank (“FHLB”), during the three months ended March 31, 2024. Net interest margin decreased 7 bps compared to the three months ended December 31, 2023, primarily due to the increase in funding costs on deposits during three months ended March 31, 2024, partially offset by an increase in debt securities.
Compared to the three months ended March 31, 2023, net interest income before provision for credit losses for the three months ended March 31, 2024 decreased by $10.6 million, or 10.2%. The decrease was primarily due to a $19.5 million increase in interest expense on certificates and other time deposits, a $16.9 million increase in interest expense on transaction and savings deposits and a $508 thousand decrease in interest income on equity securities and other investments. The decrease was partially offset by a $11.0 million decrease in advances from FHLB, a $10.2 million increase in interest income on loans driven by an increase in loan yields and average balances, a $2.7 million increase in interest income on debt securities and a $2.5 million increase in interest income on deposits in financial institutions and fed funds sold. Net interest margin decreased 45 bps from 3.69% for the three months ended March 31, 2023. The decrease was primarily due to the increase in funding costs on deposits during the three months ended March 31, 2024, partially offset by an increase in loan yields and debt securities.
Noninterest Income
Noninterest income for the three months ended March 31, 2024 was $6.7 million, an increase of $24.5 million, or 137.4%, compared to the three months ended December 31, 2023. The increase was primarily due to a $29.4 million loss in equity method investment income recorded in the three months ended December 31, 2023 related to a write down of our equity method investment in Thrive Mortgage, LLC ("Thrive") related to Thrive’s entry into a definitive agreement in December 2023 to be acquired by Lower Holding Company, which acquisition closed in March of 2024, with no corresponding or additional write down taken in the three months ended March 31, 2024. In addition, the increase was due to a $1.5 million increase in other income driven by a $1.3 million increase in BOLI income and a $1.3 million increase in loan fees. The increase was partially offset by a $6.3 million loss on sales of investment securities as a result of a strategic restructuring in which we sold $120.1 million of lower-yielding 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.
Compared to the three months ended March 31, 2023, noninterest income for the three months ended March 31, 2024 decreased by $6.9 million, or 50.8%. The decrease was primarily due to a $7.1 million decrease in government guaranteed loan income, primarily driven by a decrease in the Company’s USDA sales, a $983 thousand decrease in loss on sales of investment securities and a $849 thousand decrease in other noninterest income.
Noninterest Expense
Noninterest expense was $62.1 million for the three months ended March 31, 2024, compared to $60.2 million for the three months ended December 31, 2023, an increase of $1.9 million, or 3.1%. The increase was primarily due to a $2.8 million increase in salaries and employee benefits and a $892 thousand increase in other noninterest expense. The increase is partially offset by a decrease of $1.6 million in professional and regulatory fees driven by FDIC insurance assessment expense, which includes a $768 thousand FDIC special assessment expense recorded in the fourth quarter 2023.
Compared to the three months ended March 31, 2023, noninterest expense for the three months ended March 31, 2024 increased by $5.5 million, or 9.7%. The increase was primarily due to a $3.0 million increase other noninterest expense, a $1.7 million increase in professional and regulatory fees driven by FDIC assessment fees that increased when the Company crossed $10 billion in total assets and a $1.5 million increase in salaries and employee benefits.
Financial Condition
Total loans held for investment (“LHI”) was $9.25 billion at March 31, 2024, an increase of $43.0 million, or 1.9% annualized, compared to December 31, 2023.
Total deposits were $10.65 billion at March 31, 2024, an increase of $315.6 million, or 12.2% annualized, compared to December 31, 2023. The increase was primarily the result of an increase of $295.1 million in certificates and other time deposits, an increase of $131.2 million in noninterest-bearing deposits and an increase of $17.7 million in correspondent money market account balances. The increase was partially offset by a decrease of $128.3 million in interest-bearing transaction and savings deposits.
Credit Quality
Nonperforming assets (“NPAs”) totaled $103.8 million, or 0.82% of total assets, at March 31, 2024, compared to $95.8 million, or 0.77% of total assets, at December 31, 2023. The Company had net charge-offs of $5.3 million for the three months ended March 31, 2024. Annualized net charge-offs to average loans outstanding were 22 bps for the three months ended March 31, 2024, compared to 40 bps and 4 bps for the three months ended December 31, 2023 and March 31, 2023, respectively.
ACL as a percentage of LHI was 1.15%, 1.14% and 1.02% at March 31, 2024, December 31, 2023 and March 31, 2023, respectively. The Company recorded a provision for credit losses of $7.5 million, $9.5 million and $9.4 million for the three months ended March 31, 2024, December 31, 2023 and March 31, 2023, respectively . The recorded provision for credit losses for the three months ended March 31, 2024, compared to the three months ended December 31, 2023, was primarily attributable to an increase in general reserves as a result of changes in economic factors. The Company recorded a benefit for unfunded commitments of $1.5 million for the three months ended March 31, 2024, a $1.5 million benefit for unfunded commitments for the three months ended December 31, 2023, and a $1.5 million provision for unfunded commitments for the three months ended March 31, 2023. The recorded benefit for unfunded commitments for the three months ended March 31, 2024, compared to the three months ended December 31, 2023, was attributable to a decrease in unfunded commitment balances partially offset by changes in economic factors.
Income Tax
Income tax expense for the three months ended March 31, 2024 totaled $7.2 million, an increase of $1.2 million, or 20.5%, compared to the three months ended December 31, 2023. The Company’s effective tax rate was approximately 23.1% for the three months ended March 31, 2024. The effective tax rate for the three months ended March 31, 2024 was primarily due to a net discrete tax expense of $384 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, April 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 May 24, 2024 to stockholders of record as of the close of business on May 10, 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; 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, April 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/tn7dvesw 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/BIc24bd6831f8f4f6ba885c40b9b8ffc95. 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.comForward-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 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 (Dollars and shares in thousands, except per share data) Per Share Data (Common Stock): Basic EPS $ 0.44 $ 0.06 $ 0.60 $ 0.62 $ 0.71 Diluted EPS 0.44 0.06 0.60 0.62 0.70 Book value per common share 28.23 28.18 27.46 27.48 27.54 Tangible book value per common share1 20.33 20.21 19.44 19.41 19.43 Dividends paid per common share outstanding2 0.20 0.20 0.20 0.20 0.20 Common Stock Data: Shares outstanding at period end 54,496 54,338 54,305 54,261 54,229 Weighted average basic shares outstanding for the period 54,444 54,327 54,300 54,247 54,149 Weighted average diluted shares outstanding for the period 54,842 54,691 54,597 54,486 54,606 Summary of Credit Ratios: ACL to total LHI 1.15 % 1.14 % 1.14 % 1.05 % 1.02 % NPAs to total assets 0.82 0.77 0.65 0.55 0.35 NPAs to total loans and OREO 1.06 0.99 0.83 0.70 0.46 Net charge-offs to average loans outstanding4 0.22 0.40 0.08 0.48 0.04 Summary Performance Ratios: Return on average assets4 0.79 % 0.11 % 1.06 % 1.10 % 1.28 % Return on average equity4 6.33 0.92 8.58 8.96 10.55 Return on average tangible common equity1, 4 9.52 2.00 12.80 13.35 15.81 Efficiency ratio 62.45 77.49 54.49 49.94 48.42 Net interest margin 3.24 3.31 3.46 3.51 3.69 Selected Performance Metrics - Operating: Diluted operating EPS1 $ 0.53 $ 0.58 $ 0.60 $ 0.64 $ 0.79 Pre-tax, pre-provision operating return on average assets1, 4 1.42 % 1.54 % 1.61 % 1.90 % 2.20 % Pre-tax, pre-provision operating return on average loans1, 4 1.84 1.97 2.05 2.43 2.83 Operating return on average assets1,4 0.95 1.02 1.06 1.13 1.44 Operating return on average tangible common equity1,4 11.34 12.37 12.80 13.70 17.72 Operating efficiency ratio1 58.73 55.50 54.49 48.90 45.63 Veritex Holdings, Inc. Capital Ratios: Average stockholders' equity to average total assets 12.43 % 12.27 % 12.30 % 12.23 % 12.09 % Tangible common equity to tangible assets1 9.02 9.18 8.86 8.76 8.66 Tier 1 capital to average assets (leverage) 10.12 10.03 10.10 9.80 9.67 Common equity tier 1 capital 10.37 10.29 10.11 9.76 9.32 Tier 1 capital to risk-weighted assets 10.63 10.56 10.37 10.01 9.56 Total capital to risk-weighted assets 13.33 13.18 12.95 12.51 11.99 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)Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 (unaudited) (unaudited) (unaudited) (unaudited) ASSETS Cash and cash equivalents $ 740,769 $ 629,063 $ 713,408 $ 663,921 $ 808,395 Debt securities, net 1,344,930 1,257,042 1,060,629 1,144,020 1,150,959 Other investments 76,788 76,238 80,869 138,894 137,621 Loans held for sale (“LHFS”) 64,762 79,072 41,313 29,876 42,816 LHI, mortgage warehouse (“MW”) 449,531 377,796 390,767 436,255 437,501 LHI, excluding MW 9,249,551 9,206,544 9,237,447 9,257,183 9,237,159 Total loans 9,763,844 9,663,412 9,669,527 9,723,314 9,717,476 ACL (112,032 ) (109,816 ) (109,831 ) (102,150 ) (98,694 ) Bank-owned life insurance 85,359 84,833 84,867 84,375 84,962 Bank premises, furniture and equipment, net 105,299 105,727 106,118 105,986 107,540 Other real estate owned (“OREO”) 18,445 — — — — Intangible assets, net of accumulated amortization 38,679 41,753 44,294 48,293 51,086 Goodwill 404,452 404,452 404,452 404,452 404,452 Other assets 241,863 241,633 291,998 259,263 245,690 Total assets $ 12,708,396 $ 12,394,337 $ 12,346,331 $ 12,470,368 $ 12,609,487 LIABILITIES AND STOCKHOLDERS’ EQUITY Deposits: Noninterest-bearing deposits $ 2,349,211 $ 2,218,036 $ 2,363,340 $ 2,234,109 $ 2,212,389 Interest-bearing transaction and savings deposits 4,220,114 4,348,385 3,936,070 3,590,253 3,492,011 Certificates and other time deposits 3,486,805 3,191,737 3,403,427 2,928,949 2,896,870 Correspondent money market deposits 597,690 580,037 493,681 480,598 433,468 Total deposits 10,653,820 10,338,195 10,196,518 9,233,909 9,034,738 Accounts payable and other liabilities 186,027 195,036 229,116 190,900 171,985 Advances from FHLB 100,000 100,000 200,000 1,325,000 1,680,000 Subordinated debentures and subordinated notes 230,034 229,783 229,531 229,279 229,027 Total liabilities 11,169,881 10,863,014 10,855,165 10,979,088 11,115,750 Commitments and contingencies Stockholders’ equity: Common stock 611 610 609 609 609 Additional paid-in capital 1,319,144 1,317,516 1,314,459 1,311,687 1,308,345 Retained earnings 457,499 444,242 451,513 429,753 406,873 Accumulated other comprehensive loss (71,157 ) (63,463 ) (107,833 ) (83,187 ) (54,508 ) Treasury stock (167,582 ) (167,582 ) (167,582 ) (167,582 ) (167,582 ) Total stockholders’ equity 1,538,515 1,531,323 1,491,166 1,491,280 1,493,737 Total liabilities and stockholders’ equity $ 12,708,396 $ 12,394,337 $ 12,346,331 $ 12,470,368 $ 12,609,487 VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(In thousands, except per share data)For the Quarter Ended Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Interest income: Loans, including fees $ 161,942 $ 165,443 $ 167,368 $ 163,727 $ 151,707 Debt securities 13,695 12,282 10,928 10,166 10,988 Deposits in financial institutions and Fed Funds sold 8,050 8,162 7,128 7,507 5,534 Equity securities and other investments 900 1,717 1,691 1,118 1,408 Total interest income 184,587 187,604 187,115 182,518 169,637 Interest expense: Transaction and savings deposits 46,784 46,225 39,936 32,957 29,857 Certificates and other time deposits 40,492 40,165 36,177 28,100 20,967 Advances from FHLB 1,391 2,581 8,523 17,562 12,358 Subordinated debentures and subordinated notes 3,114 3,100 3,118 3,068 3,066 Total interest expense 91,781 92,071 87,754 81,687 66,248 Net interest income 92,806 95,533 99,361 100,831 103,389 Provision for credit losses1 7,500 9,500 8,627 15,000 9,385 (Benefit) provision for unfunded commitments (1,541 ) (1,500 ) (909 ) (1,129 ) 1,497 Net interest income after provisions 86,847 87,533 91,643 86,960 92,507 Noninterest income: Service charges and fees on deposit accounts 4,896 4,800 5,159 5,272 5,017 Loan fees 2,510 1,200 1,564 1,520 2,064 Loss on sales of debt securities (6,304 ) — — — (5,321 ) Government guaranteed loan income, net 2,614 4,378 1,772 4,144 9,688 Equity method investment (loss) income — (29,417 ) (136 ) 485 (1,521 ) Customer swap income 408 238 202 961 217 Other income 2,538 1,009 1,113 1,310 3,387 Total noninterest income (loss) 6,662 (17,792 ) 9,674 13,692 13,531 Noninterest expense: Salaries and employee benefits 33,365 30,606 30,949 28,650 31,865 Occupancy and equipment 4,677 4,670 4,881 4,827 4,973 Professional and regulatory fees 6,053 7,626 7,283 6,868 4,389 Data processing and software expense 4,856 4,569 4,541 4,709 4,720 Marketing 1,546 1,945 2,353 2,627 1,779 Amortization of intangibles 2,438 2,438 2,437 2,468 2,495 Telephone and communications 261 356 362 355 478 Other 8,920 8,028 6,608 6,693 5,916 Total noninterest expense 62,116 60,238 59,414 57,197 56,615 Income before income tax expense 31,393 9,503 41,903 43,455 49,423 Income tax expense 7,237 6,004 9,282 9,725 11,012 Net income $ 24,156 $ 3,499 $ 32,621 $ 33,730 $ 38,411 Basic EPS $ 0.44 $ 0.06 $ 0.60 $ 0.62 $ 0.71 Diluted EPS $ 0.44 $ 0.06 $ 0.60 $ 0.62 $ 0.70 Weighted average basic shares outstanding 54,444 54,327 54,300 54,247 54,149 Weighted average diluted shares outstanding 54,842 54,691 54,597 54,486 54,606 1 Includes provision for credit losses on AFS securities of $885 thousand for the three months ended March 31, 2023.
VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(Unaudited)For the Quarter Ended March 31, 2024 December 31, 2023 March 31, 2023 Average
Outstanding
BalanceInterest
Earned/
Interest
PaidAverage
Yield/
RateAverage
Outstanding
BalanceInterest
Earned/
Interest
PaidAverage
Yield/
RateAverage
Outstanding
BalanceInterest
Earned/
Interest
PaidAverage
Yield/
Rate(Dollars in thousands) Assets Interest-earning assets: Loans1 $ 9,283,815 $ 157,585 6.83 % $ 9,280,439 $ 161,021 6.88 % $ 9,141,137 $ 146,801 6.51 % LHI, MW 279,557 4,357 6.27 301,345 4,422 5.82 360,172 4,906 5.52 Debt securities 1,294,994 13,695 4.25 1,188,776 12,282 4.10 1,252,457 10,988 3.56 Interest-bearing deposits in other banks 584,593 8,050 5.54 587,929 8,162 5.51 478,345 5,534 4.69 Equity securities and other investments 76,269 900 4.75 82,271 1,717 8.28 124,985 1,408 4.57 Total interest-earning assets 11,519,228 184,587 6.44 11,440,760 187,604 6.51 11,357,096 169,637 6.06 ACL (112,229 ) (111,937 ) (92,664 ) Noninterest-earning assets 929,043 977,811 949,881 Total assets $ 12,336,042 $ 12,306,634 $ 12,214,313 Liabilities and Stockholders’ Equity Interest-bearing liabilities: Interest-bearing demand and savings deposits $ 4,639,445 $ 46,784 4.06 % $ 4,547,911 $ 46,225 4.03 % $ 4,150,995 $ 29,857 2.92 % Certificates and other time deposits 3,283,735 40,492 4.96 3,285,164 40,165 4.85 2,588,728 20,967 3.28 Advances from FHLB and Other 100,989 1,391 5.54 182,935 2,581 5.60 1,122,683 12,358 4.46 Subordinated debentures and subordinated notes 229,881 3,114 5.45 229,648 3,100 5.36 231,251 3,066 5.38 Total interest-bearing liabilities 8,254,050 91,781 4.47 8,245,658 92,071 4.43 8,093,657 66,248 3.32 Noninterest-bearing liabilities: Noninterest-bearing deposits 2,355,315 2,322,555 2,470,700 Other liabilities 192,809 228,135 173,380 Total liabilities 10,802,174 10,796,348 10,737,737 Stockholders’ equity 1,533,868 1,510,286 1,476,576 Total liabilities and stockholders’ equity $ 12,336,042 $ 12,306,634 $ 12,214,313 Net interest rate spread2 1.97 % 2.08 % 2.74 % Net interest income and margin3 $ 92,806 3.24 % $ 95,533 3.31 % $ 103,389 3.69 % 1 Includes average outstanding balances of LHFS of $53.9 million, $31.2 million and $19.7 million for the quarters ended March 31, 2024, December 31, 2023, and March 31, 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 Mar 31,
2024Dec 31,
2023Sep 30,
2023Jun 30,
2023Mar 31,
2023Average yield on interest-earning assets: Loans1 6.83 % 6.88 % 6.92 % 6.85 % 6.51 % LHI, MW 6.27 5.82 6.38 5.44 5.52 Total Loans 6.81 6.85 6.90 6.80 6.48 Debt securities 4.25 4.10 3.87 3.60 3.56 Interest-bearing deposits in other banks 5.54 5.51 5.43 5.16 4.69 Equity securities and other investments 4.75 8.28 4.94 3.25 4.57 Total interest-earning assets 6.44 % 6.51 % 6.51 % 6.36 % 6.06 % Average rate on interest-bearing liabilities: Interest-bearing demand and savings deposits 4.06 % 4.03 % 3.80 % 3.37 % 2.92 % Certificates and other time deposits 4.96 4.85 4.55 3.92 3.28 Advances from FHLB 5.54 5.60 4.66 4.78 4.46 Subordinated debentures and subordinated notes 5.45 5.36 5.39 5.37 5.38 Total interest-bearing liabilities 4.47 % 4.43 % 4.21 % 3.86 % 3.32 % Net interest rate spread2 1.97 % 2.08 % 2.30 % 2.50 % 2.74 % Net interest margin3 3.24 % 3.31 % 3.46 % 3.51 % 3.69 % 1Includes average outstanding balances of LHFS of $53.9 million, $31.2 million, $28.3 million, $23.4 million and $19.7 million for the three months ended March 31, 2024, December 31, 2023, September 30, 2023, June 30, 2023, and March 31, 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 Mar 31,
2024Dec 31,
2023Sep 30,
2023Jun 30,
2023Mar 31,
2023Average cost of interest-bearing deposits 4.43 % 4.38 % 4.12 % 3.61 % 3.06 % Average costs of total deposits, including noninterest-bearing 3.42 3.37 3.15 2.73 2.24 VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(Unaudited)LHI and Deposit Portfolio Composition
Mar 31,
2024Dec 31,
2023Sep 30,
2023Jun 30,
2023Mar 31,
2023(In thousands, except percentages) LHI1 Commercial and Industrial (“C&I”) $ 2,785,987 30.1 % $ 2,752,063 29.9 % $ 2,841,024 30.7 % $ 2,850,084 30.7 % $ 2,895,957 31.3 % Real Estate: Owner occupied commercial (“OOCRE”) 788,376 8.5 794,088 8.6 697,299 7.5 671,602 7.2 631,563 6.8 Non-owner occupied commercial (“NOOCRE”) 2,352,993 25.5 2,350,725 25.5 2,398,060 26.1 2,509,731 27.1 2,505,344 27.1 Construction and land 1,568,257 16.9 1,734,254 18.8 1,705,053 18.4 1,659,700 17.9 1,831,349 19.8 Farmland 30,979 0.3 31,114 0.3 59,684 0.6 51,663 0.6 51,680 0.6 1-4 family residential 969,401 10.5 937,119 10.2 933,225 10.1 923,442 10.0 896,252 9.7 Multi-family residential 751,607 8.1 605,817 6.6 603,395 6.5 592,473 6.4 432,209 4.6 Consumer 8,882 0.1 10,149 0.1 9,845 0.1 11,189 0.1 8,316 0.1 Total LHI $ 9,256,482 100 % $ 9,215,329 100 % $ 9,247,585 100 % $ 9,269,884 100 % $ 9,252,670 100 % MW 449,531 377,796 390,767 436,255 437,501 Total LHI1 $ 9,706,013 $ 9,593,125 $ 9,638,352 $ 9,706,139 $ 9,690,171 Total LHFS 64,762 79,072 41,313 29,876 42,816 Total Loans $ 9,770,775 $ 9,672,197 $ 9,679,665 $ 9,736,015 $ 9,732,987 Deposits Noninterest-bearing $ 2,349,211 22.1 % $ 2,218,036 21.5 % $ 2,363,340 23.2 % $ 2,234,109 24.2 % $ 2,212,389 24.5 % Interest-bearing transaction 724,171 6.8 927,193 8.9 739,098 7.2 676,653 7.3 866,609 9.6 Money market 3,326,742 31.2 3,284,324 31.8 3,096,498 30.4 2,816,769 30.5 2,518,922 27.9 Savings 169,201 1.6 136,868 1.3 100,474 1.0 96,831 1.0 106,480 1.2 Certificates and other time deposits 3,486,805 32.7 3,191,737 30.9 3,403,427 33.4 2,928,949 31.7 2,896,870 32.0 Correspondent money market accounts 597,690 5.6 580,037 5.6 493,681 4.8 480,598 5.3 433,468 4.8 Total deposits $ 10,653,820 100 % $ 10,338,195 100 % $ 10,196,518 100 % $ 9,233,909 100 % $ 9,034,738 100 % Total Loans to Deposits Ratio 91.7 % 93.6 % 94.9 % 105.4 % 107.7 % LHI to Deposit Ratio, excluding MW Loans 86.9 % 89.1 % 90.7 % 100.4 % 102.4 % 1 Total LHI does not include deferred fees of $6.9 million, $8.8 million, $10.1 million, $12.7 million and $15.5 million at March 31, 2024, December 31, 2023, September 30, 2023, June 30, 2023 and March 31, 2023, respectively.
VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(Unaudited)Asset Quality
For the Quarter Ended Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 (In thousands, except percentages) NPAs: Nonaccrual loans $ 75,721 $ 79,133 $ 65,676 $ 54,055 $ 31,452 Nonaccrual PCD loans1 9,419 13,715 13,718 13,721 12,784 Accruing loans 90 or more days past due2 220 2,975 474 528 296 Total nonperforming loans held for investment (“NPLs”) 85,360 95,823 79,868 68,304 44,532 Other real estate owned 18,445 — — — — Total NPAs $ 103,805 $ 95,823 $ 79,868 $ 68,304 $ 44,532 Charge-offs: 1-4 family residential $ — $ (21 ) $ — $ — $ — Multifamily (192 ) — — — OOCRE (120 ) (364 ) (375 ) — (116 ) NOOCRE (4,293 ) (5,434 ) — (8,215 ) — C&I (946 ) (3,893 ) (1,929 ) (3,540 ) (1,051 ) Consumer (71 ) (33 ) (49 ) (92 ) (62 ) Total charge-offs (5,430 ) (9,937 ) (2,353 ) (11,847 ) (1,229 ) Recoveries: 1-4 family residential 1 1 — 1 1 NOOCRE — — 200 150 — C&I 96 387 308 106 364 Consumer 49 34 14 46 6 Total recoveries 146 422 522 303 371 Net charge-offs $ (5,284 ) $ (9,515 ) $ (1,831 ) $ (11,544 ) $ (858 ) Provision for credit losses $ 7,500 $ 9,500 $ 8,627 $ 15,000 $ 9,385 ACL $ 112,032 $ 109,816 $ 109,831 $ 102,150 $ 98,694 Asset Quality Ratios: NPAs to total assets 0.82 % 0.77 % 0.65 % 0.55 % 0.35 % NPAs to total loans and OREO 1.06 0.99 0.83 0.70 0.46 NPLs to total LHI 0.88 1.00 0.83 0.70 0.46 NPLs, excluding nonaccrual PCD loans, to total LHI 0.78 0.86 0.69 0.56 0.33 ACL to total LHI 1.15 1.14 1.14 1.05 1.02 Net charge-offs to average loans outstanding3 0.22 0.40 0.08 0.48 0.04 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 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 (Dollars in thousands, except per share data) Tangible Common Equity Total stockholders' equity $ 1,538,515 $ 1,531,323 $ 1,491,166 $ 1,491,280 $ 1,493,737 Adjustments: Goodwill (404,452 ) (404,452 ) (404,452 ) (404,452 ) (404,452 ) Core deposit intangibles (26,057 ) (28,495 ) (30,933 ) (33,371 ) (35,808 ) Tangible common equity $ 1,108,006 $ 1,098,376 $ 1,055,781 $ 1,053,457 $ 1,053,477 Common shares outstanding 54,496 54,338 54,305 54,261 54,229 Book value per common share $ 28.23 $ 28.18 $ 27.46 $ 27.48 $ 27.54 Tangible book value per common share $ 20.33 $ 20.21 $ 19.44 $ 19.41 $ 19.43 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 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 (Dollars in thousands) Tangible Common Equity Total stockholders' equity $ 1,538,515 $ 1,531,323 $ 1,491,166 $ 1,491,280 $ 1,493,737 Adjustments: Goodwill (404,452 ) (404,452 ) (404,452 ) (404,452 ) (404,452 ) Core deposit intangibles (26,057 ) (28,495 ) (30,933 ) (33,371 ) (35,808 ) Tangible common equity $ 1,108,006 $ 1,098,376 $ 1,055,781 $ 1,053,457 $ 1,053,477 Tangible Assets Total assets $ 12,708,396 $ 12,394,337 $ 12,346,331 $ 12,470,368 $ 12,609,487 Adjustments: Goodwill (404,452 ) (404,452 ) (404,452 ) (404,452 ) (404,452 ) Core deposit intangibles (26,057 ) (28,495 ) (30,933 ) (33,371 ) (35,808 ) Tangible Assets $ 12,277,887 $ 11,961,390 $ 11,910,946 $ 12,032,545 $ 12,169,227 Tangible Common Equity to Tangible Assets 9.02 % 9.18 % 8.86 % 8.76 % 8.66 % 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 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 (Dollars in thousands) Net income available for common stockholders adjusted for amortization of core deposit intangibles Net income $ 24,156 $ 3,499 $ 32,621 $ 33,730 $ 38,411 Adjustments: Plus: Amortization of core deposit intangibles 2,438 2,438 2,438 2,438 2,438 Less: Tax benefit at the statutory rate 512 512 512 512 512 Net income available for common stockholders adjusted for amortization of core deposit intangibles $ 26,082 $ 5,425 $ 34,547 $ 35,656 $ 40,337 Average Tangible Common Equity Total average stockholders' equity $ 1,533,868 $ 1,510,286 $ 1,508,170 $ 1,510,625 $ 1,476,576 Adjustments: Average goodwill (404,452 ) (404,452 ) (404,452 ) (404,452 ) (404,452 ) Average core deposit intangibles (27,656 ) (30,093 ) (32,540 ) (34,969 ) (37,361 ) Average tangible common equity $ 1,101,760 $ 1,075,741 $ 1,071,178 $ 1,071,204 $ 1,034,763 Return on Average Tangible Common Equity (Annualized) 9.52 % 2.00 % 12.80 % 13.35 % 15.81 % 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 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 (Dollars in thousands, except per share data) Operating Earnings Net income $ 24,156 $ 3,499 $ 32,621 $ 33,730 $ 38,411 Plus: Severance payments1 — — — 1,194 835 Plus: Loss on sale of AFS securities, net 6,304 — — — 5,321 Plus: Equity method investment write-down — 29,417 — — — Plus: FDIC special assessment — 768 — — — Operating pre-tax income 30,460 33,684 32,621 34,924 44,567 Less: Tax impact of adjustments 1,323 2,059 — 251 1,293 Operating earnings $ 29,137 $ 31,625 $ 32,621 $ 34,673 $ 43,274 Weighted average diluted shares outstanding 54,842 54,691 54,597 54,486 54,606 Diluted EPS $ 0.44 $ 0.06 $ 0.60 $ 0.62 $ 0.70 Diluted operating EPS $ 0.53 $ 0.58 $ 0.60 $ 0.64 $ 0.79 1 Severance payments relate to certain restructurings made during the periods disclosed.
For the Quarter Ended Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 (Dollars in thousands) Pre-Tax, Pre-Provision Operating Earnings Net income $ 24,156 $ 3,499 $ 32,621 $ 33,730 $ 38,411 Plus: Provision for income taxes 7,237 6,004 9,282 9,725 11,012 Plus: Provision for credit losses and unfunded commitments 5,959 8,000 7,718 13,871 10,882 Plus: Severance payments — — — 1,194 756 Plus: Loss on sale of AFS securities, net 6,304 — — — 5,321 Plus: Equity method investment write-down — 29,417 — — — Plus: FDIC special assessment — 768 — — — Pre-tax, pre-provision operating earnings $ 43,656 $ 47,688 $ 49,621 $ 58,520 $ 66,382 Average total assets $ 12,336,042 $ 12,306,634 $ 12,259,062 $ 12,350,223 $ 12,214,313 Pre-tax, pre-provision operating return on average assets1 1.42 % 1.54 % 1.61 % 1.90 % 2.20 % Average loans $ 9,563,372 $ 9,581,784 $ 9,625,005 $ 9,657,313 $ 9,501,309 Pre-tax, pre-provision operating return on average loans1 1.84 % 1.97 % 2.05 % 2.43 % 2.83 % Average total assets $ 12,336,042 $ 12,306,634 $ 12,259,062 $ 12,350,223 $ 12,214,313 Return on average assets1 0.79 % 0.11 % 1.06 % 1.10 % 1.28 % Operating return on average assets1 0.95 1.02 1.06 1.13 1.44 Operating earnings adjusted for amortization of core deposit intangibles Operating earnings $ 29,137 $ 31,625 $ 32,621 $ 34,673 $ 43,274 Adjustments: Plus: Amortization of core deposit intangibles 2,438 2,438 2,438 2,438 2,438 Less: Tax benefit at the statutory rate 512 512 512 512 512 Operating earnings adjusted for amortization of core deposit intangibles $ 31,063 $ 33,551 $ 34,547 $ 36,599 $ 45,200 Average Tangible Common Equity Total average stockholders' equity $ 1,533,868 $ 1,510,286 $ 1,508,170 $ 1,510,625 $ 1,476,576 Adjustments: Less: Average goodwill (404,452 ) (404,452 ) (404,452 ) (404,452 ) (404,452 ) Less: Average core deposit intangibles (27,656 ) (30,093 ) (32,540 ) (34,969 ) (37,361 ) Average tangible common equity $ 1,101,760 $ 1,075,741 $ 1,071,178 $ 1,071,204 $ 1,034,763 Operating return on average tangible common equity1 11.34 % 12.37 % 12.80 % 13.70 % 17.72 % Efficiency ratio 62.45 % 77.49 % 54.49 % 49.94 % 48.42 % Operating efficiency ratio Net interest income $ 92,806 $ 95,533 $ 99,361 $ 100,831 $ 103,389 Noninterest income 6,662 (17,792 ) 9,674 13,692 13,531 Plus: Loss on sale of AFS securities, net 6,304 — — — 5,321 Plus: Equity method investment write-down — 29,417 — — — Operating noninterest income 12,966 11,625 9,674 13,692 18,852 Noninterest expense 62,116 60,238 59,414 57,197 56,615 Less: FDIC special assessment — 768 — — — Less: Severance payments — — — 1,194 756 Operating noninterest expense $ 62,116 $ 59,470 $ 59,414 $ 56,003 $ 55,859 Operating efficiency ratio 58.73 % 55.50 % 54.49 % 48.90 % 45.63 % 1 Annualized ratio for quarterly metrics.
