Veritex Holdings, Inc. Reports Third Quarter Operating Results

Источник: Nasdaq GlobeNewswire / 24 окт 2023 16:30:02 America/New_York

DALLAS, Oct. 24, 2023 (GLOBE NEWSWIRE) -- Veritex Holdings, Inc. (“Veritex”, the “Company”, “we” or “our”) (Nasdaq: VBTX), the holding company for Veritex Community Bank, today announced the results for the quarter ended September 30, 2023.

“Despite the challenging markets, Veritex continues to focus on strengthening our balance sheet and adding to capital”, said C. Malcolm Holland, III. “Our year long deposit centric strategy is gaining momentum shown by the positive trends in our balance sheet ratios.”

	Quarter to Date						Year to Date
	Q3 2023			Q2 2023			Q3 2023			Q3 2022

	(Dollars in thousands, except per share data) (unaudited)
Financial Results
Net income	$	32,621		$	33,730		$	104,762		$	106,418
Diluted EPS		0.60			0.62			1.92			1.98
Book value per common share		27.46			27.48			27.46			26.15
Return on average assets²		1.06	%		1.10	%		1.14	%		1.33	%
Return on average equity²		8.58			8.96			9.35			10.02
Efficiency ratio		54.49			49.94			50.88			49.05
Financial Operating Results¹
Operating earnings	$	32,621		$	34,673		$	110,489		$	107,494
Diluted operating EPS		0.60			0.64			2.02			2.00
Tangible book value per common share		19.44			19.41			19.44			17.91
Pre-tax, pre-provision operating earnings		49,621			58,520			174,523			152,719
Pre-tax, pre-provision operating return on average assets²		1.61	%		1.90	%		1.90	%		1.90	%
Pre-tax, pre-provision operating return on average loans²		2.05			2.43			2.43			2.54
Operating return on average assets²		1.06			1.13			1.20			1.34
Return on average tangible common equity²		12.80			13.35			13.95			15.40
Operating return on average tangible common equity²		12.80			13.70			14.68			15.55
Operating efficiency ratio		54.49			48.90			49.53			48.59

¹Refer 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.
²Annualized ratio.

Other Third Quarter Metrics and Company Highlights

Total deposits increased by $962.6 million, or 41.68% annualized, to $10.2 billion as of September 30, 2023 compared to $9.2 billion as of June 30, 2023;
Loan to deposit ratio decreased to 94.5% as of September 30, 2023 compared to 105.1% as of June 30, 2023;
Allowance for credit losses (“ACL”) to total loans increased to 1.14% as of September 30, 2023, or an increase of 9 bps and 20 bps from June 30, 2023 and September 30, 2022, respectively;
Annualized net charge-offs to average loans outstanding were 8 bps for the three months ended September 30, 2023 compared to 48 bps and 12 bps for the three months ended June 30, 2023 and September 30, 2022, respectively;
Total Commercial Real Estate (“CRE”) / Risk Based Capital (“RBC”) decreased to 317.2% as of September 30, 2023 compared to 327.2% as of June 30, 2023;
Total unfunded Acquisition, Development, and Construction (“ADC”) decreased to $1.15 billion, or approximately 16.3%, as of September 30, 2023 compared to $1.37 billion as of June 30, 2023;
Common equity tier 1 capital increased 35 bps to 10.11% as of September 30, 2023 compared to 9.76% as of June 30, 2023 driven by earnings and a decrease in risk-weighted assets;
Named one of the “Best Companies to Work For” by the 2023 Inaugural 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 November 24, 2023.

Results of Operations for the Three Months Ended September 30, 2023

Net Interest Income

For the three months ended September 30, 2023, net interest income before provision for credit losses was $99.3 million and net interest margin was 3.46% compared to $100.8 million and 3.51%, respectively, for the three months ended June 30, 2023. The $1.5 million decrease, or 1.5%, in net interest income before provision for credit losses was primarily due to a $8.1 million increase in interest expense on certificates and other time deposits and a $7.0 million 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 $9.0 million decrease in interest expense on advances from the Federal Home Loan Bank (“FHLB”), a $3.6 million increase in interest income on loans driven by an increase in loan yields and average balances, a $762 thousand increase in interest income on debt securities and a $573 thousand increase in equity securities and other investments during the three months ended September 30, 2023. Net interest margin decreased 5 bps compared to the three months ended June 30, 2023, primarily due to the increase in funding costs on deposits during three months ended September 30, 2023, partially offset by an increase in loan yields and debt securities.

Compared to the three months ended September 30, 2022, net interest income before provision for credit losses for the three months ended September 30, 2023 decreased by $1.7 million, or 1.7%. The decrease was primarily due to a $32.3 million increase in certificates and other time deposits, a $27.0 million increase in transaction and savings deposits and a $6.0 million increase in advances from the FHLB driven by an increase in funding costs. The decrease was partially offset by a $58.2 million increase in interest income on loans driven by an increase in loan yields and average balances and a $5.2 million increase in deposits in financial institutions and fed funds sold. Net interest margin decreased 31 bps from 3.77% for the three months ended September 30, 2022. The decrease was primarily due to the increase in funding costs on deposits during the three months ended September 30, 2023, partially offset by an increase in loan yields and debt securities.

Noninterest Income

Noninterest income for the three months ended September 30, 2023 was $9.7 million, a decrease of $4.0 million, or 29.3%, compared to the three months ended June 30, 2023. The decrease was primarily due to a $2.4 million decrease in government guaranteed loan income primarily driven by a decrease in U.S. Department of Agriculture (“USDA”) loans sold. In addition, the decrease was due to a $759 thousand decrease in customer swap income and a $621 thousand decrease in equity method investment income. This decrease was partially offset by a $178 thousand increase in other income.

Compared to the three months ended September 30, 2022, noninterest income for the three months ended September 30, 2023 decreased by $3.3 million, or 25.7%. The decrease was primarily due to a $3.2 million decrease in customer swap income, a $1.2 million decrease in loan fees driven by a $1.2 million decrease in syndication fees and a $1.0 million decrease in other noninterest income. The decrease was partially offset by a $1.2 million increase in government guaranteed loan income, primarily driven by an increase in USDA loans sold through our wholly owned subsidiary North Avenue Capital, LLC, and a $922 thousand increase in equity method investment income.

Noninterest Expense

Noninterest expense was $59.4 million for the three months ended September 30, 2023, compared to $57.2 million for the three months ended June 30, 2023, an increase of $2.2 million, or 3.9%. The increase was primarily due to a $2.3 million increase in salaries and employee benefits and a $415 thousand increase in professional and regulatory fees driven by FDIC assessment fees. The increase is partially offset by a decrease of $274 thousand in marketing expense and a $168 thousand decrease in data processing and software expense.

Compared to the three months ended September 30, 2022, noninterest expense for the three months ended September 30, 2023 increased by $8.4 million, or 16.5%. The increase was primarily driven by a $3.6 million increase in professional and regulatory fees driven by FDIC assessment fees that increased when the Company crossed $10 billion in total assets, a $2.3 million increase in other noninterest expenses, a $1.2 million increase in salaries and employee benefits, a $1.0 million increase in data processing and software expenses and a $508 thousand increase in marketing expenses.

Financial Condition

Total loans held for investment (“LHI”) was $9.64 billion at September 30, 2023, a decrease of $67.8 million, or 2.8% annualized, compared to June 30, 2023. The decrease was the result of the state of the economy and banking environment as a result of higher interest rates.

Total deposits were $10.20 billion at September 30, 2023, an increase of $962.6 million, or 41.7% annualized, compared to June 30, 2023. The increase was primarily the result of an increase of $474.5 million in certificates and other time deposits, an increase of $345.8 million in interest-bearing deposits, an increase of $129.2 million in non-interest bearing deposits and an increase of $13.1 million in correspondent money market account balances.

Credit Quality

Nonperforming assets (“NPAs”) totaled $79.9 million, or 0.65% of total assets, at September 30, 2023, compared to $68.3 million, or 0.55% of total assets, at June 30, 2023. The Company had net charge-offs of $1.8 million for the three months ended September 30, 2023. Annualized net charge-offs were down to 8 bps for the three months ended September 30, 2023, compared to 48 bps and 12 bps for the three months ended June 30, 2023 and September 30, 2022, respectively.

ACL as a percentage of LHI was 1.14%, 1.05% and 0.94% at September 30, 2023, June 30, 2023 and September 30, 2022, respectively. The Company recorded a provision for credit losses of $8.6 million for the three months ended September 30, 2023, a $15.0 million provision for credit losses for the three months ended June 30, 2023 and a $6.7 million provision for credit losses for the three months ended September 30, 2022. The recorded provision for credit losses for the three months ended September 30, 2023, compared to the three months ended June 30, 2023, was primarily attributable to an increase in general reserves as a result of changes in economic factors and individually analyzed loans receiving specific reserves. The Company recorded a benefit for unfunded commitments of $909 thousand for the three months ended September 30, 2023, a $1.1 million benefit for unfunded commitments for the three months ended June 30, 2023, and a $850 thousand provision for unfunded commitments for the three months ended September 30, 2022. The recorded benefit for unfunded commitments for the three months ended September 30, 2023, compared to the three months ended June 30, 2023, was attributable to a decrease in unfunded commitment balances partially offset by changes in economic factors.

Dividend Information

After the close of the market on Tuesday, October 24, 2023, Veritex’s Board of Directors declared a quarterly cash dividend of $0.20 per share on its outstanding shares of common stock. The dividend will be paid on or after November 24, 2023 to stockholders of record as of the close of business on November 10, 2023.

Non-GAAP Financial Measures

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

Conference Call

The Company will host an investor conference call and webcast to review the results on Wednesday, October 25, 2023, at 8:30 a.m. Central Time. Participants may pre-register for the call by visiting https://edge.media-server.com/mmc/p/nzdfo4ub/ 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/BI9b72154b2c424063aae6950d635afeec. 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; a continuation of recent turmoil in the banking industry, responsive measures to mitigate and manage it and related supervisory and regulatory actions and costs and Veritex’s future financial performance, business and growth strategy, projected plans and objectives, as well as other projections based on macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact broader economic and industry trends, and any such variations may be material. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “seeks,” “targets,” “outlooks,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing words. We refer you to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Veritex’s Annual Report on Form 10-K for the year ended December 31, 2022 and any updates to those risk factors set forth in Veritex’s Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings with the Securities and Exchange Commission (“SEC”), which are available on the SEC’s website at www.sec.gov. If one or more events related to these or other risks or uncertainties materialize, or if Veritex’s underlying assumptions prove to be incorrect, actual results may differ materially from what Veritex anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made. Veritex does not undertake any obligation, and specifically declines any obligation, to supplement, update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by law. All forward-looking statements, expressed or implied, included in this earnings release are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that Veritex or persons acting on Veritex’s behalf may issue.

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

	For the Quarter Ended															For the Nine Months Ended
	Sep 30, 2023			Jun 30, 2023			Mar 31, 2023			Dec 31, 2022			Sep 30, 2022			Sep 30, 2023			Sep 30, 2022

	(Dollars and shares in thousands, except per share data)
Per Share Data (Common Stock):
Basic EPS	$	0.60		$	0.62		$	0.71		$	0.74		$	0.80		$	1.93		$	2.01
Diluted EPS		0.60			0.62			0.70			0.73			0.79			1.92			1.98
Book value per common share		27.46			27.48			27.54			26.83			26.15			27.46			26.15
Tangible book value per common share¹		19.44			19.41			19.43			18.64			17.91			19.44			17.91
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		54,305			54,261			54,229			54,030			53,988			54,305			53,988
Weighted average basic shares outstanding for the period		54,300			54,247			54,149			54,011			53,979			54,233			52,886
Weighted average diluted shares outstanding for the period		54,597			54,486			54,606			54,780			54,633			54,563			53,655

Summary of Credit Ratios:
ACL to total LHI		1.14	%		1.05	%		1.02	%		0.96	%		0.94	%		1.14	%		0.94	%
NPAs to total assets		0.65			0.55			0.35			0.36			0.26			0.65			0.26
NPAs, excluding nonaccrual purchase credit deteriorated (“PCD”) loans, to total assets³		0.54			0.44			0.25			0.25			0.26			0.54			0.26
Net charge-offs to average loans outstanding⁴		0.08			0.48			0.04			0.24			0.12			0.20			0.13

Summary Performance Ratios:
Return on average assets⁴		1.06	%		1.10	%		1.28	%		1.35	%		1.50	%		1.14	%		1.33	%
Return on average equity⁴		8.58			8.96			10.55			11.03			11.82			9.35			10.02
Return on average tangible common equity^{1, 4}		12.80			13.35			15.81			16.75			17.82			13.95			15.40
Efficiency ratio		54.49			49.94			48.42			47.63			44.71			50.88			49.05
Net interest margin		3.46			3.51			3.69			3.87			3.77			3.55			3.48

Selected Performance Metrics - Operating:
Diluted operating EPS¹	$	0.60		$	0.64		$	0.79		$	0.74		$	0.80		$	2.02		$	2.00
Pre-tax, pre-provision operating return on average assets^{1, 4}		1.61	%		1.90	%		2.20	%		2.15	%		2.20	%		1.90	%		1.90	%
Pre-tax, pre-provision operating return on average loans^{1, 4}		2.05			2.43			2.83			2.78			2.88			2.43			2.54
Operating return on average assets^1,4		1.06			1.13			1.43			1.36			1.51			1.20			1.34
Operating return on average tangible common equity^1,4		12.80			13.70			17.68			16.95			17.94			14.68			15.55
Operating efficiency ratio¹		54.49			48.90			45.70			47.11			44.37			49.53			48.59

Veritex Holdings, Inc. Capital Ratios:
Average stockholders' equity to average total assets		12.30	%		12.23	%		12.09	%		12.20	%		12.69	%		12.21	%		13.23	%
Tangible common equity to tangible assets¹		8.86			8.76			8.66			8.60			8.58			8.86			8.58
Tier 1 capital to average assets (leverage)		10.10			9.80			9.67			9.82			9.79			10.10			9.79
Common equity tier 1 capital		10.11			9.76			9.32			9.09			9.09			10.11			9.09
Tier 1 capital to risk-weighted assets		10.37			10.01			9.56			9.34			9.35			10.37			9.35
Total capital to risk-weighted assets		12.95			12.51			11.99			11.63			11.68			12.95			11.68

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)

	Sep 30, 2023			Jun 30, 2023			Mar 31, 2023			Dec 31, 2022			Sep 30, 2022
	(unaudited)			(unaudited)			(unaudited)						(unaudited)
ASSETS
Cash and cash equivalents	$	713,408		$	663,921		$	808,395		$	436,077		$	433,897
Debt securities, net		1,060,629			1,144,020			1,150,959			1,282,460			1,303,004
Other investments		80,869			138,894			137,621			122,450			115,551

Loans held for sale (“LHFS”)		41,313			29,876			42,816			20,641			17,644
LHI, mortgage warehouse (“MW”)		390,767			436,255			437,501			446,227			523,805
LHI, excluding MW		9,237,447			9,257,183			9,237,159			9,036,424			8,513,254
Total loans		9,669,527			9,723,314			9,717,476			9,503,292			9,054,703
ACL		(109,831	)		(102,150	)		(98,694	)		(91,052	)		(85,037	)
Bank-owned life insurance		84,867			84,375			84,962			84,496			84,030
Bank premises, furniture and equipment, net		106,118			105,986			107,540			108,824			108,720
Intangible assets, net of accumulated amortization		44,294			48,293			51,086			53,213			56,238
Goodwill		404,452			404,452			404,452			404,452			404,452
Other assets		291,998			259,263			245,690			250,149			238,896
Total assets	$	12,346,331		$	12,470,368		$	12,609,487		$	12,154,361		$	11,714,454
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Noninterest-bearing deposits	$	2,363,340		$	2,234,109		$	2,212,389		$	2,640,617		$	2,811,412
Interest-bearing transaction and savings deposits		3,936,070			3,590,253			3,492,011			3,514,729			3,437,898
Certificates and other time deposits		3,403,427			2,928,949			2,896,870			2,086,642			1,667,364
Correspondent money market deposits		493,681			480,598			433,468			881,246			831,770
Total deposits		10,196,518			9,233,909			9,034,738			9,123,234			8,748,444
Accounts payable and other liabilities		229,116			190,900			171,985			177,579			173,198
Advances from FHLB		200,000			1,325,000			1,680,000			1,175,000			1,150,000
Subordinated debentures and subordinated notes		229,531			229,279			229,027			228,775			228,524
Securities sold under agreements to repurchase		—			—			—			—			2,389
Total liabilities		10,855,165			10,979,088			11,115,750			10,704,588			10,302,555
Commitments and contingencies
Stockholders’ equity:
Common stock		609			609			609			607			606
Additional paid-in capital		1,314,459			1,311,687			1,308,345			1,306,852			1,303,171
Retained earnings		451,513			429,753			406,873			379,299			350,195
Accumulated other comprehensive loss		(107,833	)		(83,187	)		(54,508	)		(69,403	)		(74,491	)
Treasury stock		(167,582	)		(167,582	)		(167,582	)		(167,582	)		(167,582	)
Total stockholders’ equity		1,491,166			1,491,280			1,493,737			1,449,773			1,411,899
Total liabilities and stockholders’ equity	$	12,346,331		$	12,470,368		$	12,609,487		$	12,154,361		$	11,714,454

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

	For the Quarter Ended															For the Nine Months Ended
	Sep 30, 2023			Jun 30, 2023			Mar 31, 2023			Dec 31, 2022			Sep 30, 2022			Sep 30, 2023			Sep 30, 2022
	(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)
Interest income:
Loans, including fees	$	167,368		$	163,727		$	151,707		$	136,846		$	109,199		$	482,802		$	262,833
Debt securities		10,928			10,166			10,988			10,880			10,462			32,082			27,856
Deposits in financial institutions and Fed Funds sold		7,128			7,507			5,534			3,401			1,898			20,169			2,874
Equity securities and other investments		1,691			1,118			1,408			1,087			1,666			4,217			3,633
Total interest income		187,115			182,518			169,637			152,214			123,225			539,270			297,196
Interest expense:
Transaction and savings deposits		39,936			32,957			29,857			24,043			12,897			102,750			18,742
Certificates and other time deposits		36,177			28,100			20,967			8,543			3,919			85,244			6,764
Advances from FHLB		8,523			17,562			12,358			10,577			2,543			38,443			4,924
Subordinated debentures and subordinated notes		3,118			3,068			3,066			2,954			2,826			9,252			8,206
Total interest expense		87,754			81,687			66,248			46,117			22,185			235,689			38,636
Net interest income		99,361			100,831			103,389			106,097			101,040			303,581			258,560
Provision for credit losses¹		8,627			15,000			9,385			11,800			6,650			33,012			15,150
(Benefit) provision for unfunded commitments		(909	)		(1,129	)		1,497			(523	)		850			(541	)		1,343
Net interest income after provisions		91,643			86,960			92,507			94,820			93,540			271,110			242,067
Noninterest income:
Service charges and fees on deposit accounts		5,159			5,272			5,017			5,173			5,217			15,448			14,966
Loan fees		1,564			1,520			2,064			2,477			2,786			5,148			7,965
Loss on sales of debt securities		—			—			(5,321	)		—			—			(5,321	)		—
Gain on sales of mortgage LHFS		21			40			6			4			16			67			546
Government guaranteed loan income, net		1,772			4,144			9,688			7,808			572			15,604			6,252
Equity method investment (loss) income		(136	)		485			(1,521	)		(5,416	)		(1,058	)		(1,172	)		275
Customer swap income		202			961			217			2,273			3,358			1,380			5,625
Other income		1,092			1,270			3,381			2,007			2,130			5,743			2,867
Total noninterest income		9,674			13,692			13,531			14,326			13,021			36,897			38,496
Noninterest expense:
Salaries and employee benefits		30,949			28,650			31,865			33,690			29,714			91,464			84,151
Occupancy and equipment		4,881			4,827			4,973			5,116			4,615			14,681			13,628
Professional and regulatory fees		7,283			6,868			4,389			4,401			3,718			18,540			9,741
Data processing and software expense		4,541			4,709			4,720			4,197			3,509			13,970			9,816
Marketing		2,353			2,627			1,779			1,841			1,845			6,759			5,338
Amortization of intangibles		2,437			2,468			2,495			2,495			2,494			7,400			7,484
Telephone and communications		362			355			478			358			389			1,195			1,126
Merger and acquisition (“M&A”) expense		—			—			—			—			384			—			1,379
Other		6,608			6,693			5,916			5,261			4,323			19,217			13,053
Total noninterest expense		59,414			57,197			56,615			57,359			50,991			173,226			145,716
Income before income tax expense		41,903			43,455			49,423			51,787			55,570			134,781			134,847
Income tax expense		9,282			9,725			11,012			11,890			12,248			30,019			28,429
Net income	$	32,621		$	33,730		$	38,411		$	39,897		$	43,322		$	104,762		$	106,418
Net income available to common stockholders	$	32,621		$	33,730		$	38,411		$	39,897		$	43,322		$	104,762		$	106,418

Basic EPS	$	0.60		$	0.62		$	0.71		$	0.74		$	0.80		$	1.93		$	2.01
Diluted EPS	$	0.60		$	0.62		$	0.70		$	0.73		$	0.79		$	1.92		$	1.98
Weighted average basic shares outstanding		54,300			54,247			54,149			54,011			53,979			54,233			52,886
Weighted average diluted shares outstanding		54,597			54,486			54,606			54,780			54,633			54,563			53,655

¹ Includes provision for credit losses on available for sale (“AFS”) securities of $885 thousand for the three months ended March 31, 2023 and June 30, 2023.

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

	For the Quarter Ended
	September 30, 2023							June 30, 2023							September 30, 2022
	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

	(In thousands, except percentages)
Assets
Interest-earning assets:
Loans¹	$	9,267,366		$	161,615	6.92	%	$	9,285,550		$	158,685	6.85	%	$	8,280,537		$	104,550	5.01	%
LHI, MW		357,639			5,753	6.38			371,763			5,042	5.44			448,556			4,649	4.11
Debt securities		1,121,716			10,928	3.87			1,133,845			10,166	3.60			1,362,365			10,462	3.05
Interest-bearing deposits in other banks		520,785			7,128	5.43			583,818			7,507	5.16			346,296			1,898	2.17
Equity securities and other investments		135,714			1,691	4.94			137,868			1,118	3.25			203,528			1,666	3.25
Total interest-earning assets		11,403,220			187,115	6.51			11,512,844			182,518	6.36			10,641,282			123,225	4.59
ACL		(105,320	)						(102,559	)						(81,888	)
Noninterest-earning assets		961,162							939,938							901,463
Total assets	$	12,259,062						$	12,350,223						$	11,460,857

Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Interest-bearing demand and savings deposits	$	4,168,876		$	39,936	3.80	%	$	3,919,745		$	32,957	3.37	%	$	4,164,164		$	12,897	1.23	%
Certificates and other time deposits		3,151,704			36,177	4.55			2,873,548			28,100	3.92			1,656,347			3,919	0.94
Advances from FHLB and Other		725,543			8,523	4.66			1,472,912			17,562	4.78			904,065			2,543	1.12
Subordinated debentures and subordinated notes		229,389			3,118	5.39			229,151			3,068	5.37			231,012			2,826	4.85
Total interest-bearing liabilities		8,275,512			87,754	4.21			8,495,356			81,687	3.86			6,955,588			22,185	1.27

Noninterest-bearing liabilities:
Noninterest-bearing deposits		2,272,207							2,175,002							2,925,462
Other liabilities		203,173							169,240							125,991
Total liabilities		10,750,892							10,839,598							10,007,041
Stockholders’ equity		1,508,170							1,510,625							1,453,816
Total liabilities and stockholders’ equity	$	12,259,062						$	12,350,223						$	11,460,857

Net interest rate spread²						2.30	%						2.50	%						3.32	%
Net interest income and margin³				$	99,361	3.46	%				$	100,831	3.51	%				$	101,040	3.77	%

¹ Includes average outstanding balances of LHFS of $28,284, $23,374 and $14,023 for the quarters ended September 30, 2023, June 30, 2023, and September 30, 2022, respectively, and average balances of LHI, excluding MW.
² Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
³ Net interest margin is equal to net interest income divided by average interest-earning assets.

VERITEX HOLDINGS, INC. AND SUBSIDIARY Financial Highlights (In thousands except percentages)

	Nine Months Ended
	September 30, 2023							September 30, 2022
	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	$	9,231,814		$	467,101	6.76	%	$	7,586,302		$	251,186	4.43	%
LHI, MW		363,182			15,701	5.78			449,906			11,647	3.46
Debt securities		1,168,860			32,082	3.67			1,274,712			27,856	2.92
Interest-bearing deposits in other banks		527,805			20,169	5.11			422,905			2,874	0.91
Equity securities and other investments		132,895			4,217	4.24			187,002			3,633	2.60
Total interest-earning assets		11,424,556			539,270	6.31			9,920,827			297,196	4.01
ACL		(100,228	)						(78,015	)
Noninterest-earning assets		950,369							886,357
Total assets	$	12,274,697						$	10,729,169

Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Interest-bearing demand and savings deposits	$	4,079,436		$	102,750	3.37	%	$	3,804,506		$	18,742	0.66	%
Certificates and other time deposits		2,873,388			85,244	3.97			1,539,861			6,764	0.59
Advances from FHLB and Other		1,105,592			38,443	4.65			837,254			4,924	0.79
Subordinated debentures and subordinated notes		229,923			9,252	5.38			231,640			8,206	4.74
Total interest-bearing liabilities		8,288,339			235,689	3.80			6,413,261			38,636	0.81

Noninterest-bearing liabilities:
Noninterest-bearing deposits		2,305,745							2,797,110
Other liabilities		182,040							98,898
Total liabilities		10,776,124							9,309,269
Stockholders’ equity		1,498,573							1,419,900
Total liabilities and stockholders’ equity	$	12,274,697						$	10,729,169

Net interest rate spread²						2.51	%						3.20	%
Net interest income and margin³				$	303,581	3.55	%				$	258,560	3.48	%

¹ Includes average outstanding balances of loans held for sale of $23,810 and $12,973 for the nine months ended September 30, 2023 and 2022, respectively, and average balances of LHI, excluding MW.
² Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
³ Net interest margin is equal to net interest income divided by average interest-earning assets.

VERITEX HOLDINGS, INC. AND SUBSIDIARIES Financial Highlights (Unaudited)
Yield Trend
	For the Quarter Ended										For the Year Ended
	Sep 30, 2023		Jun 30, 2023		Mar 31, 2023		Dec 31, 2022		Sep 30, 2022		Sep 30, 2023		Sep 30, 2022
Average yield on interest-earning assets:
Loans¹	6.92	%	6.85	%	6.51	%	5.98	%	5.01	%	6.76	%	4.43	%
LHI, MW	6.38		5.44		5.52		5.20		4.11		5.78		3.46
Debt securities	3.87		3.60		3.56		3.36		3.05		3.67		2.92
Interest-bearing deposits in other banks	5.43		5.16		4.69		3.81		2.17		5.11		0.91
Equity securities and other investments	4.94		3.25		4.57		3.62		3.25		4.24		2.60
Total interest-earning assets	6.51	%	6.36	%	6.06	%	5.55	%	4.59	%	6.31	%	4.01	%

Average rate on interest-bearing liabilities:
Interest-bearing demand and savings deposits	3.80	%	3.37	%	2.92	%	2.21	%	1.23	%	3.37	%	0.66	%
Certificates and other time deposits	4.55		3.92		3.28		1.90		0.94		3.97		0.59
Advances from FHLB	4.66		4.78		4.46		3.91		1.12		4.65		0.79
Subordinated debentures and subordinated notes	5.39		5.37		5.38		5.12		4.85		5.38		4.74
Total interest-bearing liabilities	4.21	%	3.86	%	3.32	%	2.47	%	1.27	%	3.80	%	0.81	%

Net interest rate spread²	2.30	%	2.50	%	2.74	%	3.08	%	3.32	%	2.51	%	3.20	%
Net interest margin³	3.46	%	3.51	%	3.69	%	3.87	%	3.77	%	3.55	%	3.48	%

¹Includes average outstanding balances of loans held for sale of $28,284, $23,374, $19,679, $15,296 and $14,023 for the three months ended September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022 and September 30, 2022, respectively, and average balances of LHI, excluding MW.

²Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
³Net interest margin is equal to net interest income divided by average interest-earning assets.

Supplemental Yield Trend

	For the Quarter Ended										For the Year Ended
	Sep 30, 2023		Jun 30, 2023		Mar 31, 2023		Dec 31, 2022		Sep 30, 2022		Sep 30, 2023		Sep 30, 2022
Average cost of interest-bearing deposits	4.12	%	3.61	%	3.06	%	2.12	%	1.15	%	3.62	%	0.64	%
Average costs of total deposits, including noninterest-bearing	3.15		2.73		2.24		1.46		0.76		2.03		0.31

VERITEX HOLDINGS, INC. AND SUBSIDIARIES Financial Highlights (Unaudited)
LHI and Deposit Portfolio Composition
	Sep 30, 2023					Jun 30, 2023					Mar 31, 2023					Dec 31, 2022					Sep 30, 2022

	(In thousands, except percentages)
LHI¹
Commercial and Industrial (“C&I”)	$	2,841,024		30.7	%	$	2,850,084		30.7	%	$	2,895,957		31.3	%	$	2,942,348		32.4	%	$	2,743,769		32.2	%
Real Estate:
Owner occupied commercial (“OOCRE”)		697,299		7.5			671,602		7.2			631,563		6.8			715,829		7.9			677,705		7.9
Non-owner occupied commercial (“NOOCRE”)		2,398,060		25.9			2,509,731		27.1			2,505,344		27.1			2,341,379		25.9			2,273,305		26.6
Construction and land		1,705,053		18.4			1,659,700		17.9			1,831,349		19.8			1,787,400		19.7			1,673,997		19.6
Farmland		59,684		0.6			51,663		0.6			51,680		0.6			43,500		0.5			43,569		0.5
1-4 family residential		933,225		10.1			923,442		10.0			896,252		9.7			894,456		9.9			858,693		10.1
Multi-family residential		603,395		6.7			592,473		6.4			432,209		4.6			322,679		3.6			252,244		3.0
Consumer		9,845		0.1			11,189		0.1			8,316		0.1			7,806		0.1			7,465		0.1
Total LHI	$	9,247,585		100	%	$	9,269,884		100	%	$	9,252,670		100	%	$	9,055,397		100	%	$	8,530,747		100	%

MW		390,767					436,255					437,501					446,227					523,805

Total LHI¹	$	9,638,352				$	9,706,139				$	9,690,171				$	9,501,624				$	9,054,552

Deposits
Noninterest-bearing	$	2,363,340		23.2	%	$	2,234,109		24.2	%	$	2,212,389		24.5	%	$	2,640,617		28.9	%	$	2,811,412		32.1	%
Interest-bearing transaction		739,098		7.2			676,653		7.3			866,609		9.6			622,814		6.8			603,729		6.9
Money market		3,096,498		30.4			2,816,769		30.5			2,518,922		27.9			2,773,622		30.4			2,701,762		30.9
Savings		100,474		1.0			96,831		1.0			106,480		1.2			118,293		1.3			132,407		1.5
Certificates and other time deposits		3,403,427		33.4			2,928,949		31.7			2,896,870		32.0			2,086,642		22.9			1,667,364		19.1
Correspondent money market accounts		493,681		4.8			480,598		5.2			433,468		4.8			881,246		9.7			831,770		9.5
Total deposits	$	10,196,518		100	%	$	9,233,909		100	%	$	9,034,738		100	%	$	9,123,234		100	%	$	8,748,444		100	%

Loan to Deposit Ratio		94.5	%				105.1	%				107.3	%				104.1	%				103.5	%

Loan to Deposit Ratio, excluding MW		90.7	%				100.4	%				102.4	%				99.3	%				97.5	%

¹ Total LHI does not include deferred fees of $10.1 million, $12.7 million, $15.5 million, $19.0 million and $17.5 million at September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022 and September 30, 2022, respectively.

VERITEX HOLDINGS, INC. AND SUBSIDIARIES Financial Highlights (Unaudited)
Asset Quality
	For the Quarter Ended															For the Nine Months Ended
	Sep 30, 2023			Jun 30, 2023			Mar 31, 2023			Dec 31, 2022			Sep 30, 2022			Sep 30, 2023			Sep 30, 2022

	(In thousands, except percentages)
NPAs:
Nonaccrual loans	$	65,676		$	54,055		$	31,452		$	30,364		$	30,592		$	65,676		$	30,592
Nonaccrual PCD loans¹		13,718			13,721			12,784			13,178			—			13,718			—
Accruing loans 90 or more days past due²		474			528			296			125			—			474			—
Total nonperforming loans held for investment (“NPLs”)		79,868			68,304			44,532			43,667			30,592			79,868			30,592
Other real estate owned		—			—			—			—			—			—			—
Total NPAs	$	79,868		$	68,304		$	44,532		$	43,667		$	30,592		$	79,868		$	30,592

Charge-offs:
OOCRE	$	(375	)	$	—		$	(116	)	$	—		$	(1,061	)	$	(491	)	$	(2,646	)
NOOCRE		—			(8,215	)		—			(1,019	)		(838	)		(8,215	)		(1,391	)
C&I		(1,929	)		(3,540	)		(1,051	)		(5,449	)		(460	)		(6,520	)		(4,282	)
Consumer		(49	)		(92	)		(62	)		(41	)		(19	)		(203	)		(1,244	)
Total charge-offs		(2,353	)		(11,847	)		(1,229	)		(6,509	)		(2,378	)		(15,429	)		(9,563	)

Recoveries:
1-4 family residential		—			1			1			24			4			2			7
OOCRE		—			—			—			26			—			—			245
NOOCRE		200			150			—			229			3			350			496
C&I		308			106			364			415			177			778			893
Consumer		14			46			6			30			5			66			55
Total recoveries		522			303			371			724			189			1,196			1,696

Net charge-offs	$	(1,831	)	$	(11,544	)	$	(858	)	$	(5,785	)	$	(2,189	)	$	(14,233	)	$	(7,867	)


ACL	$	109,831		$	102,150		$	98,694		$	91,052		$	85,037		$	109,831		$	85,037

Asset Quality Ratios:
NPAs to total assets		0.65	%		0.55	%		0.35	%		0.36	%		0.26	%		0.65	%		0.26	%
NPAs, excluding nonaccrual PCD loans, to total assets		0.54			0.44			0.25			0.25			0.26			0.54			0.26
NPLs to total LHI		0.83			0.71			0.47			0.48			0.35			0.83			0.38
NPLs, excluding nonaccrual PCD loans, to total LHI		0.69			0.56			0.33			0.32			0.34			0.69			0.34
ACL to total LHI		1.14			1.05			1.02			0.96			0.94			1.14			0.94
Net charge-offs to average loans outstanding³		0.08			0.48			0.04			0.24			0.12			0.20			0.13

¹Nonaccrual 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.
²Accruing loans greater than 90 days past due exclude purchase credit deteriorated loans greater than 90 days past due that are accounted for on a pooled basis.
³Annualized ratio for quarterly metrics.

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

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

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

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

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

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

	As of
	Sep 30, 2023			Jun 30, 2023			Mar 31, 2023			Dec 31, 2022			Sep 30, 2022

	(Dollars in thousands, except per share data)
Tangible Common Equity
Total stockholders' equity	$	1,491,166		$	1,491,280		$	1,493,737		$	1,449,773		$	1,411,899
Adjustments:
Goodwill		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,452	)
Core deposit intangibles		(30,933	)		(33,371	)		(35,808	)		(38,247	)		(40,684	)
Tangible common equity	$	1,055,781		$	1,053,457		$	1,053,477		$	1,007,074		$	966,763
Common shares outstanding		54,305			54,261			54,229			54,030			53,988

Book value per common share	$	27.46		$	27.48		$	27.54		$	26.83		$	26.15
Tangible book value per common share	$	19.44		$	19.41		$	19.43		$	18.64		$	17.91

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
	Sep 30, 2023			Jun 30, 2023			Mar 31, 2023			Dec 31, 2022			Sep 30, 2022

	(Dollars in thousands)
Tangible Common Equity
Total stockholders' equity	$	1,491,166		$	1,491,280		$	1,493,737		$	1,449,773		$	1,411,899
Adjustments:
Goodwill		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,452	)
Core deposit intangibles		(30,933	)		(33,371	)		(35,808	)		(38,247	)		(40,684	)
Tangible common equity	$	1,055,781		$	1,053,457		$	1,053,477		$	1,007,074		$	966,763
Tangible Assets
Total assets	$	12,346,331		$	12,470,368		$	12,609,487		$	12,154,361		$	11,714,454
Adjustments:
Goodwill		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,452	)
Core deposit intangibles		(30,933	)		(33,371	)		(35,808	)		(38,247	)		(40,684	)
Tangible Assets	$	11,910,946		$	12,032,545		$	12,169,227		$	11,711,662		$	11,269,318
Tangible Common Equity to Tangible Assets		8.86	%		8.76	%		8.66	%		8.60	%		8.58	%

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 Nine Months Ended
	Sep 30, 2023			Jun 30, 2023			Mar 31, 2023			Dec 31, 2022			Sep 30, 2022			Sep 30, 2023			Sep 30, 2022

	(Dollars in thousands)
Net income available for common stockholders adjusted for amortization of core deposit intangibles
Net income	$	32,621		$	33,730		$	38,411		$	39,897		$	43,322		$	104,762		$	106,418
Adjustments:
Plus: Amortization of core deposit intangibles		2,438			2,438			2,438			2,438			2,438			7,314			7,314
Less: Tax benefit at the statutory rate		512			512			512			512			512			1,536			1,536
Net income available for common stockholders adjusted for amortization of core deposit intangibles	$	34,547		$	35,656		$	40,337		$	41,823		$	45,248		$	110,540		$	112,196

Average Tangible Common Equity
Total average stockholders' equity	$	1,508,170		$	1,510,625		$	1,476,576		$	1,434,818		$	1,453,816		$	1,498,573		$	1,419,900
Adjustments:
Average goodwill		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,308	)
Average core deposit intangibles		(32,540	)		(34,969	)		(37,361	)		(39,792	)		(42,230	)		(34,939	)		(41,470	)
Average tangible common equity	$	1,071,178		$	1,071,204		$	1,034,763		$	990,574		$	1,007,134		$	1,059,182		$	974,122
Return on Average Tangible Common Equity (Annualized)		12.80	%		13.35	%		15.81	%		16.75	%		17.82	%		13.95	%		15.40	%

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 Nine Months Ended
	Sep 30, 2023		Jun 30, 2023		Mar 31, 2023		Dec 31, 2022		Sep 30, 2022		Sep 30, 2023		Sep 30, 2022

	(Dollars in thousands, except per share data)
Operating Earnings
Net income	$	32,621	$	33,730	$	38,411	$	39,897	$	43,322	$	104,762	$	106,418

Plus: Severance payments¹		—		1,194		756		630		—		1,950		—
Plus: Loss on sale of debt securities AFS, net		—		—		5,321		—		—		5,321		—
Plus: M&A expenses		—		—		—		—		384		—		1,379
Operating pre-tax income		32,621		34,924		44,488		40,527		43,706		112,033		107,797
Less: Tax impact of adjustments		—		251		1,293		132		81		1,544		303
Operating earnings	$	32,621	$	34,673	$	43,195	$	40,395	$	43,625	$	110,489	$	107,494

Weighted average diluted shares outstanding		54,597		54,486		54,606		54,780		54,633		54,563		53,655
Diluted EPS	$	0.60	$	0.62	$	0.70	$	0.73	$	0.79	$	1.92	$	1.98
Diluted operating EPS	$	0.60	$	0.64	$	0.79	$	0.74	$	0.80	$	2.02	$	2.00

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

	For the Quarter Ended															For the Nine Months Ended
	Sep 30, 2023			Jun 30, 2023			Mar 31, 2023			Dec 31, 2022			Sep 30, 2022			Sep 30, 2023			Sep 30, 2022

	(Dollars in thousands)
Pre-Tax, Pre-Provision Operating Earnings
Net income	$	32,621		$	33,730		$	38,411		$	39,897		$	43,322		$	104,762		$	106,418
Plus: Provision for income taxes		9,282			9,725			11,012			11,890			12,248			30,019			28,429
Plus: Provision for credit losses and unfunded commitments		7,718			13,871			10,882			11,277			7,500			32,471			16,493
Plus: Severance payments		—			1,194			756			630			—			1,950			—
Plus: Loss on sale of debt securities AFS, net		—			—			5,321			—			—			5,321			—
Plus: M&A expenses		—			—			—			—			384			—			1,379
Pre-tax, pre-provision operating earnings	$	49,621		$	58,520		$	66,382		$	63,694		$	63,454		$	174,523		$	152,719

Average total assets	$	12,259,062		$	12,350,223		$	12,214,313		$	11,761,044		$	11,460,857		$	12,274,697		$	10,729,169
Pre-tax, pre-provision operating return on average assets¹		1.61	%		1.90	%		2.20	%		2.15	%		2.20	%		1.90	%		1.90	%

Average loans	$	9,625,005		$	9,657,313		$	9,501,309		$	9,103,552		$	8,729,093		$	9,594,996		$	8,036,208
Pre-tax, pre-provision operating return on average loans¹		2.05	%		2.43	%		2.83	%		2.78	%		2.88	%		2.43	%		2.54	%

Average total assets	$	12,259,062		$	12,350,223		$	12,214,313		$	11,761,044		$	11,460,857		$	12,274,697		$	10,729,169
Return on average assets¹		1.06	%		1.10	%		1.28	%		1.35	%		1.50	%		1.14	%		1.33	%
Operating return on average assets¹		1.06			1.13			1.43			1.36			1.51			1.20			1.34

Operating earnings adjusted for amortization of core deposit intangibles
Operating earnings	$	32,621		$	34,673		$	43,195		$	40,395		$	43,625		$	110,489		$	107,494
Adjustments:
Plus: Amortization of core deposit intangibles		2,438			2,438			2,438			2,438			2,438			7,314			7,314
Less: Tax benefit at the statutory rate		512			512			512			512			512			1,536			1,536
Operating earnings adjusted for amortization of core deposit intangibles	$	34,547		$	36,599		$	45,121		$	42,321		$	45,551		$	116,267		$	113,272

Average Tangible Common Equity
Total average stockholders' equity	$	1,508,170		$	1,510,625		$	1,476,576		$	1,434,818		$	1,453,816		$	1,498,573		$	1,419,900
Adjustments:
Less: Average goodwill		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,452	)		(404,308	)
Less: Average core deposit intangibles		(32,540	)		(34,969	)		(37,361	)		(39,792	)		(42,230	)		(34,939	)		(41,470	)
Average tangible common equity	$	1,071,178		$	1,071,204		$	1,034,763		$	990,574		$	1,007,134		$	1,059,182		$	974,122
Operating return on average tangible common equity¹		12.80	%		13.70	%		17.68	%		16.95	%		17.94	%		14.68	%		15.55	%

Efficiency ratio		54.49	%		49.94	%		48.42	%		47.63	%		44.71	%		50.88	%		49.05	%
Net interest income	$	99,361		$	100,831		$	103,389		$	106,097		$	101,040		$	303,581		$	258,560
Noninterest income		9,674			13,692			13,531			14,326			13,021			36,897			38,496
Plus: Loss on sale of AFS securities, net		—			—			5,321			—			—			5,321			—
Operating noninterest income		9,674			13,692			18,852			14,326			13,021			42,218			38,496
Noninterest expense		59,414			57,197			56,615			57,359			50,991			173,226			145,716
Less: Severance payments		—			1,194			756			630			—			1,950			—
Less: M&A expenses		—			—			—			—			384			—			1,379
Operating noninterest expense	$	59,414		$	56,003		$	55,859		$	56,729		$	50,607		$	171,276		$	144,337
Operating efficiency ratio		54.49	%		48.90	%		45.70	%		47.11	%		44.37	%		49.53	%		48.59	%

¹Annualized ratio for quarterly metrics.

Veritex Holdings, Inc. Reports Third Quarter Operating Results

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