Bulletin
Investor Alert

press release

July 27, 2021, 5:01 p.m. EDT

Veritex Holdings, Inc. Reports Second Quarter Operating Results

DALLAS, July 27, Jul 27, 2021 (GLOBE NEWSWIRE via COMTEX) -- DALLAS, July 27, 2021 (GLOBE NEWSWIRE) -- Veritex Holdings, Inc. ("Veritex" or the "Company") /zigman2/quotes/201489855/composite VBTX +0.51% , the holding company for Veritex Community Bank, today announced the results for the quarter ended June 30, 2021.

"Our second quarter of 2021 was another outstanding financial and growth quarter for our Company. The investments made over the last two plus years, including our strategic merger with Green in 2019 and targeted talent hires, continue to deliver the benefits we expected. Our 21% Q2-21 annualized loan growth, record Q2-21 loan production of $1.4 billion, strengthening loan pipelines and improving credit profile make us optimistic about the second half of the year. In addition to a strong quarter, we are pleased to announce the completion of our 49% investment in Thrive Mortgage and an 18% increase in our quarterly dividend."

Second Quarter Highlights

  • Net income of $29.5 million, or $0.59 diluted earnings per share ("EPS"), compared to $31.8 million, or $0.64 diluted EPS, for the quarter ended March 31, 2021 and $24.0 million, or $0.48 diluted EPS, for the quarter ended June 30, 2020;

  • Operating earnings [1] of $30.0 million, or $0.60 diluted operating EPS [1] , compared to $32.2 million, or $0.64 diluted operating EPS [1] , for the quarter ended March 31, 2021 and $21.2 million, or $0.43 diluted operating EPS [1] , for the quarter ended June 30, 2020;

  • Total loans held for investment ("LHI"), excluding mortgage warehouse ("MW") and Paycheck Protection Program ("PPP") loans, grew $308.6 million from the first quarter of 2021, or 20.7% annualized;

  • Total LHI, excluding MW and PPP, grew $424.2 million from December 31, 2020, or 14.5% annualized, and $545.2 million, or 9.5%, year over year.

  • Total deposits grew $74.3 million from the first quarter of 2021, or 4.3% annualized, with the average cost of total deposits decreasing to 0.23% for the three months ended June 30, 2021 from 0.31% for the three months ended March 31, 2021;

  • Total noninterest-bearing deposits grew $216.3 million from the first quarter of 2021, representing 34.2% of total deposits as of June 30, 2021;

  • Book value per common share increased to $25.72 from $24.96 as of March 31, 2021 and tangible book value per common share [1] increased to $17.16 from $16.34 as of March 31, 2021; and

  • Declared quarterly cash dividend of $0.20 per share of outstanding common stock, an increase of 17.6% over the first quarter of 2021, payable on August 19, 2021.

QTD YTD
Financial Highlights Q2 2021 Q1 2021 Q2 2021 Q2 2020
(Dollars in thousands)
(unaudited)
GAAP
Net income $ 29,456 $ 31,787 $ 61,243 $ 28,162
Diluted EPS 0.59 0.64 1.22 0.56
Book value per common share 25.72 24.96 25.72 23.45
Return on average assets [2] 1.27 % 1.44 % 1.35 % 0.68 %
Efficiency ratio 52.42 49.62 51.01 46.76
Non-GAAP [1]
Operating earnings $ 29,952 $ 32,213 $ 62,165 $ 25,322
Diluted operating EPS 0.60 0.64 1.24 0.50
Tangible book value per common share 17.16 16.34 17.16 14.71
Pre-tax, pre-provision operating earnings 38,497 40,210 78,707 84,775
Pre-tax, pre-provision operating return on average assets [2] 1.66 % 1.82 % 1.74 % 2.03 %
Operating return on average assets [2] 1.29 1.46 1.37 0.61
Operating efficiency ratio 51.63 49.62 50.62 46.62
Return on average tangible common equity [2] 15.18 17.17 16.15 9.12
Operating return on average tangible common equity [2] 15.42 17.39 16.38 8.31

[1 ] 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.
[2 ] Annualized ratio.

Results of Operations for the Three Months Ended June 30, 2021

Net Interest Income

For the three months ended June 30, 2021, net interest income before provision for credit losses was $67.1 million and net interest margin was 3.11% compared to $65.6 million and 3.22%, respectively, for the three months ended March 31, 2021. Net interest margin decreased 11 basis points from the three months ended March 31, 2021 primarily due to a decrease in the average yields earned on loans, partially offset by a decrease in the average rates paid on interest-bearing demand and savings deposits and certificate and other time deposits for the three months ended June 30, 2021. As a result, the average cost of interest-bearing deposits decreased 10 basis points to 0.35% for the three months ended June 30, 2021 from 0.45% for the three months ended March 31, 2021.

Net interest income before provision for credit losses increased by $1.4 million from $65.8 million to $67.1 million and net interest margin decreased by 20 basis points from 3.31% to 3.11% for the three months ended June 30, 2021 as compared to the same period in 2020. The increase in net interest income before provision for credit losses was primarily due to a $4.1 million decrease in interest expense on certificate and other time deposits, partially offset by a $2.6 million decrease in interest income on loans during the three months ended June 30, 2021 compared to the three months ended June 30, 2020. Net interest margin decreased 20 basis points from the three months ended June 30, 2020 primarily due to a decrease in the average yields earned on loans, partially offset by decreases in the average rate paid on interest-bearing demand and savings deposits and certificates and other time deposits for the three months ended June 30, 2021. As a result, the average cost of interest-bearing deposits decreased 49 basis points to 0.35% for the three months ended June 30, 2021 from 0.84% for the three months ended June 30, 2020.

Noninterest Income

Noninterest income for the three months ended June 30, 2021 was $12.5 million, a decrease of $1.7 million, or 12.1%, compared to the three months ended March 31, 2021. The decrease was primarily due to a $3.1 million decrease in government guaranteed loan income, net, driven by a $5.6 million decrease in fee income earned on PPP loans during the three months ended June 30, 2021 compared to the three months ended March 31, 2021. This decrease was partially offset by a $2.0 million increase in gain on sale of Small Business Administration ("SBA") loans during the three months ended June 30, 2021. The decrease in noninterest income was partially offset by a $663 thousand increase in insurance income recognized during the three months ended June 30, 2021 associated with the Company's bank owned life insurance policy.

Compared to the three months ended June 30, 2020, noninterest income for the three months ended June 30, 2021 decreased by $8.8 million, or 41.5%. The decrease was primarily due to a $7.6 million decrease in government guaranteed loan income, net, driven by an $11.5 million decrease in fee income earned on PPP loans during the three months ended June 30, 2021 compared the same period in 2020, partially offset by a $2.6 million increase in the valuation of PPP loans held at fair value and a $2.0 million increase in gain on sale of SBA loans during the three months ended June 30, 2021 compared to the same period in 2020. The decrease was also due in part to a $2.9 million decrease in gain on sales of investment securities during the three months ended June 30, 2021 compared to the same period in 2020. This decrease was partially offset by $811 thousand increase in insurance income recognized during the three months ended June 30, 2021 associated with the Company's bank owned life insurance policy.

Noninterest Expense

Noninterest expense was $41.7 million for the three months ended June 30, 2021, compared to $39.6 million for the three months ended March 31, 2021, an increase of $2.1 million, or 5.4%. The increase was primarily driven by a $932 thousand increase in marketing expenses as a result of increased advertising and Community Reinvestment Act donations, a $627 thousand increase in severance payments made as a result of branch restructurings, a $203 thousand increase in write downs of certain other real estate owned properties and a $194 thousand increase in loan related legal expenses during the three months ended June 30, 2021 compared to the three months ended March 31, 2021.

Compared to the three months ended June 30, 2020, noninterest expense for the three months ended June 30, 2021 increased by $1.7 million, or 4.1%. The increase was primarily driven by a $3.4 million increase in salaries and employee benefits as a result of a $1.6 million increase in accrued employee bonus, a $1.4 million increase in salaries and a $786 thousand increase in employee stock based compensation during the three months ended June 30, 2021 compared to the same period in 2020. The increase was also driven by a $1.3 million increase in marketing expenses as a result of increased advertising during the three months ended June 30, 2021 compared to the same period in 2020. These increases were partially offset by a $1.2 million decrease in COVID-19 expenses and a $1.6 million decrease in debt extinguishment costs, which were both incurred during the three months ended June 30, 2020 with no corresponding expense during the same period in 2021.

Financial Condition

Total LHI, excluding MW and PPP, were $6.3 billion, an increase of $308.6 million, or 20.7%, annualized, compared to March 31, 2021. Total loans were $7.1 billion at June 30, 2021, an increase of $145.8 million, or 8.3% annualized, compared to March 31, 2021. The increases were the result of the continued execution and success of our loan growth strategy.

Total deposits were $7.0 billion at June 30, 2021, an increase of $74.3 million, or 4.3% annualized, compared to March 31, 2021. The increase was primarily the result of an increase of $216.3 million in noninterest-bearing demand deposits, partially offset by a decrease of $76.7 million in interest-bearing transaction and savings deposits and a decrease of $65.3 million in certificates and other time deposits.

Asset Quality

NPAs totaled $79.9 million, or 0.85% of total assets at June 30, 2021, compared to $85.0 million, or 0.92% of total assets, at March 31, 2021. Included in NPAs as of June 30, 2021 is $462 thousand of accruing loans 90 or more days past due that are considered well-secured and in the process of collection which is down from $9.1 million as of March 31, 2021. The Company's net charge-offs for the three months ended June 30, 2021 were $5.4 million, which were fully reserved against in prior periods.

The Company recorded no provision for credit losses for the three months ended June 30, 2021 and March 31, 2021, compared to $16.2 million for the three months ended June 30, 2020. The decrease in the recorded provision for credit losses for the three months ended June 30, 2021, compared to the three months ended June 30, 2020, was primarily attributable to improvement in the Texas economic forecasts used in the Current Expected Credit Losses ("CECL") model in the second quarter of 2021 to reflect the expected impact of the COVID-19 pandemic as of June 30, 2021, as compared to our Texas economic forecasts and expected impact of the COVID-19 pandemic as of June 30, 2020. In the second quarter of 2021, we also recorded a $577 thousand provision for unfunded commitments, which was attributable to higher unfunded balances.

ACL as a percentage of LHI, excluding MW and PPP loans, was 1.59%, 1.76% and 2.01% at June 30, 2021, March 31, 2021 and June 30, 2020, respectively.

Dividend Information

On July 27, 2021, Veritex's Board of Directors declared a quarterly cash dividend of $0.20 per share on its outstanding shares of common stock. The dividend will be paid on or after August 19, 2021 to stockholders of record as of the close of business on August 5, 2021.

Non-GAAP Financial Measures

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

Conference Call

The Company will host an investor conference call to review the results on Wednesday, July 28, 2021 at 8:30 a.m. Central Time. Participants may pre-register for the call by visiting https://edge.media-server.com/mmc/p/zs89r9jr and will receive a unique PIN, which can be used when dialing in for the call. This will allow attendees to access the call immediately. Alternatively, participants may call toll-free at (877) 703-9880.

The call and corresponding presentation slides will be webcast live on the home page of the Company's website, https://ir.veritexbank.com/ . An audio replay will be available one hour after the conclusion of the call at (855) 859-2056, Conference #3492033. This replay, as well as the webcast, will be available until August 4, 2021.

About Veritex Holdings, Inc.

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

Media and Investor Relations:
investorrelations@veritexbank.com

Forward-Looking Statements

This earnings release contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on various facts and derived utilizing assumptions, current expectations, estimates and projections and are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements include, without limitation, statements relating to the expected payment date of the Company's quarterly cash dividend, the impact of certain changes in the Company's accounting policies, standards and interpretations, the effects of the COVID-19 pandemic and actions taken in response thereto, the Company's future financial performance, business and growth strategy, projected plans and objectives, as well as other projections based on macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact broader economic and industry trends, and any such variations may be material. Statements preceded by, followed by or that otherwise include the words "believes," "expects," "anticipates," "intends," "projects," "estimates," "plans" and similar expressions or future or conditional verbs such as "will," "should," "would," "may" and "could" are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing words. We refer you to the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company's Annual Report on Form 10-K for the year ended December 31, 2020 and any updates to those risk factors set forth in the Company'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 the Company's underlying assumptions prove to be incorrect, actual results may differ materially from what the Company 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. The Company does not undertake any obligation, and specifically declines any obligation, to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by law. All forward-looking statements, expressed or implied, included in this earnings release are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that the Company or persons acting on the Company's behalf may issue.

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

For the Three Months Ended For the Six Months Ended
Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Jun 30, 2021 Jun 30, 2020
(Dollars and shares in thousands, except per-share data)
Per Share Data (Common Stock):
Basic EPS $ 0.60 $ 0.64 $ 0.46 $ 0.46 $ 0.48 $ 1.24 $ 0.56
Diluted EPS 0.59 0.64 0.46 0.46 0.48 1.22 0.56
Book value per common share 25.72 24.96 24.39 23.87 23.45 25.72 23.45
Tangible book value per common share [1] 17.16 16.34 15.70 15.19 14.71 17.16 14.71
Common Stock Data:
Shares outstanding at period end 49,498 49,433 49,340 49,650 49,633 49,498 49,633
Weighted average basic shares outstanding for the period 49,476 49,394 49,571 49,647 49,597 49,435 50,161
Weighted average diluted shares outstanding for the period 50,331 49,998 49,837 49,775 49,727 50,187 50,383
Summary of Credit Ratios:
ACL to total LHI, excluding MW and PPP loans 1.59 % 1.76 % 1.80 % 2.10 % 2.01 % 1.59 % 2.01 %
NPAs to total assets 0.85 0.92 0.99 1.11 0.62 0.85 0.62
Net charge-offs to average loans outstanding 0.09 -- 0.28 0.04 0.03 0.09 0.03
Summary Performance Ratios:
Return on average assets [2] 1.27 1.44 1.04 1.06 1.11 1.35 0.68
Return on average equity [2] 9.42 10.53 7.58 7.74 8.36 9.96 4.96
Return on average tangible common equity [1, 2] 15.18 17.17 12.84 13.27 14.49 16.15 9.12
Efficiency ratio 52.42 49.62 62.52 48.12 46.02 51.01 46.76
Selected Performance Metrics - Operating:
Diluted operating EPS [1] $ 0.60 $ 0.64 $ 0.60 $ 0.46 $ 0.43 $ 1.24 $ 0.50
Pre-tax, pre-provision operating return on average assets [1, 2] 1.66 % 1.82 % 1.75 % 1.82 % 2.11 % 1.74 % 2.03 %
Operating return on average assets [1, 2] 1.29 1.46 1.35 1.06 0.98 1.37 0.61
Operating return on average tangible common equity [1, 2] 15.42 17.39 16.44 13.27 12.90 16.38 8.31
Operating efficiency ratio [1] 51.63 49.62 49.49 48.11 45.74 50.62 46.62
Veritex Holdings, Inc. Capital Ratios:
Tier 1 capital to average assets (leverage) 9.38 9.50 9.43 9.54 9.16 9.38 9.16
Common equity tier 1 capital 9.03 9.27 9.30 9.67 9.66 9.03 9.66
Tier 1 capital to risk-weighted assets 9.36 9.61 9.66 10.05 10.05 9.36 10.05
Total capital to risk-weighted assets 12.86 13.38 13.56 12.70 12.71 12.86 12.71
Tangible common equity to tangible assets [1] 9.51 9.17 9.23 9.12 8.96 9.51 8.96

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

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

Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020
(unaudited) (unaudited) (unaudited) (unaudited)
ASSETS
Cash and cash equivalents $ 390,027 $ 468,029 $ 230,825 $ 128,767 $ 160,306
Debt securities 1,125,877 1,077,860 1,055,201 1,091,440 1,112,061
Other investments 87,558 87,226 87,192 98,023 104,213
Loans held for sale 12,065 19,864 21,414 13,928 28,041
LHI, PPP loans, carried at fair value 291,401 407,353 358,042 405,465 398,949
LHI, MW 559,939 599,001 577,594 544,845 441,992
LHI, excluding MW and PPP 6,272,087 5,963,493 5,847,862 5,789,293 5,726,873
Total loans 7,135,492 6,989,711 6,804,912 6,753,531 6,595,855
ACL (99,543 ) (104,936 ) (105,084 ) (121,591 ) (115,365 )
Bank-owned life insurance 83,304 83,318 82,855 82,366 81,876
Bank premises, furniture and equipment, net 123,504 114,585 115,063 115,794 115,560
Other real estate owned ("OREO") 2,467 2,337 2,337 5,796 7,716
Intangible assets, net of accumulated amortization 57,143 59,236 61,733 64,716 66,705
Goodwill 370,840 370,840 370,840 370,840 370,840
Other assets 72,856 89,304 114,997 112,693 88,091
Total assets $ 9,349,525 $ 9,237,510 $ 8,820,871 $ 8,702,375 $ 8,587,858
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing deposits $ 2,388,068 $ 2,171,719 $ 2,097,099 $ 1,920,715 $ 1,907,697
Interest-bearing transaction and savings deposits 3,112,974 3,189,693 2,958,456 2,821,945 2,714,149
Certificates and other time deposits 1,477,860 1,543,158 1,457,291 1,479,896 1,503,701
Total deposits 6,978,902 6,904,570 6,512,846 6,222,556 6,125,547
Accounts payable and other liabilities 55,499 55,902 61,928 69,540 68,713
Advances from Federal Home Loan Bank ("FHLB") 777,640 777,679 777,718 1,082,756 1,087,794
Subordinated debentures and subordinated notes 262,766 262,774 262,778 140,158 140,283
Securities sold under agreements to repurchase 1,811 2,777 2,225 2,028 1,772
Total liabilities 8,076,618 8,003,702 7,617,495 7,517,038 7,424,109
Commitments and contingencies
Stockholders' equity:
Common stock 558 557 555 555 555
Additional paid-in capital 1,134,603 1,131,324 1,126,437 1,124,148 1,122,063
Retained earnings 216,704 195,661 172,232 157,639 143,277
Accumulated other comprehensive income 77,189 62,413 56,225 47,155 42,014
Treasury stock (156,147 ) (156,147 ) (152,073 ) (144,160 ) (144,160 )
Total stockholders' equity 1,272,907 1,233,808 1,203,376 1,185,337 1,163,749
Total liabilities and stockholders' equity $ 9,349,525 $ 9,237,510 $ 8,820,871 $ 8,702,375 $ 8,587,858

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

For the Three Months Ended For the Six Months Ended
Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Jun 30, 2021 Jun 30, 2020
Interest income:
Loans, including fees $ 67,814 $ 67,399 $ 69,597 $ 68,685 $ 70,440 $ 135,213 $ 148,301
Debt securities 7,529 7,437 7,652 7,852 7,825 14,966 15,222
Deposits in financial institutions and Fed Funds sold 167 127 99 65 186 294 1,057
Equity securities and other investments 672 663 752 827 891 1,335 1,741
Total interest income 76,182 75,626 78,100 77,429 79,342 151,808 166,321
Interest expense:
Transaction and savings deposits 1,661 1,980 2,105 2,105 2,471 3,641 9,023
Certificates and other time deposits 2,423 3,061 3,919 5,004 6,515 5,484 14,755
Advances from FHLB 1,829 1,812 2,222 2,707 2,801 3,641 5,680
Subordinated debentures and subordinated notes 3,138 3,138 3,088 1,743 1,798 6,276 3,701
Total interest expense 9,051 9,991 11,334 11,559 13,585 19,042 33,159
Net interest income 67,131 65,635 66,766 65,870 65,757 132,766 133,162
Provision for credit losses -- -- -- 8,692 16,172 -- 47,948
Provision (benefit) for unfunded commitments 577 (570 ) 902 1,447 2,799 7 6,680
Net interest income after provisions 66,554 66,205 65,864 55,731 46,786 132,759 78,534
Noninterest income:
Service charges and fees on deposit accounts 3,847 3,629 3,971 3,130 2,960 7,476 6,602
Loan fees 1,823 1,341 684 1,787 1,240 3,164 2,085
(Loss) gain on sales of investment securities -- -- (256 ) (8 ) 2,879 -- 2,879
Gain on sales of mortgage loans held for sale 385 507 317 472 308 892 450
Government guaranteed loan income, net 3,448 6,548 448 2,257 11,006 9,996 11,445
Other 2,953 2,147 3,848 2,157 2,897 5,100 5,076
Total noninterest income 12,456 14,172 9,012 9,795 21,290 26,628 28,537
Noninterest expense:
Salaries and employee benefits 23,451 22,932 20,011 20,553 20,019 46,383 38,889
Occupancy and equipment 4,233 4,096 4,116 3,980 3,994 8,329 8,267
Professional and regulatory fees 3,086 3,441 3,578 3,159 2,796 6,527 4,992
Data processing and software expense 2,536 2,319 2,238 2,452 2,434 4,855 4,523
Marketing 1,841 909 945 1,062 561 2,750 1,644
Amortization of intangibles 2,517 2,537 2,558 2,840 2,696 5,054 5,392
Telephone and communications 337 337 340 345 308 674 627
COVID expenses -- -- -- 132 1,245 -- 1,245
Debt extinguishment costs -- -- 9,746 -- 1,561 -- --
Other 3,716 3,026 3,841 1,885 4,447 6,742 10,027
Total noninterest expense 41,717 39,597 47,373 36,408 40,061 81,314 75,606
Income before income tax expense 37,293 40,780 27,503 29,118 28,015 78,073 31,465
Income tax expense 7,837 8,993 4,702 6,198 3,987 16,830 3,303
Net income $ 29,456 $ 31,787 $ 22,801 $ 22,920 $ 24,028 $ 61,243 $ 28,162
Basic EPS $ 0.60 $ 0.64 $ 0.46 $ 0.46 $ 0.48 $ 1.24 $ 0.56
Diluted EPS $ 0.59 $ 0.64 $ 0.46 $ 0.46 $ 0.48 $ 1.22 $ 0.56
Weighted average basic shares outstanding 49,476 49,394 49,571 49,647 49,597 49,435 50,161
Weighted average diluted shares outstanding 50,331 49,998 49,837 49,775 49,727 50,187 50,383

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

For the Three Months Ended
June 30, 2021 March 31, 2021 June 30, 2020
Average
Outstanding
Balance
Interest
Earned/
Interest
Paid
Average
Yield/
Rate
Average
Outstanding
Balance
Interest
Earned/
Interest
Paid
Average
Yield/
Rate
Average
Outstanding
Balance
Interest
Earned/
Interest
Paid
Average
Yield/
Rate
Assets
Interest-earning assets:
Loans [1] $ 6,108,527 $ 63,427 4.16 % $ 5,897,815 $ 62,702 4.31 % $ 5,797,989 $ 67,404 4.68 %
LHI, MW 455,334 3,476 3.06 510,678 3,815 3.03 304,873 2,279 3.01
PPP loans 364,020 911 1.00 356,356 882 1.00 303,223 757 1.00
Debt securities 1,095,678 7,529 2.76 1,063,538 7,437 2.84 1,117,964 7,825 2.82
Interest-bearing deposits in other banks 548,087 167 0.12 341,483 127 0.15 366,764 186 0.20
Equity securities and other investments 87,413 672 3.08 87,178 663 3.08 110,672 891 3.24
Total interest-earning assets 8,659,059 76,182 3.53 8,257,048 75,626 3.71 8,001,485 79,342 3.99
ACL (105,050 ) (105,972 ) (110,483 )
Noninterest-earning assets 767,270 790,195 798,772
Total assets $ 9,321,279 $ 8,941,271 $ 8,689,774
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Interest-bearing demand and savings deposits $ 3,191,405 $ 1,661 0.21 % $ 3,038,586 $ 1,980 0.26 % $ 2,684,897 $ 2,471 0.37 %
Certificates and other time deposits 1,515,092 2,423 0.64 1,509,836 3,061 0.82 1,625,971 6,515 1.61
Advances from FHLB 777,655 1,829 0.94 777,694 1,812 0.94 1,206,930 2,801 0.93
Subordinated debentures and subordinated notes 264,931 3,138 4.75 265,356 3,138 4.80 142,549 1,798 5.07
Total interest-bearing liabilities 5,749,083 9,051 0.63 5,591,472 9,991 0.72 5,660,347 13,585 0.97
Noninterest-bearing liabilities:
Noninterest-bearing deposits 2,266,470 2,069,233 1,826,327
Other liabilities 51,355 56,272 47,302
Total liabilities 8,066,908 7,716,977 7,533,976
Stockholders' equity 1,254,371 1,224,294 1,155,798
Total liabilities and stockholders' equity $ 9,321,279 $ 8,941,271 $ 8,689,774
Net interest rate spread [2] 2.90 % 2.99 % 3.02 %
Net interest income $ 67,131 $ 65,635 $ 65,757
Net interest margin [3] 3.11 % 3.22 % 3.31 %

[1] Includes average outstanding balances of loans held for sale of $14,364, $16,602 and $22,958 for the three months ended June 30, 2021, March 31, 2021, and June 30, 2020, respectively, and average balances of LHI, excluding MW and PPP loans.
[2] Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
[3] Net interest margin is equal to net interest income divided by average interest-earning assets.

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

Six Months Ended
June 30, 2021 June 30, 2020
Average Outstanding Balance Interest Earned/ Interest Paid Average Yield/ Rate Average Outstanding Balance Interest Earned/ Interest Paid Average Yield/ Rate
Assets
Interest-earning assets:
Loans [1] $ 6,003,754 $ 126,128 4.24 % $ 5,790,227 $ 143,931 5.00 %
LHI, MW 482,853 7,292 3.05 234,260 3,613 3.10
PPP loans 360,209 1,793 1.00 152,861 757 1.00
Debt securities 1,079,697 14,966 2.80 1,078,459 15,222 2.84
Interest-bearing deposits in other banks 445,356 294 0.13 337,655 1,057 0.63
Equity securities and other investments 87,296 1,335 3.08 101,294 1,741 3.46
Total interest-earning assets 8,459,165 151,808 3.62 7,694,756 166,321 4.35
ACL (105,509 ) (77,376 )
Noninterest-earning assets 778,691 763,567
Total assets $ 9,132,347 $ 8,380,947
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Interest-bearing demand and savings deposits $ 3,115,417 $ 3,641 0.24 % $ 2,668,726 $ 9,023 0.68 %
Certificates and other time deposits 1,512,479 5,484 0.73 1,639,807 14,755 1.81
Advances from FHLB 777,675 3,641 0.94 1,072,416 5,680 1.07
Subordinated debentures and subordinated notes 265,142 6,276 4.77 143,869 3,701 5.17
Total interest-bearing liabilities 5,670,713 19,042 0.68 5,524,818 33,159 1.21
Noninterest-bearing liabilities:
Noninterest-bearing deposits 2,168,396 1,675,015
Other liabilities 53,823 38,488
Total liabilities 7,892,932 7,238,321
Stockholders' equity 1,239,415 1,142,626
Total liabilities and stockholders' equity $ 9,132,347 $ 8,380,947
Net interest rate spread [2] 2.94 % 3.14 %
Net interest income $ 132,766 $ 133,162
Net interest margin [3] 3.16 % 3.48 %

[1] Includes average outstanding balances of loans held for sale of $15,476 and $16,977 for the six months ended June 30, 2021 and June 30, 2020, respectively, and average balances of loans held for investment, excluding MW and PPP loans.
[2] Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
[3] Net interest margin is equal to net interest income divided by average interest-earning assets.

VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights

Yield Trend

For the Three Months Ended
June 30, 2021 March 31,
2021
December 31,
2020
September 30,
2020
June 30, 2020
Average yield on interest-earning assets:
Loans [1] 4.16 % 4.31 % 4.48 % 4.49 % 4.68 %
LHI, MW 3.06 3.03 2.99 3.00 3.01
PPP loans 1.00 1.00 1.00 1.00 1.00
Debt securities 2.76 2.84 2.83 2.84 2.82
Interest-bearing deposits in other banks 0.12 0.15 0.15 0.15 0.20
Equity securities and other investments 3.08 3.08 3.13 3.17 3.24
Total interest-earning assets 3.53 % 3.71 % 3.85 % 3.90 % 3.99 %
Average rate on interest-bearing liabilities:
Interest-bearing demand and savings deposits 0.21 % 0.26 % 0.29 % 0.31 % 0.37 %
Certificates and other time deposits 0.64 0.82 1.06 1.36 1.61
Advances from FHLB 0.94 0.94 1.00 1.01 0.93
Subordinated debentures and subordinated notes 4.75 4.80 4.73 4.87 5.07
Total interest-bearing liabilities 0.63 % 0.72 % 0.82 % 0.85 % 0.97 %
Net interest rate spread [2] 2.90 % 2.99 % 3.03 % 3.05 % 3.02 %
Net interest margin [3] 3.11 % 3.22 % 3.29 % 3.32 % 3.31 %

[1] Includes average outstanding balances of loans held for sale of $14,364, $16,602, $11,938, $15,404 and $22,958 for the three months ended June 30, 2021, March 31, 2021, December 31, 2020, September 30, 2020 and June 30, 2020, respectively, and average balances of LHI, excluding MW and PPP loans.
[2 ] Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
[3 ] Net interest margin is equal to net interest income divided by average interest-earning assets.

Supplemental Yield Trend

For the Three Months Ended
June 30, 2021 March 31,
2021
December 31,
2020
September 30,
2020
June 30, 2020
Average cost of interest-bearing deposits 0.35 % 0.45 % 0.55 % 0.67 % 0.84 %
Average costs of total deposits, including noninterest-bearing 0.23 0.31 0.38 0.46 0.59

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

Total LHI and Deposit Portfolio Composition

June 30, 2021 March 31,
2021
December 31,
2020
September 30,
2020
June 30, 2020
(Dollars in thousands)
LHI [1]
Commercial $ 1,771,100 28.2 % $ 1,632,040 27.4 % $ 1,559,546 26.7 % $ 1,623,249 28.0 % $ 1,555,300 27.2 %
Real Estate:
Owner occupied commercial ("OOCRE") 744,899 11.9 733,310 12.3 717,472 12.3 734,939 12.7 769,952 13.4
Non-owner occupied commercial ("NOOCRE) 1,986,538 31.6 1,970,945 33.0 1,904,132 32.5 1,817,013 31.4 1,847,480 32.3
Construction and land 871,765 13.9 723,444 12.1 693,030 11.8 623,496 10.8 599,510 10.5
Farmland 13,661 0.2 14,751 0.2 13,844 0.2 14,413 0.2 14,723 0.3
1-4 family residential 513,635 8.2 492,609 8.3 524,344 9.0 548,953 9.5 528,688 9.2
Multi-family residential 367,445 5.9 386,844 6.5 424,962 7.3 412,412 7.0 394,829 6.8
Consumer 10,530 0.1 12,431 0.2 13,000 0.1 14,127 0.2 14,932 0.3
Total LHI $ 6,279,573 100 % $ 5,966,374 100 % $ 5,850,330 100 % $ 5,788,602 100 % $ 5,725,414 100 %
MW 559,939 599,001 577,594 544,845 441,992
PPP loans 291,401 407,353 358,042 405,465 398,949
Total LHI [1] $ 7,130,913 $ 6,972,728 $ 6,785,966 $ 6,738,912 $ 6,566,355
Deposits
Noninterest-bearing $ 2,388,068 34.3 % $ 2,171,719 31.6 % $ 2,097,099 32.2 % $ 1,920,715 30.9 % $ 1,907,697 31.1 %
Interest-bearing transaction 451,307 6.5 463,343 6.7 453,110 7.0 450,739 7.2 343,640 5.6
Money market 2,539,061 36.4 2,602,903 37.7 2,398,526 36.8 2,267,191 36.4 2,272,520 37.1
Savings 122,606 1.8 123,447 1.8 106,820 1.6 104,015 1.7 97,989 1.6
Certificates and other time deposits 1,477,860 22.2 1,543,158 22.3 1,457,291 22.3 1,479,896 23.7 1,503,701 24.5
Total deposits $ 6,978,902 100 % $ 6,904,570 100 % $ 6,512,846 100 % $ 6,222,556 100 % $ 6,125,547 100 %
Loan to Deposit Ratio 102.2 % 101.0 % 104.2 % 108.3 % 107.2 %
Loan to Deposit Ratio, excluding MW and PPP loans 90.0 % 86.4 % 89.8 % 93.0 % 93.5 %

[1] Total LHI does not include deferred fees of $7.5 million, $2.9 million, and $2.5 million at June 30, 2021, March 31, 2021 and December 31, 2020, respectively, or deferred costs of $691 thousand and $1.5 million at September 30, 2020 and June 30, 2020, respectively.

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

Asset Quality

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For the Three Months Ended For the Six Months Ended
Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Jun 30, 2021 Jun 30, 2020
(Dollars in thousands)
NPAs:
Nonaccrual loans $ 76,994 $ 73,594 $ 81,096 $ 88,877 $ 43,594 $ 76,994 $ 43,594
Accruing loans 90 or more days past due [1] 462 9,093 4,204 1,689 2,021 462 2,021
Total nonperforming loans held for investment ("NPLs") 77,456 82,687 85,300 90,566 45,615 77,456 45,615
OREO 2,467 2,337 2,337 5,796 7,716 2,467 7,716
Total NPAs $ 79,923 $ 85,024 $ 87,637 $ 96,362 $ 53,331 $ 79,923 $ 53,331
Charge-offs:
Residential $ (300 ) $ (15 ) $ (18 ) $ -- $ -- $ (303 ) $ --
OOCRE (689 ) -- -- (2,421 ) -- (689 ) --
NOOCRE -- -- (2,865 ) -- --
Commercial (5,608 ) (346 ) (13,699 ) (68 ) (1,740 ) (5,966 ) (1,740 )
Consumer (20 ) (18 ) (26 ) (11 ) (57 ) (38 ) (125 )
Total charge-offs (6,617 ) (379 ) (16,608 ) (2,500 ) (1,797 ) (6,996 ) (1,865 )
Recoveries:
Residential 29 3 49 7 -- 26 1
OOCRE 500 -- -- -- -- 500 --
Commercial 659 226 52 14 7 885 36
Consumer 36 2 -- 13 -- 44 274
Total recoveries 1,224 231 101 34 7 1,455 311
Net charge-offs $ (5,393 ) $ (148 ) $ (16,507 ) $ (2,466 ) $ (1,790 ) $ (5,541 ) $ (1,554 )
CECL transition adjustment $ -- $ -- $ -- $ -- $ -- $ -- $ 39,137
ACL at end of period $ 99,543 $ 104,936 $ 105,084 $ 121,591 $ 115,365 $ 99,543 $ 115,365