press release

Oct. 26, 2021, 5:01 p.m. EDT

Veritex Holdings, Inc. Reports Third Quarter Operating Results

DALLAS, Oct 26, 2021 (GLOBE NEWSWIRE via COMTEX) -- DALLAS, Oct. 26, 2021 (GLOBE NEWSWIRE) -- Veritex Holdings, Inc. ("Veritex," the "Company," "we" or "our") /zigman2/quotes/201489855/composite VBTX +0.10% , the holding company for Veritex Community Bank, today announced the results for the quarter ended September 30, 2021.

"The third quarter was transformational for the growing Veritex family," said President and CEO, Malcolm C. Holland, III. "We closed our 49% investment in Thrive and announced the acquisition of North Avenue Capital, the nation's largest producer of USDA loans, which will close on November 1, 2021. We continue to see benefits from our targeted talent hires with record annualized loan growth of 22.1% for Q3-21 and remain focused on revenue diversification, sound underwriting, reducing NPAs, maintaining our strong culture and pursuing opportunities to further scale our Company."

Third Quarter Highlights

  • Net income of $36.8 million, or $0.73 diluted earnings per share ("EPS"), compared to $29.5 million, or $0.59 diluted EPS, for the quarter ended June 30, 2021 and $22.9 million, or $0.46 diluted EPS, for the quarter ended September 30, 2020;

  • Operating earnings [1] of $35.1 million, or $0.70 diluted operating EPS [1] , compared to $30.0 million, or $0.60 diluted operating EPS [1] , for the quarter ended June 30, 2021 and $22.9 million, or $0.46 diluted operating EPS [1] , for the quarter ended September 30, 2020;

  • Total loans held for investment ("LHI"), excluding mortgage warehouse ("MW") and Paycheck Protection Program ("PPP") loans, grew $344.5 million from the second quarter of 2021, or 21.9% annualized;

  • Total LHI, excluding MW and PPP, grew $768.0 million from December 31, 2020, or 17.5% annualized, and $826.2 million, or 14.3%, year over year.

  • Total deposits grew $199.9 million from the second quarter of 2021, or 11.4% annualized, with the average cost of total deposits decreasing to 0.20% for the three months ended September 30, 2021 from 0.23% for the three months ended June 30, 2021;

  • Nonperforming assets ("NPAs") to total assets decreased to 0.77%, or 8 basis points from the second quarter of 2021;

  • Book value per common share increased to $26.09 from $25.72 as of June 30, 2021 and tangible book value per common share [1] increased to $17.53 from $17.16 as of June 30, 2021;

  • Repurchased 328,122 shares at an average price of $34.85 during the third quarter of 2021 and extended the Stock Buyback Program to December 31, 2022;

  • Announced the completion of the Company's 49% investment in Thrive Mortgage, LLC ("Thrive") during the third quarter and recognized $4.5 million of equity method investment income which includes $1.9 million of PPP loan forgiveness income;

  • Announced the acquisition of North Avenue Capital, LLC on September 21, 2021. Transaction will close November 1, 2021; and

  • Declared quarterly cash dividend of $0.20 per share of outstanding common stock payable on November 23, 2021.

QTD YTD
Financial Highlights Q3 2021 Q2 2021 Q3 2021 Q3 2020
(Dollars in thousands)
(unaudited)
GAAP
Net income $ 36,835 $ 29,456 $ 98,078 $ 51,082
Diluted EPS 0.73 0.59 1.95 1.02
Book value per common share 26.09 25.72 26.09 23.87
Return on average assets [2] 1.56 % 1.27 % 1.42 % 0.81 %
Efficiency ratio 47.55 52.42 49.79 47.19
Non-GAAP [1]
Operating earnings $ 35,072 $ 29,952 $ 97,237 $ 48,250
Diluted operating EPS 0.70 0.60 1.94 0.96
Tangible book value per common share 17.53 17.16 17.53 15.19
Pre-tax, pre-provision operating earnings 43,858 38,497 122,565 124,040
Pre-tax, pre-provision operating return on average assets [2] 1.85 % 1.66 % 1.78 % 1.96 %
Operating return on average assets [2] 1.48 1.29 1.41 0.76
Operating efficiency ratio 48.51 51.63 49.89 47.10
Return on average tangible common equity [2] 17.72 15.18 16.70 10.56
Operating return on average tangible common equity [2] 16.92 15.42 16.57 10.04

[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 September 30, 2021

Net Interest Income

For the three months ended September 30, 2021, net interest income before provision for credit losses was $71.3 million and net interest margin was 3.26% compared to $67.1 million and 3.11%, respectively, for the three months ended June 30, 2021. Net interest margin increased 15 basis points from the three months ended June 30, 2021 primarily due to a change in the mix of interest-earning assets resulting from increases in loans, which tend to yield greater interest rates and decreases in PPP loans, which earned a 1.00% yield and excess liquidity which yields 15 basis points. The average cost of interest-bearing deposits decreased 5 basis points to 0.30% for the three months ended September 30, 2021 from 0.35% for the three months ended June 30, 2021.

Net interest income before provision for credit losses increased by $5.4 million from $65.9 million to $71.3 million and net interest margin decreased by 6 basis points from 3.32% to 3.26% for the three months ended September 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 $3.1 million decrease in interest expense on certificate and other time deposits and a $2.5 million increase in interest income on loans during the three months ended September 30, 2021 compared to the three months ended September 30, 2020. Net interest margin decreased 6 basis points from the three months ended September 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 September 30, 2021. As a result, the average cost of interest-bearing deposits decreased 37 basis points to 0.30% for the three months ended September 30, 2021 from 0.67% for the three months ended September 30, 2020.

Noninterest Income

Noninterest income for the three months ended September 30, 2021 was $15.6 million, an increase of $3.2 million, or 25.5%, compared to the three months ended June 30, 2021. The increase was primarily due to a $4.5 million increase in equity method investment income related to our 49% investment in Thrive which closed during the third quarter. This increase was partially offset by a $774 thousand decrease in PPP income and a $333 thousand decrease in gain on sale of Small Business Administration ("SBA") loans during the three months ended September 30, 2021 compared to the three months ended June 30, 2021.

Compared to the three months ended September 30, 2020, noninterest income for the three months ended September 30, 2021 increased by $5.8 million, or 59.5%. The increase was primarily due to the $4.5 million increase in equity method investment income related to the Company's investment in Thrive discussed above and a $1.4 million increase in service charges and fees on deposit accounts as a result of increased deposits during the three months ended September 30, 2021 , compared to the same period in 2020.

Noninterest Expense

Noninterest expense was $41.3 million for the three months ended September 30, 2021, compared to $41.7 million for the three months ended June 30, 2021, a decrease of $396 thousand, or 0.9%. The decrease was primarily driven by a $690 thousand decrease in marketing expenses as a result of decreased advertising during the three months ended September 30, 2021 compared to the three months ended June 30, 2021.

Compared to the three months ended September 30, 2020, noninterest expense for the three months ended September 30, 2021 increased by $4.9 million, or 13.5%. The increase was primarily driven by a $2.4 million increase in salaries and employee benefits as a result of a $1.8 million increase in accrued employee bonus, a $1.7 million increase in lender incentive, a $1.6 million increase in salaries and a $565 thousand increase in employee stock based compensation which was slightly offset by a $2.8 million increase in direct loan origination costs which are required to be deferred in accordance with ASC 310-20 during the three months ended September 30, 2021 compared to the same period in 2020. The increase in noninterest expense was also a result of a $556 thousand increase in occupancy and equipment, a $461 thousand increase in problem loan fees, a $242 thousand increase in professional and regulatory fees and a $128 thousand increase in legal settlements during the three months ended September 30, 2021 compared to the same period in 2020

Financial Condition

Total LHI, excluding MW and PPP, were $6.6 billion, an increase of $343.8 million, or 21.9%, annualized, compared to June 30, 2021. Total loans were $7.4 billion at September 30, 2021, an increase of $250.2 million, or 14.0% annualized, compared to June 30, 2021. The increases were the result of the continued execution and success of our loan growth strategy.

Total deposits were $7.2 billion at September 30, 2021, an increase of $199.9 million, or 11.4% annualized, compared to June 30, 2021. The increase was primarily the result of an increase of $169.7 million in certificates and other time deposits and an increase of $115.3 million in interest-bearing transaction and savings deposits. This increase was partially offset by a decrease of $85.1 million in noninterest-bearing demand deposits.

Asset Quality

NPAs totaled $74.0 million, or 0.77% of total assets at September 30, 2021, compared to $79.9 million, or 0.85% of total assets, at June 30, 2021. Included in NPAs as of September 30, 2021 are $1.7 million of accruing loans 90 or more days past due that are considered well-secured and in the process of collection. The Company's net charge-offs for the three months ended September 30, 2021 were $5.8 million, which were fully reserved against in prior periods.

The Company recorded no provision for credit losses for the three months ended September 30, 2021 and June 30, 2021, compared to $8.7 million for the three months ended September 30, 2020. The decrease in the recorded provision for credit losses for the three months ended September 30, 2021, compared to the three months ended September 30, 2020, was primarily attributable to improvement in the Texas economic forecasts used in the Current Expected Credit Losses ("CECL") model in the third quarter of 2021 to reflect the expected impact of the COVID-19 pandemic as of September 30, 2021, as compared to our Texas economic forecasts and expected impact of the COVID-19 pandemic as of September 30, 2020. In the third quarter of 2021, we also recorded a $448 thousand benefit for unfunded commitments, which was also attributable to improvement in the Texas economic forecasts.

Allowance for credit losses ("ACL") as a percentage of LHI, excluding MW and PPP loans, was 1.42%, 1.59% and 2.10% at September 30, 2021, June 30, 2021 and September 30, 2020, respectively.

Dividend Information

On October 26, 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 November 23, 2021 to stockholders of record as of the close of business on November 10, 2021.

Non-GAAP Financial Measures

Veritex's management uses certain financial measures that are not calculated and presented in accordance with generally accepted accounting principles as in effect from time to time in the United States ("GAAP") 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 EPS, 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, October 27, 2021 at 8:30 a.m. Central Time. Participants may pre-register for the call by visiting https://edge.media-server.com/mmc/p/ttpjfm6e 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 #5908627. This replay, as well as the webcast, will be available until November 3, 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 .

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 expected timing of completion of the Company's acquisition of North Avenue Capital, LLC ("NAC"), 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. Further, certain important factors could affect future results and cause actual results to differ materially from those expressed in the forward-looking statements, including, but not limited to, the possibility that the Company's acquisition of NAC does not close when expected or at all because required regulatory, shareholder or other approvals and other conditions to closing are not received or satisfied on a timely basis or at all, the failure to close for any other reason, that the businesses of the Company and NAC will not be integrated successfully, that the cost savings and any synergies from the proposed acquisition may not be fully realized or may take longer to realize than expected, disruption from the proposed acquisition making it more difficult to maintain relationships with employees, customers or other parties with whom the Company or NAC have business relationships, diversion of management time on acquisition-related issues, the reaction to the transaction of the companies' customers, employees and counterparties and other factors, many of which are beyond the control of the Company and NAC. 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 Nine Months Ended
Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Sep 30, 2021 Sep 30, 2020
(Dollars and shares in thousands, except per-share data)
Per Share Data (Common Stock):
Basic EPS $ 0.75 $ 0.60 $ 0.64 $ 0.46 $ 0.46 $ 1.98 $ 1.02
Diluted EPS 0.73 0.59 0.64 0.46 0.46 1.95 1.02
Book value per common share 26.09 25.72 24.96 24.39 23.87 26.09 23.87
Tangible book value per common share [1] 17.53 17.16 16.34 15.70 15.19 17.53 15.19
Dividends paid per common share outstanding [2] 0.20 0.20 0.17 0.17 0.17 0.57 0.51
Common Stock Data:
Shares outstanding at period end 49,229 49,498 49,433 49,340 49,650 49,229 49,650
Weighted average basic shares outstanding for the period 49,423 49,476 49,394 49,571 49,647 49,431 49,989
Weighted average diluted shares outstanding for the period 50,306 50,331 49,998 49,837 49,775 50,230 50,176
Summary of Credit Ratios:
ACL to total LHI, excluding MW and PPP loans 1.42 % 1.59 % 1.76 % 1.80 % 2.10 % 1.42 % 2.10 %
NPAs to total assets 0.77 0.85 0.92 0.99 1.11 0.77 1.11
Net charge-offs to average loans outstanding 0.09 0.09 -- 0.28 0.04 0.18 0.07
Summary Performance Ratios:
Return on average assets [3] 1.56 1.27 1.44 1.04 1.06 1.42 0.81
Return on average equity [3] 11.32 9.42 10.53 7.58 7.74 10.43 5.91
Return on average tangible common equity [1, 3] 17.72 15.18 17.17 12.84 13.27 16.70 10.56
Efficiency ratio 47.55 52.42 49.62 62.52 48.12 49.79 47.19
Net interest margin 3.26 3.11 3.22 3.29 3.32 3.20 3.42
Selected Performance Metrics - Operating:
Diluted operating EPS [1] $ 0.70 $ 0.60 $ 0.64 $ 0.60 $ 0.46 $ 1.94 $ 0.96
Pre-tax, pre-provision operating return on average assets [1, 2] 1.85 % 1.66 % 1.82 % 1.75 % 1.82 % 1.78 % 1.96 %
Operating return on average assets [1, 3] 1.48 1.29 1.46 1.35 1.06 1.41 0.76
Operating return on average tangible common equity [1, 3] 16.92 15.42 17.39 16.44 13.27 16.57 10.04
Operating efficiency ratio [1] 48.51 51.63 49.62 49.49 48.11 49.89 47.10
Veritex Holdings, Inc. Capital Ratios:
Average stockholders' equity to average total assets 13.75 % 13.46 % 13.69 % 13.67 % 13.72 % 13.63 % 13.66 %
Tangible common equity to tangible assets [1] 9.43 9.51 9.17 9.23 9.12 9.43 9.12
Tier 1 capital to average assets (leverage) 9.54 9.38 9.50 9.43 9.54 9.54 9.54
Common equity tier 1 capital 8.75 9.03 9.27 9.30 9.67 8.75 9.67
Tier 1 capital to risk-weighted assets 9.06 9.36 9.61 9.66 10.05 9.06 10.05
Total capital to risk-weighted assets 12.31 12.86 13.38 13.56 12.70 12.31 12.70

[1 ] Refer to the section titled "Reconciliation of Non-GAAP Financial Measures" after the financial highlights for a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures.
[2 ] Dividend amount represents dividend paid per common share subsequent to each respective quarter end.
[3] Annualized ratio for quarterly metrics.

VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(In thousands)
Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020
(unaudited) (unaudited) (unaudited) (unaudited)
ASSETS
Cash and cash equivalents $ 229,712 $ 390,027 $ 468,029 $ 230,825 $ 128,767
Debt securities 1,103,745 1,125,877 1,077,860 1,055,201 1,091,440
Other investments 191,786 87,558 87,226 87,192 98,023
Loans held for sale 18,896 12,065 19,864 21,414 13,928
LHI, PPP loans, carried at fair value 135,842 291,401 407,353 358,042 405,465
LHI, MW 615,045 559,939 599,001 577,594 544,845
LHI, excluding MW and PPP 6,615,905 6,272,087 5,963,493 5,847,862 5,789,293
Total loans 7,385,688 7,135,492 6,989,711 6,804,912 6,753,531
ACL (93,771 ) (99,543 ) (104,936 ) (105,084 ) (121,591 )
Bank-owned life insurance 83,781 83,304 83,318 82,855 82,366
Bank premises, furniture and equipment, net 116,063 123,504 114,585 115,063 115,794
Other real estate owned ("OREO") -- 2,467 2,337 2,337 5,796
Intangible assets, net of accumulated amortization 54,682 57,143 59,236 61,733 64,716
Goodwill 370,840 370,840 370,840 370,840 370,840
Other assets 129,774 72,856 89,304 114,997 112,693
Total assets $ 9,572,300 $ 9,349,525 $ 9,237,510 $ 8,820,871 $ 8,702,375
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing deposits $ 2,302,925 $ 2,388,068 $ 2,171,719 $ 2,097,099 $ 1,920,715
Interest-bearing transaction and savings deposits 3,228,306 3,112,974 3,189,693 2,958,456 2,821,945
Certificates and other time deposits 1,647,521 1,477,860 1,543,158 1,457,291 1,479,896
Total deposits 7,178,752 6,978,902 6,904,570 6,512,846 6,222,556
Accounts payable and other liabilities 66,571 55,499 55,902 61,928 69,540
Advances from Federal Home Loan Bank ("FHLB") 777,601 777,640 777,679 777,718 1,082,756
Subordinated debentures and subordinated notes 262,761 262,766 262,774 262,778 140,158
Securities sold under agreements to repurchase 2,455 1,811 2,777 2,225 2,028
Total liabilities 8,288,140 8,076,618 8,003,702 7,617,495 7,517,038
Commitments and contingencies
Stockholders' equity:
Common stock 559 558 557 555 555
Additional paid-in capital 1,137,889 1,134,603 1,131,324 1,126,437 1,124,148
Retained earnings 243,633 216,704 195,661 172,232 157,639
Accumulated other comprehensive income 69,661 77,189 62,413 56,225 47,155
Treasury stock (167,582 ) (156,147 ) (156,147 ) (152,073 ) (144,160 )
Total stockholders' equity 1,284,160 1,272,907 1,233,808 1,203,376 1,185,337
Total liabilities and stockholders' equity $ 9,572,300 $ 9,349,525 $ 9,237,510 $ 8,820,871 $ 8,702,375


VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(In thousands, except per share data)
For the Three Months Ended For the Nine Months Ended
Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Sep 30, 2021 Sep 30, 2020
Interest income:
Loans, including fees $ 71,139 $ 67,814 $ 67,399 $ 69,597 $ 68,685 $ 206,352 $ 216,986
Debt securities 7,613 7,529 7,437 7,652 7,852 22,579 23,074
Deposits in financial institutions and Fed Funds sold 130 167 127 99 65 424 1,122
Equity securities and other investments 898 672 663 752 827 2,233 2,568
Total interest income 79,780 76,182 75,626 78,100 77,429 231,588 243,750
Interest expense:
Transaction and savings deposits 1,588 1,661 1,980 2,105 2,105 5,229 11,128
Certificates and other time deposits 1,934 2,423 3,061 3,919 5,004 7,418 19,759
Advances from FHLB 1,848 1,829 1,812 2,222 2,707 5,489 8,387
Subordinated debentures and subordinated notes 3,134 3,138 3,138 3,088 1,743 9,410 5,444
Total interest expense 8,504 9,051 9,991 11,334 11,559 27,546 44,718
Net interest income 71,276 67,131 65,635 66,766 65,870 204,042 199,032
Provision for credit losses -- -- -- -- 8,692 -- 56,640
(Benefit) provision for unfunded commitments (448 ) 577 (570 ) 902 1,447 (441 ) 8,127
Net interest income after provisions 71,724 66,554 66,205 65,864 55,731 204,483 134,265
Noninterest income:
Service charges and fees on deposit accounts 4,484 3,847 3,629 3,971 3,130 11,960 9,732
Loan fees 1,746 1,823 1,341 684 1,787 4,910 5,027
(Loss) gain on sales of investment securities (188 ) -- -- (256 ) (8 ) (188 ) 2,871
Gain on sales of mortgage loans held for sale 407 385 507 317 472 1,299 922
Government guaranteed loan income, net 2,341 3,448 6,548 448 2,257 12,337 13,702
Equity method investment income 4,522 -- -- -- -- 4,522 --
Other 2,315 2,953 2,147 3,848 2,157 7,415 6,078
Total noninterest income 15,627 12,456 14,172 9,012 9,795 42,255 38,332
Noninterest expense:
Salaries and employee benefits 22,964 23,451 22,932 20,011 20,553 69,347 59,442
Occupancy and equipment 4,536 4,233 4,096 4,116 3,980 12,865 12,247
Professional and regulatory fees 3,401 3,086 3,441 3,578 3,159 9,928 8,151
Data processing and software expense 2,494 2,536 2,319 2,238 2,452 7,349 6,975
Marketing 1,151 1,841 909 945 1,062 3,901 2,706
Amortization of intangibles 2,509 2,517 2,537 2,558 2,840 7,563 8,232
Telephone and communications 380 337 337 340 345 1,054 972
COVID expenses -- -- -- -- 132 -- 1,377
Debt extinguishment costs -- -- -- 9,746 -- -- --
Other 3,886 3,716 3,026 3,841 1,885 10,628 11,912
Total noninterest expense 41,321 41,717 39,597 47,373 36,408 122,635 112,014
Income before income tax expense 46,030 37,293 40,780 27,503 29,118 124,103 60,583
Income tax expense 9,195 7,837 8,993 4,702 6,198 26,025 9,501
Net income $ 36,835 $ 29,456 $ 31,787 $ 22,801 $ 22,920 $ 98,078 $ 51,082
Basic EPS $ 0.75 $ 0.60 $ 0.64 $ 0.46 $ 0.46 $ 1.98 $ 1.02
Diluted EPS $ 0.73 $ 0.59 $ 0.64 $ 0.46 $ 0.46 $ 1.95 $ 1.02
Weighted average basic shares outstanding 49,423 49,476 49,394 49,571 49,647 49,431 49,989
Weighted average diluted shares outstanding 50,306 50,331 49,998 49,837 49,775 50,230 50,176


VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(In thousands except percentages)
For the Three Months Ended
September 30, 2021 June 30, 2021 September 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] $ 6,384,856 $ 66,911 4.16 % $ 6,108,527 $ 63,427 4.16 % $ 5,753,859 $ 64,958 4.49 %
LHI, MW 465,945 3,697 3.15 455,334 3,476 3.06 358,248 2,705 3.00
PPP loans 210,092 531 1.00 364,020 911 1.00 407,112 1,022 1.00
Debt securities 1,119,952 7,613 2.70 1,095,678 7,529 2.76 1,101,469 7,852 2.84
Interest-bearing deposits in other banks 336,289 130 0.15 548,087 167 0.12 175,201 65 0.15
Equity securities and other investments 167,242 898 2.13 87,413 672 3.08 103,948 827 3.17
Total interest-earning assets 8,684,376 79,780 3.64 8,659,059 76,182 3.53 7,899,837 77,429 3.90
ACL (99,482 ) (105,050 ) (116,859 )
Noninterest-earning assets 800,576 767,270 802,948
Total assets $ 9,385,470 $ 9,321,279 $ 8,585,926
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Interest-bearing demand and savings deposits $ 3,201,409 $ 1,588 0.20 % $ 3,191,405 $ 1,661 0.21 % $ 2,735,170 $ 2,105 0.31 %
Certificates and other time deposits 1,519,824 1,934 0.50 1,515,092 2,423 0.64 1,459,046 5,004 1.36
Advances from FHLB 777,617 1,848 0.94 777,655 1,829 0.94 1,067,771 2,707 1.01
Subordinated debentures and subordinated notes 264,714 3,134 4.70 264,931 3,138 4.75 142,432 1,743 4.87
Total interest-bearing liabilities 5,763,564 8,504 0.59 5,749,083 9,051 0.63 5,404,419 11,559 0.85
Noninterest-bearing liabilities:
Noninterest-bearing deposits 2,271,197 2,266,470 1,937,921
Other liabilities 60,181 51,355 65,704
Total liabilities 8,094,942 8,066,908 7,408,044
Stockholders' equity 1,290,528 1,254,371 1,177,882
Total liabilities and stockholders' equity $ 9,385,470 $ 9,321,279 $ 8,585,926
Net interest rate spread [2] 3.05 % 2.90 % 3.05 %
Net interest income $ 71,276 $ 67,131 $ 65,870
Net interest margin [3] 3.26 % 3.11 % 3.32 %

[1] Includes average outstanding balances of loans held for sale of $8,542, $14,364 and $15,404 for the three months ended September 30, 2021, June 30, 2021, and September 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)
Nine Months Ended
September 30, 2021 September 30, 2020
AverageOutstandingBalance InterestEarned/InterestPaid AverageYield/Rate AverageOutstandingBalance InterestEarned/InterestPaid AverageYield/Rate
Assets
Interest-earning assets:
Loans [1] $ 6,118,880 $ 193,040 4.22 % $ 5,779,469 $ 208,889 4.83 %
LHI, MW 477,319 10,988 3.08 275,890 6,318 3.06
PPP loans 309,620 2,324 1.00 236,778 1,779 1.00
Debt securities 1,093,263 22,579 2.76 1,086,185 23,074 2.84
Interest-bearing deposits in other banks 408,601 424 0.14 283,108 1,122 0.53
Equity securities and other investments 114,237 2,233 2.61 102,185 2,568 3.36
Total interest-earning assets 8,521,920 231,588 3.63 7,763,615 243,750 4.19
ACL (103,478 ) (90,633 )
Noninterest-earning assets 799,207 776,790
Total assets $ 9,217,649 $ 8,449,772
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Interest-bearing demand and savings deposits $ 3,144,395 $ 5,229 0.22 % $ 2,680,925 $ 11,128 0.55 %
Certificates and other time deposits 1,514,954 7,418 0.65 1,579,114 19,759 1.67
Advances from FHLB 777,655 5,489 0.94 1,070,856 8,387 1.05
Subordinated debentures and subordinated notes 264,998 9,410 4.75 143,387 5,444 5.07
Total interest-bearing liabilities 5,702,002 27,546 0.65 5,474,282 44,718 1.09
Noninterest-bearing liabilities:
Noninterest-bearing deposits 2,198,551 1,763,289
Other liabilities 60,456 57,737
Total liabilities 7,961,009 7,295,308
Stockholders' equity 1,256,640 1,154,464
Total liabilities and stockholders' equity $ 9,217,649 $ 8,449,772
Net interest rate spread [2] 2.98 % 3.10 %
Net interest income $ 204,042 $ 199,032
Net interest margin [3] 3.20 % 3.42 %

[1] Includes average outstanding balances of loans held for sale of $13,140 and $16,448 for the nine months ended September 30, 2021 and September 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
September 30,2021 June 30,
2021
March 31,
2021
December 31,
2020
September 30,2020
Average yield on interest-earning assets:
Loans [1] 4.16 % 4.16 % 4.31 % 4.48 % 4.49 %
LHI, MW 3.15 3.06 3.03 2.99 3.00
PPP loans 1.00 1.00 1.00 1.00 1.00
Debt securities 2.70 2.76 2.84 2.83 2.84
Interest-bearing deposits in other banks 0.15 0.12 0.15 0.15 0.15
Equity securities and other investments 2.13 3.08 3.08 3.13 3.17
Total interest-earning assets 3.64 % 3.53 % 3.71 % 3.85 % 3.90 %
Average rate on interest-bearing liabilities:
Interest-bearing demand and savings deposits 0.20 % 0.21 % 0.26 % 0.29 % 0.31 %
Certificates and other time deposits 0.50 0.64 0.82 1.06 1.36
Advances from FHLB 0.94 0.94 0.94 1.00 1.01
Subordinated debentures and subordinated notes 4.70 4.75 4.80 4.73 4.87
Total interest-bearing liabilities 0.59 % 0.63 % 0.72 % 0.82 % 0.85 %
Net interest rate spread [2] 3.05 % 2.90 % 2.99 % 3.03 % 3.05 %
Net interest margin [3] 3.26 % 3.11 % 3.22 % 3.29 % 3.32 %

[ 1] Includes average outstanding balances of loans held for sale of $8,542, $14,364, $16,602, $11,938 and $15,404 for the three months ended September 30, 2021, June 30, 2021, March 31, 2021, December 31, 2020 and September 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
September 30,2021 June 30,
2021
March 31,
2021
December 31,
2020
September 30,2020
Average cost of interest-bearing deposits 0.30 % 0.35 % 0.45 % 0.55 % 0.67 %
Average costs of total deposits, including noninterest-bearing 0.20 0.23 0.31 0.38 0.46

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

Total LHI and Deposit Portfolio Composition

September 30, 2021 June 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020
(Dollars in thousands)
LHI [1]
Commercial $ 1,812,679 27.4 % $ 1,771,100 28.2 % $ 1,632,040 27.4 % $ 1,559,546 26.7 % $ 1,623,249 28.0 %
Real Estate:
Owner occupied commercial ("OOCRE") 711,476 10.7 744,899 11.9 733,310 12.3 717,472 12.3 734,939 12.7
Non-owner occupied commercial ("NOOCRE) 2,175,499 32.8 1,986,538 31.6 1,970,945 33.0 1,904,132 32.5 1,817,013 31.4
Construction and land 936,174 14.1 871,765 13.9 723,444 12.1 693,030 11.8 623,496 10.8
Farmland 73,550 1.1 13,661 0.2 14,751 0.2 13,844 0.2 14,413 0.2
1-4 family residential 543,518 8.2 513,635 8.2 492,609 8.3 524,344 9.0 548,953 9.5
Multi-family residential 356,885 5.4 367,445 5.9 386,844 6.5 424,962 7.3 412,412 7.0
Consumer 14,266 0.2 10,530 0.1 12,431 0.2 13,000 0.2 14,127 0.2
Total LHI $ 6,624,047 100 % $ 6,279,573 100 % $ 5,966,374 100 % $ 5,850,330 100 % $ 5,788,602 100 %
MW 615,045 559,939 599,001 577,594 544,845
PPP loans 135,842 291,401 407,353 358,042 405,465
Total LHI [1] $ 7,374,934 $ 7,130,913 $ 6,972,728 $ 6,785,966 $ 6,738,912
Deposits
Noninterest-bearing $ 2,302,925 32.1 % $ 2,388,068 34.3 % $ 2,171,719 31.6 % $ 2,097,099 32.2 % $ 1,920,715 30.9 %
Interest-bearing transaction 514,537 7.2 451,307 6.5 463,343 6.7 453,110 7.0 450,739 7.2
Money market 2,585,926 36.0 2,539,061 36.4 2,602,903 37.7 2,398,526 36.8 2,267,191 36.4
Savings 127,843 1.8 122,606 1.8 123,447 1.8 106,820 1.6 104,015 1.7
Certificates and other time deposits 1,647,521 22.9 1,477,860 21.2 1,543,158 22.3 1,457,291 22.3 1,479,896 23.7
Total deposits $ 7,178,752 100 % $ 6,978,902 100 % $ 6,904,570 100 % $ 6,512,846 100 % $ 6,222,556 100 %
Loan to Deposit Ratio 102.7 % 102.2 % 101.0 % 104.2 % 108.3 %
Loan to Deposit Ratio, excluding MW and PPP loans 92.3 % 90.0 % 86.4 % 89.8 % 93.0 %

[1] Total LHI does not include deferred fees of $8.1 million, $7.5 million, $2.9 million and $2.5 million at September 30, 2021, June 30, 2021, March 31, 2021 and December 31, 2020, respectively, or deferred costs of $691 thousand at September 30, 2020.

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

Asset Quality

For the Three Months Ended For the Nine Months Ended
Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Sep 30, 2021 Sep 30, 2020
(Dollars in thousands)
NPAs:
Nonaccrual loans $ 72,317 $ 76,994 $ 73,594 $ 81,096 $ 88,877 $ 72,317 $ 88,877
Accruing loans 90 or more days past due [1] 1,711 462 9,093 4,204 1,689 1,711 1,689
Total nonperforming loans held for investment ("NPLs") 74,028 77,456 82,687 85,300 90,566 74,028 90,566
OREO -- 2,467 2,337 2,337 5,796 -- 5,796
Total NPAs $ 74,028 $ 79,923 $ 85,024 $ 87,637 $ 96,362 $ 74,028 $ 96,362
Charge-offs:
Residential $ (64 ) $ (300 ) $ (15 ) $ (18 ) $ -- $ (379 ) $ --
OOCRE (813 ) (689 ) -- -- (2,421 ) (1,502 ) (2,421 )
NOOCRE -- -- -- (2,865 ) --
Commercial (5,508 ) (5,608 ) (346 ) (13,699 ) (68 ) (11,462 ) (1,808 )
Consumer (17 ) (20 ) (18 ) (26 ) (11 ) (55 ) (136 )
Total charge-offs (6,402 ) (6,617 ) (379 ) (16,608 ) (2,500 ) (13,398 ) (4,365 )
Recoveries:
Residential 26 29 3 49 7 58 8
OOCRE -- 500 -- -- -- 500 --
Commercial 596 659 226 52 14 1,481 50
Consumer 8 36 2 -- 13 46 287
Total recoveries 630 1,224 231 101 34 2,085 345
Net charge-offs $ (5,772 ) $ (5,393 ) $ (148 ) $ (16,507 ) $ (2,466 ) $ (11,313 ) $ (4,020 )
CECL transition adjustment $ -- $ -- $ -- $ -- $ -- $ -- $ 39,137
ACL at end of period $ 93,771 $ 99,543 $ 104,936 $ 105,084 $ 121,591 $ 93,771 $ 121,591