DALLAS, April 25, 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 March 31, 2023.

“I am incredibly pleased with our first quarter operating performance. We reported outstanding earnings metrics while all banks were navigating the impact of the recent banking environment,” said C. Malcolm Holland, III. “These recent events have given our bankers an opportunity to connect with our customers and prospects to provide reassurance of our Company’s ability to meet their needs. I am encouraged that the time and focus put in over the years resulted in very little deposit outflow since last quarter.”

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.

Other First Quarter Highlights

• Pre-tax, pre-provision operating return on average assets increased 6 bps from the fourth quarter of 2022 to 2.21% and increased 50 bps from the first quarter 2022;

• Pre-tax, pre-provision operating return on average loans increased 6 bps from the fourth quarter of 2022 to 2.84% and increased 50 bps from the first quarter 2022;

• Tangible book value per common share increased to $19.43 during the three months ended March 31, 2023 compared to $18.64 for the three months ended December 31, 2022 and $18.51 for the three months ended March 31, 2022;

• Non-performing assets (“NPAs”) to total assets decreased to 0.35%, or 1 bps from December 31, 2022 and 11 bps from March 31, 2022, respectively;

• Annualized net charge-offs to average loans outstanding were 4 bps for the first quarter of 2023 compared to 28 bps for the three months ended December 31, 2022;

• Total loans held for investment (“LHI”), excluding mortgage warehouse (“MW”), grew $200.7 million, or 8.9% annualized, during the three months ended March 31, 2023 from $9.04 billion at the end of the fourth quarter of 2022;

• Declared quarterly cash dividend of $0.20 per share of outstanding common stock payable on May 25, 2023.

Results of Operations for the Three Months Ended March 31, 2023

Net Interest Income

For the three months ended March 31, 2023, net interest income before provision for credit losses was $103.4 million and net interest margin was 3.69% compared to $106.1 million and 3.87%, respectively, for the three months ended December 31, 2022. The $2.7 million decrease in net interest income before provision for credit losses was primarily due to a $12.4 million increase in interest expense on certificates and other time deposits and a $5.8 million increase in transaction and savings deposits driven by an increase in funding costs on deposits, partially offset by a $14.9 million increase in loan yields and average balances during the three months ended March 31, 2023. Net interest margin decreased 18 basis points compared to the three months ended December 31, 2022, primarily due to the increase in funding costs on deposits during three months ended March 31, 2023, partially offset by an increase in loan yields and average balances.

Compared to the three months ended March 31, 2022, net interest income before provision for credit losses for the three months ended March 31, 2023 increased by $30.3 million, or 41.6%. The increase was primarily due to a $80.3 million increase in interest income on loans driven by an increase in average balances and loan yields, partially offset by a $28.1 million increase in transaction and savings deposits and a $19.6 million increase in certificates and other time deposits driven by an increase in funding costs. Net interest margin increased 47 basis points to 3.69% for the three months ended March 31, 2023 from 3.22% for the three months ended March 31, 2022. The increase was primarily due to the increase in average balances and loan yields during the three months ended March 31, 2023, partially offset by an increase in funding costs.

Noninterest Income

Noninterest income for the three months ended March 31, 2023 was $13.5 million, a decrease of $795 thousand, or 5.5%, compared to the three months ended December 31, 2022. The decrease was primarily due to a $5.3 million loss on sales of investment securities due to the Company selling $116.2 million of investment securities in early March 2023 and a $2.1 million decrease in customer swap income. The decrease was partially offset by a $3.9 million decrease in equity method investment losses and a $1.9 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 (“NAC”).

Compared to the three months ended March 31, 2022, noninterest income for the three months ended March 31, 2023 decreased by $1.6 million, or 10.4%. The decrease was primarily due to a $5.3 million loss on sales of investment securities due to the Company selling $116.2 million of investment securities in early March 2023 and a $1.9 million decrease in equity method investment income. The decrease was partially offset by a $4.8 million increase in government guaranteed loan income primarily driven by an increase in USDA loans sold through NAC and a $959 thousand increase in BOLI income.

Noninterest Expense

Noninterest expense was $56.6 million for the three months ended March 31, 2023, compared to $57.4 million for the three months ended December 31, 2022, a decrease of $744 thousand, or 1.3%. The decrease was primarily due to a $1.8 million decrease in salaries and employee benefits, partially offset by a $523 thousand increase in data processing and software expenses, a $196 thousand increase in third party banking services, a $120 thousand increase in telephone and communications expenses, and a $459 thousand increase in other miscellaneous expenses.

Compared to the three months ended March 31, 2022, noninterest expense for the three months ended March 31, 2023 increased by $10.0 million, or 21.6%. The increase was primarily driven by a $4.4 million increase in salaries and employee benefits, a $1.8 million increase in data processing and software expenses, a $1.4 million increase in loan and collection expenses, a $1.2 million increase in professional and regulatory fees, and a $429 thousand increase in third party banking services.

Financial Condition

Total LHI, excluding MW, were $9.24 billion at March 31, 2023, an increase of $200.7 million, or 8.9% annualized, compared to December 31, 2022. The increase was the result of the continued execution, and success of our loan growth strategy, including our continued investment in talent.

Total deposits were $9.03 billion at March 31, 2023, a decrease of $88.5 million, or 3.9% annualized, compared to December 31, 2022. The decrease was primarily the result of a decrease of $447.8 million in correspondent money market deposits and a decrease of $428.2 million in non-interest bearing deposits, partially offset by an increase of $810.2 million in certificates and other time deposits.

Credit Quality

Nonperforming assets totaled $44.5 million, or 0.35% of total assets, at March 31, 2023, compared to $43.7 million, or 0.36% of total assets, at December 31, 2022. The Company had net charge-offs of $858 thousand for the quarter, which were fully reserved against in prior quarters under our allowance for credit loss (“ACL”) model.

The Company recorded a provision for credit losses of $8.5 million for the three months ended March 31, 2023, an $11.8 million provision for credit losses for the three months ended December 31, 2022 and a $500 thousand benefit for credit losses for the three months ended March 31, 2022. The recorded provision for credit losses for the three months ended March 31, 2023, compared to the three months ended December 31, 2022, was primarily attributable to an increase in general reserves as a result of changes in economic factors and loan growth. The Company recorded a provision for unfunded commitments of $1.5 million for the three months ended March 31, 2023, a $523 thousand benefit for unfunded commitments for the three months ended December 31, 2022, and a $493 thousand provision for unfunded commitments for the three months ended March 31, 2022. The recorded provision for unfunded commitments for the three months ended March 31, 2023, compared to the three months ended December 31, 2022, was attributable to changes in economic factors partially offset by a decrease in unfunded commitment balances. ACL as a percentage of LHI, excluding MW, was 1.07%, 1.01% and 1.02% at March 31, 2023, December 31, 2022 and March 31, 2022, respectively.

Dividend Information

After the close of the market on Tuesday, April 25, 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 May 25, 2023 to stockholders of record as of the close of business on May 11, 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, April 26, 2023, at 8:30 a.m. Central Time. Participants may pre-register for the call by visiting https://edge.media-server.com/mmc/p/4tvcudmz and will receive a unique PIN, which can be used when dialing in for the call.

Participants may also register via teleconference at:
https://register.vevent.com/register/BI557c0ef1335341a3870ff09ae09bc101. Once registration is completed, participants will be provided with a dial-in number containing a personalized conference code to access the call. All participants are instructed to dial-in 15 minutes prior to the start time.

A replay will be available within approximately two hours after the completion of the call, and made accessible for one week thereafter. You may access the replay via webcast through the investor relations section of Veritex’s website.

About Veritex Holdings, Inc.

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

Forward-Looking Statements

This earnings release includes “forward-looking statements”, within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on various facts and derived utilizing assumptions, current expectations, estimates and projections and are subject to known and unknown risks, uncertainties and other factors, which change over time and are beyond our control, that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements include, without limitation, statements relating to the expected payment of Veritex Holdings, Inc.’s (“Veritex”) quarterly cash dividend; the impact of certain changes in Veritex’s accounting policies, standards and interpretations; the effects of the COVID-19 pandemic and actions taken in response thereto; 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.

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 ASC326 and were accounted for on a pooled basis that have subsequently been placed on nonaccrual status.
⁴Annualized ratio for quarterly metrics.