• Veritex Holdings, Inc. Reports Fourth Quarter and Year-End 2020 Operating Results

    المصدر: Nasdaq GlobeNewswire / 26 يناير 2021 16:00:01   America/Chicago

    DALLAS, Jan. 26, 2021 (GLOBE NEWSWIRE) -- Veritex Holdings, Inc. (“Veritex” or the “Company”) (Nasdaq: VBTX), the holding company for Veritex Community Bank, today announced the results for the fourth quarter and full year of 2020. Net income for the quarter ended December 31, 2020 totaled $22.8 million, or $0.46 diluted earnings per share ("EPS"), compared to $22.9 million, or $0.46 diluted EPS, for the quarter ended September 30, 2020 and $29.1 million, or $0.56 diluted EPS, for the quarter ended December 31, 2019. Operating earnings for the quarter ended December 31, 2020 totaled $29.7 million, or $0.60 diluted operating EPS1, compared to $22.9 million, or $0.46 diluted operating EPS1, for the quarter ended September 30, 2020 and $30.3 million, or $0.58 diluted operating EPS1, for the quarter ended December 31, 2019.

    “2020 certainly proved to be a very challenging year given the economic disruption from the pandemic. Yet through it all, the team executed well and delivered strong results,” said C Malcolm Holland, III, the Company’s Chairman and Chief Executive Officer. The 4th quarter reflects continued loan growth, strong deposit results, higher capital levels and continued strong pre-tax, pre-provision operating earnings. Our business momentum and loan pipelines are the strongest we have seen since 2019. This momentum is supported by the recovering economy, the strength of the Texas economy and our significant investment during 2020 in new team members to support our continued success.”

    Fourth Quarter and 2020 Highlights:

    • Net income of $22.8 million, or $0.46 diluted EPS, compared to $22.9 million, or $0.46 diluted EPS, for the quarter ended September 30, 2020 and $29.1 million, or $0.56 diluted EPS, for the quarter ended December 31, 2019. Net income of $73.9 million, or $1.48 diluted EPS, for the year ended December 31, 2020 compared to $90.7 million, or $1.68 diluted EPS, for the year ended December 31, 2019;
    • Pre-tax, pre-provision operating earnings1 totaled $38.4 million, compared to $39.3 million for the quarter ended September 30, 2020 and $42.1 million for the quarter ended December 31, 2019;
    • Total loans held for investment, excluding Paycheck Protection Program ("PPP") loans, grew $91.3 million, from the third quarter of 2020, or 5.8% annualized. Total loans held for investment, excluding PPP loans, grew $504.3 million, or 8.5%, year over year;
    • Total deposits grew $290.3 million for the fourth quarter of 2020, or 18.7% annualized, with the average cost of total deposits decreasing to 0.38% for the three months ended December 31, 2020 from 0.46% for the three months ended September 30, 2020. Total deposits grew $618.5 million, or 10.5%, year over year;
    • Return on average tangible common equity1 of 12.84% and operating return on average tangible common equity1 of 16.44% for the three months ended December 31, 2020;
    • Repurchased 347,428 shares of outstanding common stock under the stock buyback program during the three months ended December 31, 2020 at an average price of $22.90. Since inception, the Company has repurchased 11.1% of issued common stock under the stock buyback program;
    • Declared quarterly cash dividend of $0.17 payable on February 18, 2021.

    Financial HighlightsQTD YTD
     Q4 2020 Q3 2020 Q4 2020 Q4 2019
      
     (Dollars in thousands)
    (unaudited)
    GAAP       
    Net income$22,801  $22,920  $73,883  $90,739 
    Diluted EPS0.46  0.46  1.48  1.68 
    Book value per common share24.39  23.87  24.39  23.32 
    Return on average assets21.04% 1.06% 0.87% 1.14%
    Efficiency ratio62.52  48.12  50.90  56.41 
    Return on average tangible common equity12.84  13.27  12.84  13.27 
    Non-GAAP1       
    Operating earnings$29,730  $22,928  $77,980  $123,836 
    Diluted operating EPS0.60  0.46  1.56  2.29 
    Tangible book value per common share15.70  15.19  15.70  14.73 
    Pre-tax, pre-provision operating earnings38,407  39,265  162,447  178,186 
    Pre-tax, pre-provision operating return on average assets21.75% 1.82% 1.91% 2.24%
    Operating return on average assets21.35  1.06  0.91  1.56 
    Operating efficiency ratio49.49  48.11  47.69  43.80 
    Operating return on average tangible common equity16.44  13.27  11.72  17.39 

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

    Result of Operations for the Three Months Ended December 31, 2020

    Net Interest Income

    For the three months ended December 31, 2020, net interest income before provision for loan losses was $66.8 million and net interest margin was 3.29% compared to $65.9 million and 3.32%, respectively, for the three months ended September 30, 2020. The $896 thousand increase in net interest income was primarily due to a $951 thousand increase in interest income on loans driven by an increase in average balances. Net interest margin decreased 3 basis points from the three months ended September 30, 2020, primarily due to a 1 basis point decrease in yields earned on loan balances. As a result, the average cost of interest-bearing deposits decreased to 0.55% for the three months ended December 31, 2020 from 0.67% for the three months ended September 30, 2020.

    Net interest income before provision for loan losses decreased by $3.1 million from $69.9 million to $66.8 million and net interest margin decreased 52 basis points from 3.81% to 3.29% for the three months ended December 31, 2020 as compared to the same period in 2019. The decrease in net interest income before provision for loan losses was primarily due to a $15.5 million decrease in interest income on loans, excluding MW and PPP, partially offset by a $6.1 million and $5.5 million decrease in interest expenses on transaction and savings deposits and certificates and other time deposits, respectively, during the three months ended December 31, 2020 compared to the three months ended December 31, 2019. Net interest margin decreased 52 basis points compared to the three months ended December 31, 2019 primarily due to a decrease in yields earned on loan balances, 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 December 31, 2020. As a result, the average cost of interest-bearing deposits decreased to 0.55% for the three months ended December 31, 2020 from 1.59% for the three months ended December 31, 2019.

    Noninterest Income

    Noninterest income for the three months ended December 31, 2020 was $9.0 million, a decrease of $783 thousand, or 8.0% compared to the three months ended September 30, 2020. The decrease in noninterest income is primarily due to a $1.8 million decrease in government guaranteed loan income, net, and a $1.1 million decrease in loan fees. This is partially offset by a $841 thousand increase in service fees and a $830 thousand net increase in derivative income.

    Compared to the three months ended December 31, 2019, noninterest income for the three months ended December 31, 2020 grew $1.9 million or 26.4%. The increase was primarily due to a $1.1 million increase in derivative income and a $771 thousand increase in gain on sale of other real estate owned.

    Noninterest Expense

    Noninterest expense was $47.4 million for the three months ended December 31, 2020, compared to $36.4 million and $36.3 million for the three months ended September 30, 2020 and December 31, 2019, respectively. The increase was primarily driven by a $9.7 million increase in debt extinguishment costs on Federal Home Loan Bank ("FHLB") advances that were pre-paid in the fourth quarter of 2020 with no corresponding FHLB advance prepayments during the three months ended September 30, 2020 or December 31, 2019.

    Financial Condition

    Total loans were $6.8 billion at December 31, 2020, an increase of $51.4 million, or 3.04% annualized, compared to September 30, 2020 and an increase of $869.6 million, or 14.65%, compared to December 31, 2019. These increases were the result of the continued execution and success of our loan growth strategy.

    Total deposits were $6.5 billion at December 31, 2020, an increase of $290.3 million, or 18.7% annualized, compared to September 30, 2020 and an increase of $618.5 million, or 10.49%, compared to December 31, 2019. The increase from September 30, 2020 was primarily the result of an increase of $176.4 million in non-interest bearing demand deposits and an increase of $136.5 million in interest-bearing transaction and savings deposits accounts. The increase from December 31, 2019 was primarily the result of an increase of $540.6 million in non-interest bearing demand deposits and an increase of $303.5 million in interest-bearing transaction and savings deposits accounts, partially offset by a decrease of $225.6 million in certificates and other time deposits.

    Asset Quality

    Nonperforming assets totaled $87.6 million, or 0.99% of total assets, at December 31, 2020, compared to $96.4 million, or 1.11% of total assets, at September 30, 2020. The Company had net charge-offs of $16.5 million for the quarter, which is primarily the result of one lending relationship.

    The Company recorded no provision for credit losses for the three months ended December 31, 2020, compared to $8.7 million and $3.5 million for the three months ended September 30, 2020 and December 31, 2019, respectively. The decrease in the recorded provision for credit losses for the three months ended December 31, 2020, 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 fourth quarter of 2020 to reflect the expected impact of the COVID-19 pandemic as of December 31, 2020, as compared to our Texas economic forecasts and expected impact of the COVID-19 pandemic as of September 30, 2020. In the fourth quarter of 2020, we recorded a $902 thousand provision for unfunded commitments which was attributable to higher unfunded balances compared to a $1.4 million provision for unfunded commitments recorded for the three months ended September 30, 2020. Allowance for credit losses ("ACL") as a percentage of loans held for investment ("LHI"), excluding mortgage warehouse and PPP loans, was 1.80%, 2.10% and 0.50% at December 31, 2020, September 30, 2020 and December 31, 2019, respectively.

    Income Tax

    Income tax expense for the three months ended December 31, 2020 totaled $4.7 million, a decrease of $1.5 million, or 24.1%, compared to the three months ended September 30, 2020. The Company’s effective tax rate was approximately 17.1% and 21.3% for the three months ended December 31, 2020 and the three months ended September 30, 2020, respectively. The change in the effective tax rate from the three months ended September 30, 2020 was primarily due to the reversal of acquired deferred tax liabilities resulting in a tax benefit of $1.2 million offset by tax expense of $550 thousand for setting up an uncertain tax position liability for state nexus tax exposure for the three months ended December 31, 2020.

    Dividend Information

    On January 26, 2021, Veritex's Board of Directors declared a quarterly cash dividend of $0.17 per share on its outstanding shares of common stock. The dividend will be paid on or after February 18, 2021 to stockholders of record as of the close of business on February 4, 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, January 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/pkxdjtjuzz and will receive a unique PIN number, which can be used when dialing in for the call. This will allow attendees to enter 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, www.veritexbank.com. An audio replay will be available one hour after the conclusion of the call at (855) 859-2056, Conference #4893521. This replay, as well as the webcast, will be available until February 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 Veritex’s 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, 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,” “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, 2019 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 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 SUBSIDIARY
    Financial Highlights
    (Unaudited)

     For the Quarter Ended For the Year Ended
     Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Dec 31, 2020 Dec 31, 2019
      
     (Dollars and shares in thousands)
    Per Share Data (Common Stock):             
    Basic EPS$0.46  $0.46  $0.48  $0.08  $0.56  $1.48  $1.71 
    Diluted EPS0.46  0.46  0.48  0.08  0.56  1.48  1.68 
    Book value per common share24.39  23.87  23.45  23.19  23.32  24.39  23.32 
    Tangible book value per common share115.70  15.19  14.71  14.39  14.73  15.70  14.73 
                  
    Common Stock Data:             
    Shares outstanding at period end49,340  49,650  49,633  49,557  51,064  49,340  51,064 
    Weighted average basic shares outstanding for the period49,571  49.647  49.597  50.725  51,472  49,884  53,154 
    Weighted average diluted shares outstanding for the period49,837  49,775  49,727  51,056  52,263  50,036  53,978 
                  
    Summary of Credit Ratios:             
    ACL to total LHI, excluding mortgage warehouse and PPP loans1.80% 2.10% 2.01% 1.73% 0.50% 1.80% 0.50%
    Nonperforming assets to total assets0.99  1.11  0.62  0.60  0.50  0.99  0.50 
    Net charge-offs to average loans outstanding0.28  0.04  0.03  —  —  0.36  0.19 
                  
    Summary Performance Ratios:             
    Return on average assets21.04% 1.06% 1.11% 0.20% 1.43% 0.87% 1.14%
    Return on average equity27.58  7.74  8.36  1.41  9.63  6.34  7.57 
    Return on average tangible common equity1, 212.84  13.27  14.49  3.27  16.22  11.16  13.02 
    Efficiency ratio62.52  48.12  46.02  47.61  47.12  50.90  56.41 
                  
    Selected Performance Metrics - Operating:             
    Diluted operating EPS1$0.60  $0.46  $0.43  $0.08  $0.58  $1.56  $2.29 
    Pre-tax, pre-provision operating return on average assets1, 21.75% 1.82% 2.11% 1.94% 2.07% 1.91% 2.24%
    Operating return on average assets1, 21.35  1.06  0.98  0.20  1.49  0.91  1.56 
    Operating return on average tangible common equity1, 216.44  13.27  12.90  3.27  16.87  11.72  17.39 
    Operating efficiency ratio149.49  48.11  45.74  47.61  45.67  47.69  43.80 
                  
    Veritex Holdings, Inc. Capital Ratios:             
    Tier 1 capital to average assets (leverage)9.43  9.54  9.16  9.49  10.17  9.43  10.17 
    Common equity tier 1 capital9.30  9.67  9.66  9.53  10.60  9.30  10.60 
    Tier 1 capital to risk-weighted assets9.66  10.05  10.05  9.92  11.02  9.66  11.02 
    Total capital to risk-weighted assets13.56  12.70  12.71  12.48  13.10  13.56  13.10 
    Tangible common equity to tangible assets19.23  9.12  8.96  8.81  10.01  9.23  10.01 
                         

    1Refer to "Reconciliation of Non-GAAP Financial Measures" after the financial highlights for a reconciliation of this non-GAAP financial measure to its most directly comparable GAAP measure.
    2Annualized ratio for quarterly metrics.

    VERITEX HOLDINGS, INC. AND SUBSIDIARY
    Financial Highlights
    (in thousands)

     Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019
     (unaudited) (unaudited) (unaudited) (unaudited)  
    ASSETS         
    Cash and cash equivalents$230,825  $128,767  $160,306  $430,842  $251,550 
    Debt securities1,055,201  1,091,440  1,112,061  1,117,804  997,330 
    Other investments87,192  98,023  104,213  112,775  84,063 
              
    Loans held for sale21,414  13,928  28,041  15,048  14,080 
    PPP loans, at fair value358,042  405,465  398,949  —  — 
    Loans held for investment, mortgage warehouse ("MW")577,594  544,845  441,992  371,161  183,628 
    Loans held for investment, excluding MW and PPP5,847,862  5,789,293  5,726,873  5,853,735  5,737,577 
    Total loans6,804,912  6,753,531  6,595,855  6,239,944  5,935,285 
    Allowance for credit losses(105,084) (121,591) (115,365) (100,983) (29,834)
    Bank-owned life insurance82,855  82,366  81,876  81,395  80,915 
    Bank premises, furniture and equipment, net115,063  115,794  115,560  116,056  118,536 
    Other real estate owned2,337  5,796  7,716  7,720  5,995 
    Intangible assets, net61,733  64,716  66,705  69,444  72,263 
    Goodwill370,840  370,840  370,840  370,840  370,840 
    Other assets114,997  112,693  88,091  85,787  67,994 
    Total assets$8,820,871  $8,702,375  $8,587,858  $8,531,624  $7,954,937 
    LIABILITIES AND STOCKHOLDERS’ EQUITY         
    Deposits:         
    Noninterest-bearing deposits$2,097,099  $1,920,715  $1,907,697  $1,549,260  $1,556,500 
    Interest-bearing transaction and savings deposits2,958,456  2,821,945  2,714,149  2,536,865  2,654,972 
    Certificates and other time deposits1,457,291  1,479,896  1,503,701  1,713,820  1,682,878 
    Total deposits6,512,846  6,222,556  6,125,547  5,799,945  5,894,350 
    Accounts payable and other liabilities59,263  66,096  64,625  56,339  37,427 
    Accrued interest payable2,665  3,444  4,088  5,407  6,569 
    Advances from Federal Home Loan Bank777,718  1,082,756  1,087,794  1,377,832  677,870 
    Subordinated debentures and subordinated notes262,778  140,158  140,283  140,406  145,571 
    Securities sold under agreements to repurchase2,225  2,028  1,772  2,426  2,353 
    Total liabilities7,617,495  7,517,038  7,424,109  7,382,355  6,764,140 
    Commitments and contingencies         
    Stockholders’ equity:         
    Common stock555  555  555  554  549 
    Additional paid-in capital1,126,437  1,124,148  1,122,063  1,119,757  1,117,879 
    Retained earnings172,232  157,639  143,277  127,812  147,911 
    Accumulated other comprehensive income56,225  47,155  42,014  45,306  19,061 
    Treasury stock(152,073) (144,160) (144,160) (144,160) (94,603)
    Total stockholders’ equity1,203,376  1,185,337  1,163,749  1,149,269  1,190,797 
    Total liabilities and stockholders’ equity$8,820,871  $8,702,375  $8,587,858  $8,531,624  $7,954,937 
     

    VERITEX HOLDINGS, INC. AND SUBSIDIARY
    Financial Highlights
    (in thousands, except per share data)

     For the Quarter Ended For the Year Ended
     Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Dec 31, 2020 Dec 31, 2019
    Interest income:             
    Loans, including fees$69,597  $68,685  $70,440  $77,861  $82,469  $286,583  $340,813 
    Investment securities7,652  7,852  7,825  7,397  7,168  30,726  29,484 
    Deposits in financial institutions and Fed Funds sold99  65  186  871  1,285  1,221  5,540 
    Other investments752  827  891  850  820  3,320  2,949 
    Total interest income78,100  77,429  79,342  86,979  91,742  321,850  378,786 
    Interest expense:             
    Transaction and savings deposits2,105  2,105  2,471  6,552  8,203  13,233  40,355 
    Certificates and other time deposits3,919  5,004  6,515  8,240  9,455  23,678  38,675 
    Advances from FHLB2,222  2,707  2,801  2,879  2,661  10,609  9,984 
    Subordinated debentures and subordinated notes3,088  1,743  1,798  1,903  1,559  8,532  4,675 
    Total interest expense11,334  11,559  13,585  19,574  21,878  56,052  93,689 
    Net interest income66,766  65,870  65,757  67,405  69,864  265,798  285,097 
    Provision for credit losses—  8,692  16,172  31,776  3,493  56,640  21,514 
    Provision for unfunded commitments902  1,447  2,799  3,881  —  9,029  — 
    Net interest income after provisions65,864  55,731  46,786  31,748  66,371  200,129  263,583 
    Noninterest income:             
    Service charges and fees on deposit accounts3,971  3,130  2,960  3,642  3,728  13,703  14,334 
    Loan fees684  1,787  1,240  845  1,921  4,556  7,782 
    (Loss) gain on sales of investment securities(256) (8) 2,879  —  (438) 2,615  (1,852)
    Gain on sales of mortgage loans held for sale317  472  308  142  81  1,239  475 
    Government guaranteed loan income, net448  2,257  11,006  439  560  14,150  4,709 
    Rental income579  502  547  551  371  2,179  2,172 
    Other3,269  1,655  2,350  1,628  909  8,902  2,460 
    Total noninterest income9,012  9,795  21,290  7,247  7,132  47,344  30,080 
    Noninterest expense:             
    Salaries and employee benefits20,011  20,553  20,019  18,870  18,917  79,453  72,791 
    Occupancy and equipment4,116  3,980  3,994  4,273  4,198  16,363  16,385 
    Professional and regulatory fees3,578  3,159  2,796  2,196  2,615  11,729  10,201 
    Data processing and software expense2,238  2,452  2,434  2,089  1,880  9,213  8,365 
    Marketing945  1,062  561  1,083  971  3,651  3,259 
    Amortization of intangibles2,558  2,840  2,696  2,696  2,696  10,790  10,887 
    Telephone and communications340  345  308  319  466  1,312  1,847 
    Merger and acquisition expense—  —  —  —  918  —  38,960 
    COVID expenses—  132  1,245  —  —  1,377  — 
    Debt extinguishment costs9,746  —  1,561  —  —  11,307  — 
    Other3,841  1,885  4,447  4,019  3,623  14,192  13,712 
    Total noninterest expense47,373  36,408  40,061  35,545  36,284  159,387  177,803 
    Income before income tax expense27,503  29,118  28,015  3,450  37,219  88,086  115,860 
    Income tax (benefit) expense4,702  6,198  3,987  (684) 8,168  14,203  25,121 
    Net income$22,801  $22,920  $24,028  $4,134  $29,051  $73,883  $90,739 
                  
    Basic EPS$0.46  $0.46  $0.48  $0.08  $0.56  $1.48  $1.71 
    Diluted EPS$0.46  $0.46  $0.48  $0.08  $0.56  $1.48  $1.68 
    Weighted average basic shares outstanding49,571  49,647  49,597  50,725  51,472  49,884  53,154 
    Weighted average diluted shares outstanding49,837  49,775  49,727  51,056  52,263  50,036  53,978 
     

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

     For the Quarter Ended
     December 31, 2020 September 30, 2020 December 31, 2019
     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
      
     (Dollars in thousands)
    Assets                 
    Interest-earning assets:                 
    Loans1$5,798,692  $65,259  4.48% $5,753,859  $64,958  4.49% $5,692,773  $80,779  5.63%
    Loans held for investment, mortgage warehouse446,027  3,355  2.99  358,248  2,705  3.00  191,132  1,690  3.51 
    PPP loans390,509  983  1.00  407,112  1,022  1.00  —  —  — 
    Debt securities1,076,031  7,652  2.83  1,101,469  7,852  2.84  1,004,342  7,168  2.83 
    Interest-earning deposits in other banks258,687  99  0.15  175,201  65  0.15  312,530  1,285  1.63 
    Equity securities and other investments95,706  752  3.13  103,948  827  3.17  71,791  820  4.53 
    Total interest-earning assets8,065,652  78,100  3.85  7,899,837  77,429  3.90  7,272,568  91,742  5.00 
    Allowance for loan losses(121,162)     (116,859)     (27,564)    
    Noninterest-earning assets805,651      802,948      798,501     
    Total assets$8,750,141      $8,585,926      $8,043,505     
                      
    Liabilities and Stockholders’ Equity                 
    Interest-bearing liabilities:                 
    Interest-bearing demand and savings deposits$2,862,084  2,105  0.29% $2,735,170  $2,105  0.31% $2,621,163  8,203  1.24%
    Certificates and other time deposits1,467,250  3,919  1.06  1,459,046  5,004  1.36  1,789,544  9,455  2.10 
    Advances from FHLB885,014  2,222  1.00  1,067,771  2,707  1.01  726,352  2,661  1.45 
    Subordinated debentures and subordinated notes259,581  3,088  4.73  142,432  1,743  4.87  118,193  1,559  5.23 
    Total interest-bearing liabilities5,473,929  11,334  0.82  5,404,419  11,559  0.85  5,255,252  21,878  1.65 
                      
    Noninterest-bearing liabilities:                 
    Noninterest-bearing deposits2,011,995      1,937,921      1,540,406     
    Other liabilities67,943      65,704      50,656     
    Total liabilities7,553,867      7,408,044      6,846,314     
    Stockholders’ equity1,196,274      1,177,882      1,197,191     
    Total liabilities and stockholders’ equity$8,750,141      $8,585,926      $8,043,505     
                      
    Net interest rate spread2    3.03%     3.05%     3.35%
    Net interest income and margin3  $66,766  3.29%   $65,870  3.32%   $69,864  3.81%
     

    1 Includes average outstanding balances of loans held for sale of $11,938, $15,404 and $8,525 for the three months ended December 31, 2020, September 30, 2020 and December 31, 2019, respectively, and average balances of loans held for investment, excluding mortgage warehouse 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 SUBSIDIARY
    Financial Highlights
    (Unaudited)

     For the Year Ended December 31,
     2020 2019
     Average
    Outstanding
    Balance    		 Interest
    Earned/
    Interest
    Paid    		 Average
    Yield/
    Rate    		 Average
    Outstanding
    Balance    		 Interest
    Earned/
    Interest
    Paid    		 Average
    Yield/
    Rate
      
     (Dollars in thousands)
    Assets           
    Interest-earning assets:           
    Loans1$5,770,228  $273,999  4.97% $5,722,039  $334,025  5.93%
    Loans held for investment, mortgage warehouse318,657  9,672  3.04  162,325  6,788  4.28 
    PPP loans290,851  2,912  1.00  —  —  — 
    Debt securities1,083,633  30,726  2.84  977,621  29,484  3.02 
    Interest-earning deposits in other banks276,970  1,221  0.44  259,866  5,540  2.13 
    Equity securities and other investments100,556  3,320  3.30  60,308  2,949  4.89 
    Total interest-earning assets7,840,895  321,850  4.10  7,182,159  378,786  5.27 
    Allowance for loan losses(98,527)     (23,533)    
    Noninterest-earning assets782,907      799,257     
    Total assets$8,525,275      $7,957,883     
                
    Liabilities and Stockholders’ Equity           
    Interest-bearing liabilities:           
    Interest-bearing demand and savings deposits$2,726,462  13,233  0.49  $2,648,113  40,355  1.52 
    Certificates and other time deposits1,550,995  23,678  1.53  1,997,090  38,675  1.94 
    Advances from FHLB1,024,142  10,609  1.04  502,681  9,984  1.99 
    Subordinated debentures and subordinated notes172,594  8,532  4.94  86,110  4,675  5.43 
    Total interest-bearing liabilities5,474,193  56,052  1.02  5,233,994  93,689  1.79 
                
    Noninterest-bearing liabilities:           
    Noninterest-bearing deposits1,825,806      1,480,207     
    Other liabilities60,303      44,809     
    Total liabilities7,360,302      6,759,010     
    Stockholders’ equity1,164,973      1,198,873     
    Total liabilities and stockholders’ equity$8,525,275      $7,957,883     
                
    Net interest rate spread2    3.08%     3.48%
    Net interest income and margin3  $265,798  3.39%   $285,097  3.97%
     

    1Includes average outstanding balances of loans held for sale of $15,315 and $8,762 for the twelve months ended December 31, 2020 and 2019, respectively, and average balances of loans held for investment, excluding mortgage warehouse 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 SUBSIDIARY
    Financial Highlights
    (Unaudited)

    Yield Trend

     For the Quarter Ended
     Dec 31,
    2020    		 Sep 30,
    2020    		 Jun 30,
    2020    		 Mar 31,
    2020    		 Dec 31,
    2019
    Average yield on interest-earning assets:         
    Total loans14.48% 4.49% 4.68% 5.32% 5.63%
    Loans held for investment, mortgage warehouse2.99  3.00  3.01  3.28  3.51 
    PPP loans1.00  1.00  1.00  —  — 
    Debt securities2.83  2.84  2.82  2.86  2.83 
    Interest-bearing deposits in other banks0.15  0.15  0.20  1.14  1.63 
    Equity securities and other investments3.13  3.17  3.24  3.72  4.53 
    Total interest-earning assets3.85% 3.90% 3.99% 4.74% 5.00%
              
    Average rate on interest-bearing liabilities:         
    Interest-bearing demand and savings deposits0.29% 0.31% 0.37% 1.00% 1.24%
    Certificates and other time deposits1.06  1.36  1.61  2.01  2.10 
    Advances from FHLB1.00  1.01  0.93  1.23  1.45 
    Subordinated debentures and subordinated notes4.73  4.87  5.07  5.27  5.23 
    Total interest-bearing liabilities0.82% 0.85% 0.97% 1.47% 1.65%
              
    Net interest rate spread23.03% 3.05% 3.02% 3.27% 3.35%
    Net interest margin33.29% 3.32% 3.31% 3.67% 3.81%
                   

    1 Includes average outstanding balances of loans held for sale of $11,938, $15,404, $22,958, $10,995 and $8,525 for the three months ended December 31, 2020, September 30, 2020, June 30, 2020, March 31, 2020 and December 31, 2019, respectively, and average balances of loans held for investment, excluding mortgage warehouse 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 Quarter Ended
     Dec 31,
    2020    		 Sep 30,
    2020    		 Jun 30,
    2020    		 Mar 31,
    2020    		 Dec 31,
    2019
    Average cost of interest-bearing deposits0.55% 0.67% 0.84% 1.39% 1.59%
    Average costs of total deposits, including noninterest-bearing0.38  0.46  0.59  1.02  1.18 
                   

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

    LHI and Deposit Portfolio Composition

     Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019
      
     (Dollars in thousands)
    LHI1                   
    Commercial$1,559,546  26.7% $1,623,249  28.0% $1,555,300  27.2% $1,777,603  30.4% $1,712,838  29.9%
    Real Estate:                   
    Owner occupied commercial717,472  12.3  734,939  12.7  769,952  13.4  723,839  12.4  706,782  12.3 
    Non-owner occupied commercial1,904,132  32.5  1,817,013  31.4  1,847,480  32.3  1,828,386  31.2  1,784,201  31.1 
    Construction and land693,030  11.8  623,496  10.8  599,510  10.5  566,470  9.7  629,374  11.0 
    Farmland13,844  0.2  14,413  0.2  14,723  0.3  14,930  0.3  16,939  0.3 
    1-4 family residential524,344  9.0  548,953  9.5  528,688  9.2  536,892  9.2  549,811  9.6 
    Multi-family residential424,962  7.3  412,412  7.1  394,829  6.8  388,374  6.7  320,041  5.6 
    Consumer13,000  0.2  14,127  0.2  14,932  0.3  15,771  0.3  17,457  0.3 
    Total LHI$5,850,330  100% $5,788,602  100% $5,725,414  100% $5,852,265  100% $5,737,443  100%
                        
    Mortgage warehouse577,594    544,845    441,992    371,161    183,628   
    PPP loans358,042    405,465    398,949    —    —   
                        
    Total LHI1$6,785,966    $6,738,912    $6,566,355    $6,223,426    $5,921,071   
                        
    Deposits                   
    Noninterest-bearing$2,097,099  32.2% $1,920,715  30.9% $1,907,697  31.1% $1,549,260  26.7% $1,556,500  26.4%
    Interest-bearing transaction453,110  7.0  450,739  7.2  343,640  5.6  306,641  5.3  388,877  6.6 
    Money market2,398,526  36.8  2,267,191  36.4  2,272,520  37.1  2,143,874  37.0  2,180,017  37.0 
    Savings106,820  1.6  104,015  1.7  97,989  1.6  86,350  1.5  86,078  1.5 
    Certificates and other time deposits1,457,291  22.4  1,479,896  23.7  1,503,701  24.5  1,713,820  29.6  1,682,878  28.6 
    Total deposits$6,512,846  100% $6,222,556  100% $6,125,547  100% $5,799,945  100% $5,894,350  100%
                        
    Loan to Deposit Ratio104.2%   108.3%   107.2%   107.3%   100.5%  
    Loan to Deposit Ratio, excluding mortgage warehouse and PPP loans89.8%   93.0%   93.5%   100.9%   97.3%  
                             

    1 Total LHI does not include deferred fees of $2.5 million and $691 thousand at December 31, 2020 and September 30, 2020, respectively, deferred costs of $1.5 million, $1.5 million and $134 thousand at June 30, 2020, March 31, 2020 and December 31, 2019, respectively.

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

    Asset Quality

     For the Quarter Ended For the Year Ended
     Dec 31,
    2020    		 Sep 30,
    2020    		 Jun 30,
    2020    		 Mar 31,
    2020    		 Dec 31,
    2019    		 Dec 31,
    2020    		 Dec 31,
    2019
      
     (Dollars in thousands)
    Nonperforming Assets ("NPAs"):             
    Nonaccrual loans$81,096  $88,877  $43,594  $38,836  $29,799  $81,096  $29,799 
    Accruing loans 90 or more days past due14,204  1,689  2,021  4,764  3,660  4,204  3,660 
    Total nonperforming loans held for investment ("NPLs")85,300  90,566  45,615  43,600  33,459  85,300  33,459 
    Other real estate owned2,337  5,796  7,716  7,720  5,995  2,337  5,995 
    Total NPAs$87,637  $96,362  $53,331  $51,320  $39,454  $87,637  $39,454 
                  
    Charge-offs:             
    Residential$(18) $—  $—  $—  $—  $(18) $(157)
    Owner occupied commercial real estate—  (2,421) —  —  —  (2,421) — 
    Nonowner occupied commercial real estate(2,865) —  —  —  —  (2,865) — 
    Commercial(13,699) (68) (1,740) —  —  (15,507) (10,898)
    Consumer(26) (11) (57) (68) (48) (162) (265)
    Total charge-offs(16,608) (2,500) (1,797) (68) (48) (20,973) (11,320)
                  
    Recoveries:             
    Residential49  7  —  1  5  57  67 
    Commercial52  14  7  29  135  102  226 
    Consumer—  13  —  274  6  287  92 
    Total recoveries101  34  7  304  146  446  385 
                  
    Net charge-offs$(16,507) $(2,466) $(1,790) $236  $98  $(20,527) $(10,935)
                  
    CECL transition adjustment$—  $—  $—  $39,137  $—  $39,137  $— 
                  
    Allowance for credit losses ("ACL") at end of period$105,084  $121,591  $115,365  $100,983  $29,834  $105,084  $29,834 
                  
    Asset Quality Ratios:             
    NPAs to total assets0.99% 1.11% 0.62% 0.60% 0.50% 0.99% 0.50%
    NPLs to total LHI, excluding mortgage warehouse and PPP loans1.46  1.56  0.80  0.75  0.57  1.46  0.57 
    ACL to total LHI, excluding mortgage warehouse and PPP loans1.80  2.10  2.01  1.73  0.50  1.80  0.50 
    Net charge-offs to average loans outstanding0.28  0.04  0.03  —  —  0.36  0.19 
                         

    1 Accruing loans greater than 90 days past due exclude purchase credit deteriorated loans greater than 90 days past due that are accounted for on a pooled basis.

    VERITEX HOLDINGS, INC. AND SUBSIDIARY
    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 per common share 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
     Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019
      
     (Dollars in thousands, except per share data)
    Tangible Common Equity         
    Total stockholders' equity$1,203,376   $1,185,337   $1,163,749   $1,149,269   $1,190,797  
    Adjustments:         
    Goodwill(370,840) (370,840) (370,840) (370,840) (370,840)
    Core deposit intangibles(57,758) (60,209) (62,661) (65,112) (67,563)
    Tangible common equity$774,778   $754,288   $730,248   $713,317   $752,394  
    Common shares outstanding49,340   49,650   49,633   49,557   51,064  
              
    Book value per common share$24.39   $23.87   $23.45   $23.19   $23.32  
    Tangible book value per common share$15.70   $15.19   $14.71   $14.39   $14.73  
                        

    VERITEX HOLDINGS, INC. AND SUBSIDIARY
    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
     Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019
      
     (Dollars in thousands)
    Tangible Common Equity         
    Total stockholders' equity$1,203,376  $1,185,337  $1,163,749  $1,149,269  $1,190,797 
    Adjustments:         
    Goodwill(370,840) (370,840) (370,840) (370,840) (370,840)
    Core deposit intangibles(57,758) (60,209) (62,661) (65,112) (67,563)
    Tangible common equity$774,778  $754,288  $730,248  $713,317  $752,394 
    Tangible Assets         
    Total assets$8,820,871  $8,702,375  $8,587,858  $8,531,624  $7,954,937 
    Adjustments:         
    Goodwill(370,840) (370,840) (370,840) (370,840) (370,840)
    Core deposit intangibles(57,758) (60,209) (62,661) (65,112) (67,563)
    Tangible Assets$8,392,273  $8,271,326  $8,154,357  $8,095,672  $7,516,534 
    Tangible Common Equity to Tangible Assets9.23% 9.12% 8.96% 8.81% 10.01%
     

    VERITEX HOLDINGS, INC. AND SUBSIDIARY
    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 Year Ended
     Dec 31,
    2020    		 Sep 30,
    2020    		 Jun 30,
    2020    		 Mar 31,
    2020    		 Dec 31,
    2019    		 Dec 31,
    2020    		 Dec 31,
    2019
      
     (Dollars in thousands)
    Net income available for common stockholders adjusted for amortization of core deposit intangibles             
    Net income$22,801   $22,920   $24,028   $4,134   $29,051   $73,883   $90,739  
    Adjustments:             
    Plus: Amortization of core deposit intangibles2,451   2,451   2,451   2,451   2,451   9,804   9,830  
    Less: Tax benefit at the statutory rate515   515   515   515   515   2,060   2,065  
    Net income available for common stockholders adjusted for amortization of core deposit intangibles$24,737   $24,856   $25,964   $6,070   $30,987   $81,627   $98,504  
                  
    Average Tangible Common Equity             
    Total average stockholders' equity$1,196,274   $1,177,882   $1,155,798   $1,183,116   $1,197,191   $1,164,973   $1,198,873  
    Adjustments:             
    Average goodwill(370,840) (370,840) (370,840) (370,840) (370,463) (370,840) (369,441)
    Average core deposit intangibles(59,010) (61,666) (64,151) (66,439) (68,913) (62,803) (72,692)
    Average tangible common equity$766,424   $745,376   $720,807   $745,837   $757,815   $731,330   $756,740  
    Return on Average Tangible Common Equity (Annualized)12.84 % 13.27 % 14.49 % 3.27 % 16.22 % 11.16 % 13.02 %
     

    VERITEX HOLDINGS, INC. AND SUBSIDIARY
    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, 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 loss (gain) on sale of securities, net, plus loss on sale of disposed branch assets, plus debt extinguishment costs, plus merger and acquisition expenses, less tax impact of adjustments, plus other merger and acquisition tax items, plus re-measurement of deferred tax assets as a result of the reduction in the corporate income tax rate under the Tax Cuts and Jobs Act. 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 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 non interest expense plus adjustments to operating non interest expense divided by non interest income plus adjustments to operating non interest 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 Year Ended
     Dec 31,
    2020    		 Sep 30,
    2020    		 Jun 30,
    2020    		 Mar 31,
    2020    		 Dec 31,
    2019    		 Dec 31,
    2020    		 Dec 31,
    2019
      
     (Dollars in thousands)
    Operating Earnings             
    Net income$22,801  $22,920  $24,028  $4,134  $29,051  $73,883  $90,739 
    Plus: Loss (gain) on sale of securities available for sale, net256  8  (2,879) —  438  (2,615) 1,852 
    Plus: Loss on sale of disposed branch assets1—  —  —  —  —  —  359 
    Plus: Debt extinguishment costs29,746  —  1,561  —  —  11,307  — 
    Plus: Merger and acquisition expenses—  —  —  —  918  —  38,601 
    Operating pre-tax income32,803  22,928  22,710  4,134  30,407  82,575  131,551 
    Less: Tax impact of adjustments2,100  —  (277) —  (23) 1,823  8,262 
    Plus: Other M&A tax items3—  —  —  —  829  —  1,512 
    Plus: Nonrecurring tax adjustments4(973) —  (1,799) —  (965) (2,772) (965)
    Operating earnings$29,730  $22,928  $21,188  $4,134  $30,294  $77,980  $123,836 
                  
    Weighted average diluted shares outstanding49,837  49,775  49,727  51,056  52,263  50,036  53,978 
    Diluted EPS$0.46  $0.46  $0.48  $0.08  $0.56  $1.49  $1.68 
    Diluted operating EPS$0.60  $0.46  $0.43  $0.08  $0.58  $1.56  $2.29 
                                

    1 Loss on sale of disposed branch assets for the year ended December 31, 2019 is included in merger and acquisition expense in the condensed consolidated statements of income.
    2 Debt extinguishment costs relate to prepayment penalties paid in connection with the early payoff of FHLB structured advances.
    3 Other M&A tax items of $829 thousand recorded during the three months ended December 31, 2019 relate to permanent tax expense recognized by the Company as a result of deduction limitations on compensation paid to covered employees in excess of the 162(m) limitation directly due to change-in-control payments made to covered employees in connection with the Green acquisition.
    4 A nonrecurring tax adjustment of $973 thousand recorded in the fourth quarter of 2020 was primarily due the reversal of acquired deferred tax liabilities resulting in a tax benefit of $1.2 million offset by tax expense of $281 thousand for the setup of an uncertain tax position liability relating to state tax exposure for tax years prior to the year ending December 31, 2020. A nonrecurring tax adjustment of $1,799 was recorded in the second quarter of 2020 as a result of the Company amending a prior year Green tax return to carry back a net operating loss ("NOL") incurred by Green on January 1, 2019. The Company was allowed to carry back this NOL as result of a provision in the CARES Act which permits NOLs generated in tax years 2018, 2019 or 2020 to be carried back five years. A nonrecurring tax adjustment of $965 thousand was recorded during the fourth quarter of 2019 primarily due to the Company recording a net tax benefit of $1.6 million as a result of the Company settling an audit with the IRS. The Company released an uncertain tax position reserve that was assumed in the Green acquisition resulting in a $2.2 million tax benefit, offset by tax expense totaling $598 thousand that were recorded due to the Tax Cuts and Jobs Act rate change on deferred tax assets resulting from the IRS audit settlement. The net IRS settlement was offset by various non-recurring tax expenses totaling $0.6 million.

     For the Quarter Ended For the Year Ended
     Dec 31,
    2020    		 Sep 30,
    2020    		 Jun 30,
    2020    		 Mar 31,
    2020    		 Dec 31,
    2019    		 Dec 31,
    2020    		 Dec 31,
    2019
      
     (Dollars in thousands)
    Pre-Tax, Pre-Provision Operating Earnings             
    Net Income$22,801  $22,920  $24,028  $4,134  $29,051  $73,883  $90,739 
    Plus: Provision for income taxes4,702  6,198  3,987  (684) 8,168  14,203  25,121 
    Pus: Provision for credit losses and unfunded commitments902  10,139  18,971  35,657  3,493  65,669  21,514 
    Plus: Loss (gain) on sale of securities, net256  8  (2,879) —  438  (2,615) 1,852 
    Plus: Loss on sale of disposed branch assets1—  —  —  —  —  —  359 
    Plus: Debt extinguishment costs9,746  —  1,561  —  —  11,307  — 
    Plus: Merger and acquisition expenses—  —  —  —  918  —  38,601 
    Net pre-tax, pre-provision operating earnings$38,407  $39,265  $45,668  $39,107  $42,068  $162,447  $178,186 
                  
    Total average assets$8,750,141  $8,585,926  $8,689,774  $8,125,782  $8,043,505  $8,525,275  $7,957,883 
    Pre-tax, pre-provision operating return on average assets21.75% 1.82% 2.11% 1.94% 2.07% 1.91% 2.24%
                  
    Average Total Assets$8,750,141  $8,585,926  $8,689,744  $8,125,782  $8,043,505  $8,525,275  $7,957,883 
    Return on average assets21.04% 1.06% 1.11% 0.20% 1.43% 0.87% 1.14%
    Operating return on average assets21.35  1.06  0.98  0.20  1.49  0.91  1.56 
                  
    Operating earnings adjusted for amortization of core deposit intangibles             
    Operating earnings$29,730  $22,928  $21,188  $4,134  $30,294  $77,980  $123,836 
    Adjustments:             
    Plus: Amortization of core deposit intangibles2,451  2,451  2,451  2,451  2,451  9,804  9,830 
    Less: Tax benefit at the statutory rate515  515  515  515  515  2,060  2,065 
    Operating earnings adjusted for amortization of core deposit intangibles$31,666  $24,864  $23,124  $6,070  $32,230  $85,724  $131,601 
                  
    Average Tangible Common Equity             
    Total average stockholders' equity$1,196,274  $1,177,882  $1,155,798  $1,183,116  $1,197,191  $1,164,973  $1,198,873 
    Adjustments:             
    Average goodwill(370,840) (370,840) (370,840) (370,840) (370,463) (370,840) (369,441)
    Average core deposit intangibles(59,010) (61,666) (64,151) (66,439) (68,913) (62,803) (72,692)
    Average tangible common equity$766,424  $745,376  $720,807  $745,837  $757,815  $731,330  $756,740 
    Operating return on average tangible common equity216.44% 13.27% 12.90% 3.27% 16.87% 11.72% 17.39%
                  
    Efficiency ratio62.52% 48.12% 46.02% 47.61% 47.12% 50.90% 56.41%
    Operating efficiency ratio49.49% 48.11% 45.74% 47.61% 45.67% 47.69% 43.80%
                         

    1 Loss on sale of disposed branch assets for the year ended December 31, 2019 is included in merger and acquisition expense in the condensed consolidated statements of income.
    2 Annualized ratio for quarterly metrics.


    Media Contact:
LaVonda Renfro
972-349-6200
lrenfro@veritexbank.com

Investor Relations:
Susan Caudle
972-349-6132
scaudle@veritexbank.com

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