• Veritex Holdings, Inc. Reports Second Quarter Operating Results

    ソース: Nasdaq GlobeNewswire / 25 7 2023 17:00:01   America/New_York

    DALLAS, July 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 June 30, 2023.

    “I am incredibly pleased with our second quarter and year to date results,” said C. Malcolm Holland, III. “We increased our deposits by $200 million with only 1% in brokered, grew capital by $32 million, expanded our CET1 ratio by 44 basis points and decreased our commercial real estate exposure. We continue to see positive results in all these areas as we progress through the start of the third quarter.”       

      Quarter to Date Year to Date
    Financial Highlights Q2 2023 Q1 2023 Q2 2023 Q2 2022
       
      (Dollars in thousands, except per share data)
    (unaudited)
    GAAP        
    Net income $33,730  $38,411  $72,141  $63,096 
    Diluted EPS  0.62   0.70   1.32   1.19 
    Book value per common share  27.48   27.54   27.48   26.50 
    Return on average assets2  1.10%  1.28%  1.18%  1.23%
    Efficiency ratio  49.94   48.42   49.17   51.76 
    Return on average equity2  8.96   10.55   9.74   9.07 
    Non-GAAP1        
    Operating earnings $34,673  $43,274  $77,947  $63,869 
    Diluted operating EPS  0.64   0.79   1.43   1.20 
    Tangible book value per common share  19.41   19.43   19.41   18.20 
    Pre-tax, pre-provision operating earnings  58,520   66,461   124,981   89,265 
    Pre-tax, pre-provision operating return on average assets2  1.90%  2.21%  2.05%  1.74%
    Pre-tax, pre-provision operating return on average loans2  2.43   2.84   2.63   2.34 
    Operating return on average assets2  1.13   1.44   1.28   1.24 
    Operating efficiency ratio  48.90   45.63   47.21   51.22 
    Return on average tangible common equity2  13.35   15.81   14.55   14.17 
    Operating return on average tangible common equity2  13.70   17.72   15.66   14.34 

    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 Second Quarter Results

    • Total deposits increased by $199.2 million, or 8.8% annualized;
    • Loan to deposit ratio has decreased 3% from March 31, 2023;
    • Uninsured and uncollateralized deposits decreased to 33.3% as of June 30, 2023 compared to 36.5% as of March 31, 2023;
    • Common Equity Tier 1 increased 44 basis points to 9.76% driven by a decrease in risk-weighted assets;
    • Acquisition, development, and construction (“ADC”) loans decreased 9.3% from March 31, 2023 and as a percentage of risk-based capital (“RBC”) decreased from 129.2% to 115.1%;
    • Total ADC/CRE loans decreased 0.2% from March 31, 2023 and as a percentage of RBC decreased from 333.7% to 327.2%;
    • ACL to total loans increased to 1.05%;
    • Non-performing assets (“NPAs”) to total assets increased to 0.55%, or 20 bps, from March 31, 2023;
    • Annualized net charge-offs to average loans outstanding were 48 bps for the second quarter of 2023 compared to 4 bps for the three months ended March 31, 2023; and
    • Declared quarterly cash dividend of $0.20 per share of outstanding common stock payable on August 25, 2023.

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

    Net Interest Income

    For the three months ended June 30, 2023, net interest income before provision for credit losses was $100.8 million and net interest margin was 3.51% compared to $103.4 million and 3.69%, respectively, for the three months ended March 31, 2023. The $2.6 million decrease in net interest income before provision for credit losses was primarily due to a $7.1 million increase in interest expense on certificates and other time deposits, a $5.2 million increase in advances from the Federal Home Loan Bank (“FHLB”), a $3.1 million increase in transaction and savings deposits driven by an increase in funding costs on deposits, and an $822 thousand decrease in interest income on debt securities. The decrease was partially offset by a $12.0 million increase in interest income on loans driven by an increase in loan yields and average balances and a $2.0 million increase in interest income on deposits in financial institutions and fed funds sold during the three months ended June 30, 2023. Net interest margin decreased 18 basis points compared to the three months ended March 31, 2023, primarily due to the increase in funding costs on deposits and FHLB borrowing costs during three months ended June 30, 2023, partially offset by an increase in loan yields and average balances.

    Compared to the three months ended June 30, 2022, net interest income before provision for credit losses for the three months ended June 30, 2023 increased by $16.4 million, or 19.4%. The increase was primarily due to a $81.5 million increase in interest income on loans driven by an increase in average balances and loan yields and a $6.8 million increase in deposits in financial institutions and fed funds sold, partially offset by a $28.9 million increase in transaction and savings deposits, a $26.6 million increase in certificates and other time deposits and a $16.4 million increase in advances from FHLB driven by an increase in funding costs. Net interest margin increased 9 basis points to 3.51% for the three months ended June 30, 2023 from 3.42% for the three months ended June 30, 2022. The increase was primarily due to the increase in average balances and loan yields during the three months ended June 30, 2023, partially offset by an increase in funding costs.

    Noninterest Income

    Noninterest income for the three months ended June 30, 2023 was $13.7 million, an increase of $161 thousand, or 1.2%, compared to the three months ended March 31, 2023. The increase was primarily due to a $2.0 million increase in equity method investment income and a loss on sales of investment securities in the first quarter of 2023 of $5.3 million. The increase was partially offset by a $5.5 million decrease in government guaranteed loan income primarily driven by a decrease in USDA loans sold.

    Compared to the three months ended June 30, 2022, noninterest income for the three months ended June 30, 2023 increased by $3.3 million, or 31.9%. The increase was primarily due to a $3.4 million increase in government guaranteed loan income, primarily driven by an increase in USDA loans sold through NAC and a $1.6 million increase in other noninterest income. The increase was partially offset by a $865 thousand decrease in loan fees driven by a $562 thousand decrease in syndication fees, a $481 thousand decrease in equity method investment income, and a decrease of $360 thousand in customer swap income.

    Noninterest Expense

    Noninterest expense was $57.2 million for the three months ended June 30, 2023, compared to $56.6 million for the three months ended March 31, 2023, an increase of $582 thousand, or 1.0%. The increase was primarily due to a $2.5 million increase in professional and regulatory fees driven by FDIC assessment fees that increased when the Company crossed $10 billion in total assets, an increase of $848 thousand in marketing expense, and a $777 thousand increase in other noninterest expense. The increase is partially offset by a $3.2 million decrease in salaries and employee benefits.

    Compared to the three months ended June 30, 2022, noninterest expense for the three months ended June 30, 2023 increased by $9.0 million, or 18.8%. The increase was primarily driven by a $4.0 million increase in professional and regulatory fees driven by FDIC assessment fees that increased when the Company crossed $10 billion in total assets, a $1.7 million increase in salaries and employee benefits, a $1.7 million increase in other noninterest expenses, a $1.3 million increase in data processing and software expenses and a $331 thousand increase in occupancy and equipment expenses.

    Financial Condition

    Total LHI was $9.71 billion at June 30, 2023, an increase of $16.0 million, or 0.7% annualized, compared to March 31, 2023. 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 $9.23 billion at June 30, 2023, an increase of $199.2 million, or 8.8% annualized, compared to March 31, 2023. The increase was primarily the result of an increase of $98.2 million in interest-bearing deposits, an increase of $32.1 million in certificates and other time deposits, an increase of $21.7 million in non-interest bearing deposits, and an increase of $47.1 million in correspondent money market account balances. As of June 30, 2023, uninsured deposits were 33.26% of total deposits compared to 38.92% as of March 31, 2023.

    Credit Quality

    Nonperforming assets totaled $68.3 million, or 0.55% of total assets, at June 30, 2023, compared to $44.5 million, or 0.35% of total assets, at March 31, 2023. The Company had net charge-offs of $11.5 million for the quarter.

    The Company recorded a provision for credit losses of $15.0 million for the three months ended June 30, 2023, a $9.4 million provision for credit losses for the three months ended March 31, 2023 and a $9.0 million provision for credit losses for the three months ended June 30, 2022. The recorded provision for credit losses for the three months ended June 30, 2023, compared to the three months ended March 31, 2023, was primarily attributable to an increase in general reserves as a result of changes in economic factors and loan growth. The Company recorded a benefit for unfunded commitments of $1.1 million for the three months ended June 30, 2023, a $1.5 million provision for unfunded commitments for the three months ended March 31, 2023, and no provision for unfunded commitments for the three months ended June 30, 2022. The recorded benefit for unfunded commitments for the three months ended June 30, 2023, compared to the three months ended March 31, 2023, was attributable to a decrease in unfunded commitment balances partially offset by changes in economic factors. Allowance for credit loss (“ACL”) as a percentage of LHI was 1.05%, 1.02% and 0.94% at June 30, 2023, March 31, 2023 and June 30, 2022, respectively.

    Dividend Information

    After the close of the market on Tuesday, July 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 August 25, 2023 to stockholders of record as of the close of business on August 10, 2023.

    Non-GAAP Financial Measures

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

    Conference Call

    The Company will host an investor conference call and webcast to review the results on Wednesday, July 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/xu9w726g 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/BI4c4f56cfcc834a4f9ccbaba9c815983a. 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; a continuation of recent turmoil in the banking industry, responsive measures to mitigate and manage it and related supervisory and regulatory actions and costs and Veritex’s future financial performance, business and growth strategy, projected plans and objectives, as well as other projections based on macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact broader economic and industry trends, and any such variations may be material. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “seeks,” “targets,” “outlooks,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing words. We refer you to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Veritex’s Annual Report on Form 10-K for the year ended December 31, 2022 and any updates to those risk factors set forth in Veritex’s Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings with the Securities and Exchange Commission (“SEC”), which are available on the SEC’s website at www.sec.gov. If one or more events related to these or other risks or uncertainties materialize, or if Veritex’s underlying assumptions prove to be incorrect, actual results may differ materially from what Veritex anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made. Veritex does not undertake any obligation, and specifically declines any obligation, to supplement, update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by law. All forward-looking statements, expressed or implied, included in this earnings release are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that Veritex or persons acting on Veritex’s behalf may issue.


    VERITEX HOLDINGS, INC. AND SUBSIDIARIES
    Financial Highlights
    (Unaudited)
     
      For the Quarter Ended For the Six Months
    Ended
      Jun 30,
    2023
     Mar 31,
    2023
     Dec 31,
    2022
     Sep 30,
    2022
     Jun 30,
    2022
     Jun 30,
    2023
     Jun 30,
    2022
       
      (Dollars and shares in thousands, except per share data)
    Per Share Data (Common Stock):              
    Basic EPS $0.62  $0.71  $0.74  $0.80  $0.55  $1.33  $1.21 
    Diluted EPS  0.62   0.70   0.73   0.79   0.54   1.32   1.19 
    Book value per common share  27.48   27.54   26.83   26.15   26.50   27.48   26.50 
    Tangible book value per common share1  19.41   19.43   18.64   17.91   18.20   19.41   18.20 
    Dividends paid per common share outstanding2  0.20   0.20   0.20   0.20   0.20   0.40   0.40 
                   
    Common Stock Data:              
    Shares outstanding at period end  54,261   54,229   54,030   53,988   53,951   54,261   53,951 
    Weighted average basic shares outstanding for the period  54,247   54,149   54,011   53,979   53,949   54,199   52,331 
    Weighted average diluted shares outstanding for the period  54,486   54,606   54,780   54,633   54,646   54,546   53,121 
                   
    Summary of Credit Ratios:              
    ACL to total LHI  1.05%  1.02%  0.96%  0.94%  0.94%  1.05%  0.94%
    NPAs to total assets  0.55   0.35   0.36   0.26   0.40   0.55   0.40 
    NPAs, excluding nonaccrual purchase credit deteriorated (“PCD”) loans, to total assets3  0.44   0.25   0.25   0.26   0.40   0.44   0.40 
    Net charge-offs to average loans outstanding4  0.48   0.04   0.24   0.12   0.04   0.26   0.14 
                   
    Summary Performance Ratios:              
    Return on average assets4  1.10%  1.28%  1.35%  1.50%  1.11%  1.18%  1.23%
    Return on average equity4  8.96   10.55   11.03   11.82   8.21   9.74   9.07 
    Return on average tangible common equity1, 4  13.35   15.81   16.75   17.82   12.68   14.55   14.17 
    Efficiency ratio  49.94   48.42   47.63   44.71   50.76   49.17   51.76 
    Net interest margin  3.51   3.69   3.87   3.77   3.42   3.60   3.32 
                   
    Selected Performance Metrics - Operating:              
    Diluted operating EPS1 $0.64  $0.79  $0.74  $0.80  $0.55  $1.43  $1.20 
    Pre-tax, pre-provision operating return on average assets1, 4  1.90%  2.21%  2.15%  2.20%  1.76%  2.05%  1.74%
    Pre-tax, pre-provision operating return on average loans1, 4  2.43   2.84   2.78   2.88   2.35   2.63   2.34 
    Operating return on average assets1,4  1.13   1.44   1.36   1.51   1.12   1.28   1.24 
    Operating return on average tangible common equity1,4  13.70   17.72   16.95   17.94   12.77   15.66   14.34 
    Operating efficiency ratio1  48.90   45.63   47.11   44.37   50.45   47.21   51.22 
                   
    Veritex Holdings, Inc. Capital Ratios:              
    Average stockholders' equity to average total assets  12.23%  12.09%  12.20%  12.69%  13.51%  12.16%  13.54%
    Tangible common equity to tangible assets1  8.76   8.66   8.60   8.58   9.04   8.76   9.04 
    Tier 1 capital to average assets (leverage)  9.80   9.67   9.82   9.79   10.14   9.80   10.14 
    Common equity tier 1 capital  9.76   9.32   9.09   9.09   9.25   9.76   9.25 
    Tier 1 capital to risk-weighted assets  10.01   9.56   9.34   9.35   9.52   10.01   9.52 
    Total capital to risk-weighted assets  12.51   11.99   11.63   11.68   11.95   12.51   11.95 

    1Refer to the section titled “Reconciliation of Non-GAAP Financial Measures” after the financial highlights for a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures.
    2Dividend amount represents dividend paid per common share subsequent to each respective quarter end.
    3Nonaccrual PCD loans consist of PCD loans that transitioned upon adoption of ASC 326 Financial Instruments - Credit Losses and were accounted for on a pooled basis that have subsequently been placed on nonaccrual status.
    4Annualized ratio for quarterly metrics.

    VERITEX HOLDINGS, INC. AND SUBSIDIARIES
    Financial Highlights
    (In thousands)
               
      Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022
      (unaudited) (unaudited)   (unaudited) (unaudited)
    ASSETS          
    Cash and cash equivalents $663,921  $808,395  $436,077  $433,897  $410,716 
    Debt securities, net  1,144,020   1,150,959   1,282,460   1,303,004   1,354,403 
    Other investments  138,894   137,621   122,450   115,551   202,685 
               
    Loans held for sale  29,876   42,816   20,641   17,644   14,210 
    LHI, MW  436,255   437,501   446,227   523,805   629,291 
    LHI, excluding MW  9,257,183   9,237,159   9,036,424   8,513,254   7,923,131 
    Total loans  9,723,314   9,717,476   9,503,292   9,054,703   8,566,632 
    ACL, loans  (102,150)  (98,694)  (91,052)  (85,037)  (80,576)
    Bank-owned life insurance  84,375   84,962   84,496   84,030   84,097 
    Bank premises, furniture and equipment, net  105,986   107,540   108,824   108,720   108,769 
    Other real estate owned (“OREO”)              1,032 
    Intangible assets, net of accumulated amortization  48,293   51,086   53,213   56,238   59,011 
    Goodwill  404,452   404,452   404,452   404,452   404,452 
    Other assets  259,263   245,690   250,149   238,896   193,590 
    Total assets $12,470,368  $12,609,487  $12,154,361  $11,714,454  $11,304,811 
    LIABILITIES AND STOCKHOLDERS’ EQUITY          
    Deposits:          
    Noninterest-bearing deposits $2,234,109  $2,212,389  $2,640,617  $2,811,412  $2,947,830 
    Interest-bearing transaction and savings deposits  3,590,253   3,492,011   3,514,729   3,437,898   3,233,803 
    Certificates and other time deposits  2,928,949   2,896,870   2,086,642   1,667,364   1,562,626 
    Correspondent money market deposits  480,598   433,468   881,246   831,770   773,447 
    Total deposits  9,233,909   9,034,738   9,123,234   8,748,444   8,517,706 
    Accounts payable and other liabilities  190,900   171,985   177,579   173,198   126,116 
    Advances from FHLB  1,325,000   1,680,000   1,175,000   1,150,000   1,000,000 
    Subordinated debentures and subordinated notes  229,279   229,027   228,775   228,524   228,272 
    Securities sold under agreements to repurchase           2,389   3,275 
    Total liabilities  10,979,088   11,115,750   10,704,588   10,302,555   9,875,369 
    Commitments and contingencies          
    Stockholders’ equity:          
    Common stock  609   609   607   606   606 
    Additional paid-in capital  1,311,687   1,308,345   1,306,852   1,303,171   1,300,170 
    Retained earnings  429,753   406,873   379,299   350,195   317,664 
    Accumulated other comprehensive loss  (83,187)  (54,508)  (69,403)  (74,491)  (21,416)
    Treasury stock  (167,582)  (167,582)  (167,582)  (167,582)  (167,582)
    Total stockholders’ equity  1,491,280   1,493,737   1,449,773   1,411,899   1,429,442 
    Total liabilities and stockholders’ equity $12,470,368  $12,609,487  $12,154,361  $11,714,454  $11,304,811 


    VERITEX HOLDINGS, INC. AND SUBSIDIARIES
    Financial Highlights
    (In thousands, except per share data)
     
      For the Quarter Ended For the Six Months Ended
      Jun 30,
    2023
     Mar 31,
    2023
     Dec 31,
    2022
     Sep 30,
    2022
     Jun 30,
    2022
     Jun 30,
    2023
     Jun 30,
    2022
      (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
    Interest income:              
    Loans, including fees $163,727  $151,707  $136,846  $109,199  $82,191  $315,434  $153,634
    Debt securities  10,166   10,988   10,880   10,462   9,632   21,154   17,394
    Deposits in financial institutions and Fed Funds sold  7,507   5,534   3,401   1,898   714   13,041   976
    Equity securities and other investments  1,118   1,408   1,087   1,666   1,057   2,526   1,967
    Total interest income  182,518   169,637   152,214   123,225   93,594   352,155   173,971
    Interest expense:              
    Transaction and savings deposits  32,957   29,857   24,043   12,897   4,094   62,814   5,845
    Certificates and other time deposits  28,100   20,967   8,543   3,919   1,465   49,067   2,845
    Advances from FHLB  17,562   12,358   10,577   2,543   834   29,920   2,381
    Subordinated debentures and subordinated notes  3,068   3,066   2,954   2,826   2,721   6,134   5,380
    Total interest expense  81,687   66,248   46,117   22,185   9,114   147,935   16,451
    Net interest income  100,831   103,389   106,097   101,040   84,480   204,220   157,520
    Provision for credit losses1  15,000   9,385   11,800   6,650   9,000   24,385   8,500
    (Benefit) provision for unfunded commitments  (1,129)  1,497   (523)  850      368   493
    Net interest income after provisions  86,960   92,507   94,820   93,540   75,480   179,467   148,527
    Noninterest income:              
    Service charges and fees on deposit accounts  5,272   5,017   5,173   5,217   5,039   10,289   9,749
    Loan fees  1,520   2,064   2,477   2,786   2,385   3,584   5,179
    Loss on sales of investment securities     (5,321)           (5,321)  
    Gain on sales of mortgage loans held for sale  40   6   4   16   223   46   530
    Government guaranteed loan income, net  4,144   9,688   7,808   572   789   13,832   5,680
    Equity method investment income (loss)  485   (1,521)  (5,416)  (1,058)  966   (1,036)  1,333
    Customer swap income  961   217   2,273   3,358   1,321   1,178   2,267
    Other income (loss)  1,270   3,381   2,007   2,130   (345)  4,651   737
    Total noninterest income  13,692   13,531   14,326   13,021   10,378   27,223   25,475
    Noninterest expense:              
    Salaries and employee benefits  28,650   31,865   33,690   29,714   26,924   60,515   54,437
    Occupancy and equipment  4,827   4,973   5,116   4,615   4,496   9,800   9,013
    Professional and regulatory fees  6,868   4,389   4,401   3,718   2,865   11,257   6,023
    Data processing and software expense  4,709   4,720   4,197   3,509   3,386   9,429   6,307
    Marketing  2,627   1,779   1,841   1,845   2,306   4,406   3,493
    Amortization of intangibles  2,468   2,495   2,495   2,494   2,495   4,963   4,990
    Telephone and communications  355   478   358   389   352   833   737
    Merger and acquisition (“M&A”) expense           384   295      995
    Other  6,693   5,916   5,261   4,323   5,034   12,609   8,730
    Total noninterest expense  57,197   56,615   57,359   50,991   48,153   113,812   94,725
    Income before income tax expense  43,455   49,423   51,787   55,570   37,705   92,878   79,277
    Income tax expense  9,725   11,012   11,890   12,248   8,079   20,737   16,181
    Net income $33,730  $38,411  $39,897  $43,322  $29,626  $72,141  $63,096
    Net income available to common stockholders $33,730  $38,411  $39,897  $43,322  $29,626  $72,141  $63,096
                   
    Basic EPS $0.62  $0.71  $0.74  $0.80  $0.55  $1.33  $1.21
    Diluted EPS $0.62  $0.70  $0.73  $0.79  $0.54  $1.32  $1.19
    Weighted average basic shares outstanding  54,247   54,149   54,011   53,979   53,949   54,199   52,331
    Weighted average diluted shares outstanding  54,486   54,606   54,780   54,633   54,646   54,546   53,121

    1 Includes provision for credit losses on loans of $23.5 million and available for sale (“AFS”) securities of $885 thousand for the six months ended June 30, 2023.


    VERITEX HOLDINGS, INC. AND SUBSIDIARIES
    Financial Highlights
    (Unaudited)
     
      For the Quarter Ended
      June 30, 2023 March 31, 2023 June 30, 2022
      Average
    Outstanding
    Balance
     Interest
    Earned/
    Interest
    Paid
     Average
    Yield/
    Rate
     Average
    Outstanding
    Balance
     Interest
    Earned/
    Interest
    Paid
     Average
    Yield/
    Rate
     Average
    Outstanding
    Balance
     Interest
    Earned/
    Interest
    Paid
     Average
    Yield/
    Rate
       
      (In thousands, except percentages)
    Assets                  
    Interest-earning assets:                  
    Loans1 $9,285,550  $158,685 6.85% $9,141,137  $146,801 6.51% $7,558,966  $78,262 4.15%
    LHI, MW  371,763   5,042 5.44   360,172   4,906 5.52   479,187   3,929 3.29 
    Debt securities  1,133,845   10,166 3.60   1,252,457   10,988 3.56   1,318,502   9,632 2.93 
    Interest-bearing deposits in other banks  583,818   7,507 5.16   478,345   5,534 4.69   369,847   714 0.77 
    Equity securities and other investments  137,868   1,118 3.25   124,985   1,408 4.57   167,327   1,057 2.53 
    Total interest-earning assets  11,512,844   182,518 6.36   11,357,096   169,637 6.06   9,893,829   93,594 3.79 
    ACL, loans  (102,559)      (92,664)      (74,268)    
    Noninterest-earning assets  939,938       949,881       892,102     
    Total assets $12,350,223      $12,214,313      $10,711,663     
                       
    Liabilities and Stockholders’ Equity                  
    Interest-bearing liabilities:                  
    Interest-bearing demand and savings deposits $3,919,745  $32,957 3.37% $4,150,995  $29,857 2.92% $3,770,098  $4,094 0.44%
    Certificates and other time deposits  2,873,548   28,100 3.92   2,588,728   20,967 3.28   1,459,690   1,465 0.40 
    Advances from FHLB and Other  1,472,912   17,562 4.78   1,122,683   12,358 4.46   828,769   834 0.40 
    Subordinated debentures and subordinated notes  229,151   3,068 5.37   231,251   3,066 5.38   232,043   2,721 4.70 
    Total interest-bearing liabilities  8,495,356   81,687 3.86   8,093,657   66,248 3.32   6,290,600   9,114 0.58 
                       
    Noninterest-bearing liabilities:                  
    Noninterest-bearing deposits  2,175,002       2,470,700       2,870,692     
    Other liabilities  169,240       173,380       102,994     
    Total liabilities  10,839,598       10,737,737       9,264,286     
    Stockholders’ equity  1,510,625       1,476,576       1,447,377     
    Total liabilities and stockholders’ equity $12,350,223      $12,214,313      $10,711,663     
                       
    Net interest rate spread2     2.50%     2.74%     3.21%
    Net interest income and margin3   $100,831 3.51%   $103,389 3.69%   $84,480 3.42%

    1 Includes average outstanding balances of loans held for sale of $23,374, $19,679 and $12,112 for the quarters ended June 30, 2023, March 31, 2023, and June 30, 2022, respectively, and average balances of LHI, excluding MW.
    2 Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
    3 Net interest margin is equal to net interest income divided by average interest-earning assets.


    VERITEX HOLDINGS, INC. AND SUBSIDIARY
    Financial Highlights
    (In thousands except percentages)
     
      Six Months Ended
      June 30, 2023 June 30, 2022
      Average
    Outstanding
    Balance
     Interest
    Earned/
    Interest Paid
     Average
    Yield/ Rate
     Average
    Outstanding
    Balance
     Interest
    Earned/
    Interest Paid
     Average
    Yield/ Rate
    Assets            
    Interest-earning assets:            
    Loans1 $9,213,742  $305,486 6.69% $7,233,431  $146,636 4.09%
    LHI, WH  366,000   9,948 5.48   450,592   6,998 3.13 
    Debt securities  1,192,823   21,154 3.58   1,230,159   17,394 2.85 
    Interest-bearing deposits in other banks  531,373   13,041 4.95   461,844   976 0.43 
    Equity securities and other investments  131,462   2,526 3.87   178,602   1,967 2.22 
    Total interest-earning assets  11,435,400   352,155 6.21   9,554,628   173,971 3.67 
    ACL  (97,639)      (76,046)    
    Noninterest-earning assets  944,883       878,679     
    Total assets $12,282,644      $10,357,261     
                 
    Liabilities and Stockholders’ Equity            
    Interest-bearing liabilities:            
    Interest-bearing demand and savings deposits $4,033,975  $62,814 3.14% $3,621,697  $5,845 0.33%
    Certificates and other time deposits  2,731,925   49,067 3.62   1,480,654   2,845 0.39 
    Advances from FHLB and Other  1,298,765   29,920 4.65   803,295   2,381 0.60 
    Subordinated debentures and subordinated notes  230,195   6,134 5.37   231,959   5,380 4.68 
    Total interest-bearing liabilities  8,294,860   147,935 3.60   6,137,605   16,451 0.54 
                 
    Noninterest-bearing liabilities:            
    Noninterest-bearing deposits  2,322,790       2,731,869     
    Other liabilities  171,299       85,126     
    Total liabilities  10,788,949       8,954,600     
    Stockholders’ equity  1,493,695       1,402,661     
    Total liabilities and stockholders’ equity $12,282,644      $10,357,261     
                 
    Net interest rate spread2     2.61%     3.13%
    Net interest income and margin3   $204,220 3.60%   $157,520 3.32%

    1 Includes average outstanding balances of loans held for sale of $21,537 and $12,440 for the six months ended June 30, 2023 and 2022, respectively, and average balances of LHI, excluding MW.
    2 Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
    3 Net interest margin is equal to net interest income divided by average interest-earning assets.

    VERITEX HOLDINGS, INC. AND SUBSIDIARIES
    Financial Highlights
    (Unaudited)
    Yield Trend
      For the Quarter Ended
      Jun 30,
    2023
     Mar 31,
    2023
     Dec 31,
    2022
     Sep 30,
    2022
     Jun 30,
    2022
    Average yield on interest-earning assets:          
    Loans1 6.85% 6.51% 5.98% 5.01% 4.15%
    LHI, MW 5.44  5.52  5.20  4.11  3.29 
    Debt securities 3.60  3.56  3.36  3.05  2.93 
    Interest-bearing deposits in other banks 5.16  4.69  3.81  2.17  0.77 
    Equity securities and other investments 3.25  4.57  3.62  3.25  2.53 
    Total interest-earning assets 6.36% 6.06% 5.55% 4.59% 3.79%
               
    Average rate on interest-bearing liabilities:          
    Interest-bearing demand and savings deposits 3.37% 2.92% 2.21% 1.23% 0.44%
    Certificates and other time deposits 3.92  3.28  1.90  0.94  0.40 
    Advances from FHLB 4.78  4.46  3.91  1.12  0.40 
    Subordinated debentures and subordinated notes 5.37  5.38  5.12  4.85  4.70 
    Total interest-bearing liabilities 3.86% 3.32% 2.47% 1.27% 0.58%
               
    Net interest rate spread2 2.50% 2.74% 3.08% 3.32% 3.21%
    Net interest margin3 3.51% 3.69% 3.87% 3.77% 3.42%

      
    1Includes average outstanding balances of loans held for sale of $23,374, $19,679, $15,296, $14,023 and $12,112 for the three months ended June 30, 2023, March 31, 2023, December 31, 2022, September 30, 2022 and June 30, 2022, respectively, and average balances of LHI, excluding MW. 
    2 Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities. 
    3 Net interest margin is equal to net interest income divided by average interest-earning assets.

    Supplemental Yield Trend

      For the Quarter Ended
      Jun 30,
    2023
     Mar 31,
    2023
     Dec 31,
    2022
     Sep 30,
    2022
     Jun 30,
    2022
    Average cost of interest-bearing deposits 3.61% 3.06% 2.12% 1.15% 0.43%
    Average costs of total deposits, including noninterest-bearing 2.73  2.24  1.46  0.76  0.28 

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

    LHI and Deposit Portfolio Composition

      Jun 30,
    2023
     Mar 31,
    2023
     Dec 31,
    2022
     Sep 30,
    2022
     Jun 30,
    2022
       
      (In thousands, except percentages)
    LHI1                    
    Commercial and Industrial (“C&I”) $2,850,084  30.7% $2,895,957  31.3% $2,942,348  32.4% $2,743,769  32.2% $2,457,742  31.0%
    Real Estate:                    
    Owner occupied commercial (“OOCRE”)  671,602  7.2   631,563  6.8   715,829  7.9   677,705  7.9   646,723  8.1 
    Non-owner occupied commercial (“NOOCRE”)  2,509,731  27.1   2,505,344  27.1   2,341,379  25.9   2,273,305  26.6   2,203,970  27.8 
    Construction and land  1,659,700  17.9   1,831,349  19.8   1,787,400  19.7   1,673,997  19.6   1,532,997  19.3 
    Farmland  51,663  0.6   51,680  0.6   43,500  0.5   43,569  0.5   47,319  0.6 
    1-4 family residential  923,442  10.0   896,252  9.7   894,456  9.9   858,693  10.1   765,260  9.6 
    Multi-family residential  592,473  6.4   432,209  4.6   322,679  3.6   252,244  3.0   276,632  3.5 
    Consumer  11,189  0.1   8,316  0.1   7,806  0.1   7,465  0.1   7,520  0.1 
    Total LHI $9,269,884  100% $9,252,670  100% $9,055,397  100% $8,530,747  100% $7,938,163  100%
                         
    MW  436,255     437,501     446,227     523,805     629,291   
                         
    Total LHI1 $9,706,139    $9,690,171    $9,501,624    $9,054,552    $8,567,454   
                         
    Deposits                    
    Noninterest-bearing $2,234,109  24.2% $2,212,389  24.5% $2,640,617  28.9% $2,811,412  32.1% $2,947,830  34.6%
    Interest-bearing transaction  676,653  7.3   866,609  9.6   622,814  6.8   603,729  6.9   660,557  7.8 
    Money market  2,816,769  30.5   2,518,922  27.9   2,773,622  30.4   2,701,762  30.9   2,443,748  28.7 
    Savings  96,831  1.0   106,480  1.2   118,293  1.3   132,407  1.5   129,498  1.5 
    Certificates and other time deposits  2,928,949  31.7   2,896,870  32.0   2,086,642  22.9   1,667,364  19.1   1,562,626  18.3 
    Correspondent money market accounts  480,598  5.2   433,468  4.8   881,246  9.7   831,770  9.5   773,447  9.1 
    Total deposits $9,233,909  100% $9,034,738  100% $9,123,234  100% $8,748,444  100% $8,517,706  100%
                         
    Loan to Deposit Ratio  105.1%    107.3%    104.1%    103.5%    100.6%  
                         
    Loan to Deposit Ratio, excluding MW  100.4%    102.4%    99.3%    97.5%    93.2%  

    1 Total LHI does not include deferred fees of $12.7 million, $15.5 million, $19.0 million, $17.5 million and $15.0 million at June 30, 2023, March 31, 2023, December 31, 2022, September 30, 2022 and June 30, 2022, respectively.

    VERITEX HOLDINGS, INC. AND SUBSIDIARIES
    Financial Highlights
    (Unaudited)
    Asset Quality
     
     For the Quarter Ended Six Months Ended
     Jun 30,
    2023
     Mar 31,
    2023
     Dec 31,
    2022
     Sep 30,
    2022
     Jun 30,
    2022
     June 30,
    2023
     Jun 30,
    2022
          
     (In thousands, except percentages)    
    NPAs:             
    Nonaccrual loans$        54,055  $        31,452  $        30,364  $        30,592  $        42,242  $        54,055  $        42,242 
    Nonaccrual PCD loans1         13,721           12,784           13,178           —           —           13,721           — 
    Accruing loans 90 or more days past due2         528           296           125           —           1,753           528           1,753 
    Total nonperforming loans held for investment (“NPLs”)         68,304           44,532           43,667           30,592           43,995           68,304           43,995 
    OREO         —           —           —           —           1,032           —           1,032 
    Total NPAs$        68,304  $        44,532  $        43,667  $        30,592  $        45,027  $        68,304  $        45,027 
                  
    Charge-offs:             
    OOCRE$        —  $        (116) $        —  $        (1,061) $        (244) $        (116) $        (1,585)
    NOOCRE         (8,215)          —           (1,019)          (838)          —           (8,215)          (553)
    C&I         (3,540)          (1,051)          (5,449)          (460)          (528)          (4,591)          (3,822)
    Consumer         (92)          (62)          (41)          (19)          (1,091)          (154)          (1,225)
    Total charge-offs         (11,847)          (1,229)          (6,509)          (2,378)          (1,863)          (13,076)          (7,185)
                  
    Recoveries:             
    1-4 family residential         1           1           24           4           3           2           3 
    OOCRE         —           —           26           —           245           —           245 
    NOOCRE         150           —           229           3           93           150           493 
    C&I         106           364           415           177           572           470           716 
    Consumer         46           6           30           5           41           52           50 
    Total recoveries         303           371           724           189           954           674           1,507 
                  
    Net charge-offs$        (11,544) $        (858) $        (5,785) $        (2,189) $        (909) $        (12,402) $        (5,678)
                  
                  
    ACL$        102,150  $        98,694  $        91,052  $        85,037  $        80,576  $        102,150  $        80,576 
                  
    Asset Quality Ratios:             
    NPAs to total assets 0.55%  0.35%  0.36%  0.26%  0.40%  0.55%  0.40%
    NPAs, excluding nonaccrual PCD loans, to total assets 0.44   0.25   0.25   0.26   0.40   0.44   0.40 
    NPLs to total LHI 0.71   0.47   0.48   0.35   0.55   0.71   0.55 
    NPLs, excluding nonaccrual PCD loans, to total LHI 0.56   0.33   0.32   0.34   0.51   0.56   0.51 
    ACL to total LHI 1.05   1.02   0.96   0.94   0.94   1.05   0.94 
    Net charge-offs to average loans outstanding3 0.48   0.04   0.24   0.12   0.04   0.26   0.14 

    1 Nonaccrual PCD loans consist of PCD loans that transitioned upon adoption of ASC 326 Financial Instruments - Credit Losses and were accounted for on a pooled basis that have subsequently been placed on nonaccrual status.
    2 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.
    3Annualized ratio for quarterly metrics.

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

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

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

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

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

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

      As of
      Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022
       
      (Dollars in thousands, except per share data)
    Tangible Common Equity          
    Total stockholders' equity $1,491,280  $1,493,737  $1,449,773  $1,411,899  $1,429,442 
    Adjustments:          
    Goodwill  (404,452)  (404,452)  (404,452)  (404,452)  (404,452)
    Core deposit intangibles  (33,371)  (35,808)  (38,247)  (40,684)  (43,122)
    Tangible common equity $1,053,457  $1,053,477  $1,007,074  $966,763  $981,868 
    Common shares outstanding  54,261   54,229   54,030   53,988   53,951 
               
    Book value per common share $27.48  $27.54  $26.83  $26.15  $26.50 
    Tangible book value per common share $19.41  $19.43  $18.64  $17.91  $18.20 

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

    Tangible Common Equity to Tangible Assets. Tangible common equity to tangible assets is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) tangible common equity as total stockholders’ equity, less goodwill and core deposit intangibles, net of accumulated amortization; (b) tangible assets as total assets less goodwill and core deposit intangibles, net of accumulated amortization; and (c) tangible common equity to tangible assets as tangible common equity (as described in clause (a)) divided by tangible assets (as described in clause (b)). For tangible common equity to tangible assets, the most directly comparable financial measure calculated in accordance with GAAP is total stockholders’ equity to total assets.

    We believe that this measure is important to many investors in the marketplace who are interested in the relative changes from period to period in common equity and total assets, in each case, exclusive of changes in core deposit intangibles. Goodwill and other intangible assets have the effect of increasing both total stockholders’ equity and assets while not increasing our tangible common equity or tangible assets.

    The following table reconciles, as of the dates set forth below, total stockholders’ equity to tangible common equity and total assets to tangible assets and presents our tangible common equity to tangible assets:

      As of
      Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022
       
      (Dollars in thousands)
    Tangible Common Equity          
    Total stockholders' equity $1,491,280  $1,493,737  $1,449,773  $1,411,899  $1,429,442 
    Adjustments:          
    Goodwill  (404,452)  (404,452)  (404,452)  (404,452)  (404,452)
    Core deposit intangibles  (33,371)  (35,808)  (38,247)  (40,684)  (43,122)
    Tangible common equity $1,053,457  $1,053,477  $1,007,074  $966,763  $981,868 
    Tangible Assets          
    Total assets $12,470,368  $12,609,487  $12,154,361  $11,714,454  $11,304,811 
    Adjustments:          
    Goodwill  (404,452)  (404,452)  (404,452)  (404,452)  (404,452)
    Core deposit intangibles  (33,371)  (35,808)  (38,247)  (40,684)  (43,122)
    Tangible Assets $12,032,545  $12,169,227  $11,711,662  $11,269,318  $10,857,237 
    Tangible Common Equity to Tangible Assets  8.76%  8.66%  8.60%  8.58%  9.04%

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

    Return on Average Tangible Common Equity. Return on average tangible common equity is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) net income available for common stockholders adjusted for amortization of core deposit intangibles (which we refer to as “return”) as net income, plus amortization of core deposit intangibles, less tax benefit at the statutory rate; (b) average tangible common equity as total average stockholders’ equity less average goodwill and average core deposit intangibles, net of accumulated amortization; and (c) return (as described in clause (a)) divided by average tangible common equity (as described in clause (b)). For return on average tangible common equity, the most directly comparable financial measure calculated in accordance with GAAP is return on average equity.

    We believe that this measure is important to many investors in the marketplace who are interested in the return on common equity, exclusive of the impact of core deposit intangibles. Goodwill and core deposit intangibles have the effect of increasing total stockholders’ equity while not increasing our tangible common equity. This measure is particularly relevant to acquisitive institutions that may have higher balances in goodwill and core deposit intangibles than non-acquisitive institutions.

    The following table reconciles, as of the dates set forth below, average tangible common equity to average common equity and net income available for common stockholders adjusted for amortization of core deposit intangibles, net of taxes to net income and presents our return on average tangible common equity:

      For the Quarter Ended Six Months Ended
      Jun 30,
    2023
     Mar 31,
    2023
     Dec 31,
    2022
     Sep 30,
    2022
     Jun 30,
    2022
     June 30,
    2023
     Jun 30,
    2022
           
      (Dollars in thousands)    
    Net income available for common stockholders adjusted for amortization of core deposit intangibles              
    Net income $33,730  $38,411  $39,897  $43,322  $29,626  $72,141  $63,096 
    Adjustments:              
    Plus: Amortization of core deposit intangibles  2,438   2,438   2,438   2,438   2,438   4,876   4,876 
    Less: Tax benefit at the statutory rate  512   512   512   512   512   1,024   1,024 
    Net income available for common stockholders adjusted for amortization of core deposit intangibles $35,656  $40,337  $41,823  $45,248  $31,552  $75,993  $66,948 
                   
    Average Tangible Common Equity              
    Total average stockholders' equity $1,510,625  $1,476,576  $1,434,818  $1,453,816  $1,447,377  $1,493,695  $1,402,661 
    Adjustments:              
    Average goodwill  (404,452)  (404,452)  (404,452)  (404,452)  (404,452)  (404,452)  (404,234)
    Average core deposit intangibles  (34,969)  (37,361)  (39,792)  (42,230)  (44,720)  (36,159)  (45,932)
    Average tangible common equity $1,071,204  $1,034,763  $990,574  $1,007,134  $998,205  $1,053,084  $952,495 
    Return on Average Tangible Common Equity (Annualized)  13.35%  15.81%  16.75%  17.82%  12.68%  14.55%  14.17%

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

    Operating Earnings, Pre-tax, Pre-provision Operating Earnings and performance metrics calculated using Operating Earnings and Pre-tax, Pre-provision Operating Earnings, including Diluted Operating Earnings per Share, Operating Return on Average Assets, Pre-tax, Pre-Provision Operating Return on Average Assets, Pre-tax, Pre-Provision Operating Return on Average Loans, Operating Return on Average Tangible Common Equity and Operating Efficiency Ratio. Operating earnings, pre-tax, pre-provision operating earnings and the performance metrics calculated using these metrics, listed below, are non-GAAP measures used by management to evaluate the Company’s financial performance. We calculate (a) operating earnings as net income plus severance payments, plus loss on sale of debt securities AFS, net, less tax impact of adjustments, plus nonrecurring tax adjustments. We calculate (b) diluted operating earnings per share as operating earnings as described in clause (a) divided by weighted average diluted shares outstanding. We calculate (c) pre-tax, pre-provision operating earnings as operating earnings as described in clause (a) plus provision for income taxes, plus provision (benefit) for credit losses and unfunded commitments. We calculate (d) pre-tax, pre-provision operating return on average assets as pre-tax, pre-provision operating earnings as described in clause (a) divided by total average assets. We calculate (e) operating return on average assets as operating earnings as described in clause (a) divided by total average assets. We calculate (f) operating return on average tangible common equity as operating earnings as described in clause (a), adjusted for the amortization of intangibles and tax benefit at the statutory rate, divided by total average tangible common equity (average stockholders’ equity less average goodwill and average core deposit intangibles, net of accumulated amortization). We calculate (g) operating efficiency ratio as noninterest expense plus adjustments to operating noninterest expense divided by noninterest income plus adjustments to operating noninterest income, plus net interest income.

    We believe that these measures and the operating metrics calculated utilizing these measures are important to management and many investors in the marketplace who are interested in understanding the ongoing operating performance of the Company and provide meaningful comparisons to its peers.

    The following tables reconcile, as of the dates set forth below, operating net income and pre-tax, pre-provision operating earnings and related metrics:

      For the Quarter Ended Six Months Ended
      Jun 30,
    2023
     Mar 31,
    2023
     Dec 31,
    2022
     Sep 30,
    2022
     Jun 30,
    2022
     June 30,
    2023
     Jun 30,
    2022
       
      (Dollars in thousands, except per share data)
    Operating Earnings              
    Net income $33,730 $38,411 $39,897 $43,322 $29,626 $72,141 $63,096
                   
    Plus: Severance payments1  1,194  835  630      2,029  
    Plus: Loss on sale of debt securities AFS, net    5,321        5,321  
    Plus: M&A expenses        384  295    995
    Operating pre-tax income  34,924  44,567  40,527  43,706  29,921  79,491  64,091
    Less: Tax impact of adjustments  251  1,293  132  81  66  1,544  222
    Operating earnings $34,673 $43,274 $40,395 $43,625 $29,855 $77,947 $63,869
                   
    Weighted average diluted shares outstanding  54,486  54,606  54,780  54,633  54,646  54,546  53,121
    Diluted EPS $0.62 $0.70 $0.73 $0.79 $0.54 $1.32 $1.19
    Diluted operating EPS $0.64 $0.79 $0.74 $0.80 $0.55 $1.43 $1.20

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

      For the Quarter Ended Six Months Ended
      Jun 30,
    2023
     Mar 31,
    2023
     Dec 31,
    2022
     Sep 30,
    2022
     Jun 30,
    2022
     June 30,
    2023
     Jun 30,
    2022
       
      (Dollars in thousands)
    Pre-Tax, Pre-Provision Operating Earnings              
    Net income $33,730  $38,411  $39,897  $43,322  $29,626  $72,141  $63,096 
    Plus: Provision for income taxes  9,725   11,012   11,890   12,248   8,079   20,737   16,181 
    Plus: Provision for credit losses and unfunded commitments  13,871   10,882   11,277   7,500   9,000   24,753   8,993 
    Plus: Severance payments  1,194   835   630         2,029    
    Plus: Loss on sale of debt securities AFS, net     5,321            5,321    
    Plus: M&A expenses           384   295      995 
    Pre-tax, pre-provision operating earnings $58,520  $66,461  $63,694  $63,454  $47,000  $124,981  $89,265 
                   
    Average total assets $12,350,223  $12,214,313  $11,761,044  $11,460,857  $10,711,663  $12,282,644  $10,357,261 
    Pre-tax, pre-provision operating return on average assets1  1.90%  2.21%  2.15%  2.20%  1.76%  2.05%  1.74%
                   
    Average loans $9,657,313  $9,501,309  $9,103,552  $8,729,093  $8,038,153  $9,579,742  $7,684,023 
    Pre-tax, pre-provision operating return on average loans1  2.43%  2.84%  2.78%  2.88%  2.35%  2.63%  2.34%
                   
    Average total assets $12,350,223  $12,214,313  $11,761,044  $11,460,857  $10,711,663  $12,282,644  $10,357,261 
    Return on average assets1  1.10%  1.28%  1.35%  1.50%  1.11%  1.18%  1.23%
    Operating return on average assets1  1.13   1.44   1.36   1.51   1.12   1.28   1.24 
                   
    Operating earnings adjusted for amortization of core deposit intangibles              
    Operating earnings $34,673  $43,274  $40,395  $43,625  $29,855  $77,947  $63,869 
    Adjustments:              
    Plus: Amortization of core deposit intangibles  2,438   2,438   2,438   2,438   2,438   4,876   4,876 
    Less: Tax benefit at the statutory rate  512   512   512   512   512   1,024   1,024 
    Operating earnings adjusted for amortization of core deposit intangibles $36,599  $45,200  $42,321  $45,551  $31,781  $81,799  $67,721 
                   
    Average Tangible Common Equity              
    Total average stockholders' equity $1,510,625  $1,476,576  $1,434,818  $1,453,816  $1,447,377  $1,493,695  $1,402,661 
    Adjustments:              
    Less: Average goodwill  (404,452)  (404,452)  (404,452)  (404,452)  (404,452)  (404,452)  (404,234)
    Less: Average core deposit intangibles  (34,969)  (37,361)  (39,792)  (42,230)  (44,720)  (36,159)  (45,932)
    Average tangible common equity $1,071,204  $1,034,763  $990,574  $1,007,134  $998,205  $1,053,084  $952,495 
    Operating return on average tangible common equity1  13.70%  17.72%  16.95%  17.94%  12.77%  15.66%  14.34%
                   
    Efficiency ratio  49.94%  48.42%  47.63%  44.71%  50.76%  49.17%  51.76%
    Net interest income $100,831  $103,389  $106,097  $101,040  $84,480  $204,220  $157,520 
    Noninterest income  13,692   13,531   14,326   13,021   10,378   27,223   25,475 
    Plus: Loss on sale of AFS securities, net     5,321            5,321    
    Operating noninterest income  13,692   18,852   14,326   13,021   10,378   32,544   25,475 
    Noninterest expense  57,197   56,615   57,359   50,991   48,153   113,812   94,725 
    Less: Severance payments  1,194   835   630         2,029    
    Less: M&A expenses           384   295      995 
    Operating noninterest expense $56,003  $55,780  $56,729  $50,607  $47,858  $111,783  $93,730 
    Operating efficiency ratio  48.90%  45.63%  47.11%  44.37%  50.45%  47.21%  51.22%

    1 Annualized ratio for quarterly metrics.


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