[PART I — FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents Veritex Holdings, Inc.'s unaudited consolidated financial statements for Q1 2024 and 2023, covering balance sheets, income, equity, and cash flows, with detailed accounting notes [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to **$12.71 billion** by March 31, 2024, driven by cash and loans, with liabilities and equity also growing due to increased deposits Consolidated Balance Sheet Highlights (in millions) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Total Assets** | **$12,708.4** | **$12,394.3** | | Total cash and cash equivalents | $740.8 | $629.1 | | Total LHI, net | $9,587.1 | $9,474.5 | | **Total Liabilities** | **$11,169.9** | **$10,863.0** | | Total deposits | $10,653.8 | $10,338.2 | | **Total Stockholders' Equity** | **$1,538.5** | **$1,531.3** | [Consolidated Statements of Income](index=7&type=section&id=Consolidated%20Statements%20of%20Income) Net income for Q1 2024 decreased to **$24.2 million** from **$38.4 million** in Q1 2023, primarily due to lower net interest income and increased interest expense, resulting in diluted EPS of **$0.44** Consolidated Income Statement Summary (in millions, except per share data) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Total interest and dividend income | $184.6 | $169.6 | | Total interest expense | $91.8 | $66.2 | | **Net Interest Income** | **$92.8** | **$103.4** | | Provision for credit losses | $7.5 | $9.4 | | Total noninterest income | $6.7 | $13.5 | | Total noninterest expense | $62.1 | $56.6 | | **Net Income** | **$24.2** | **$38.4** | | **Diluted EPS** | **$0.44** | **$0.70** | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities was **$44.3 million** in Q1 2024, while investing activities used **$237.1 million**, and financing activities provided **$304.6 million**, leading to a **$111.7 million** net increase in cash Cash Flow Summary (in millions) | Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $44.3 | $34.5 | | Net cash used in investing activities | ($237.1) | ($66.5) | | Net cash provided by financing activities | $304.6 | $404.3 | | **Net increase in cash and cash equivalents** | **$111.7** | **$372.3** | [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes detail the company's accounting policies and financial items, covering securities and loan portfolios, ACL methodology, fair value measurements, derivatives, off-balance-sheet commitments, stock compensation, income taxes, and regulatory capital - Veritex is a Texas state banking organization with 19 branches in the Dallas-Fort Worth metroplex and 11 in the Houston metropolitan area, providing a full range of banking services[22](index=22&type=chunk) Loan Portfolio Composition (in millions) | Loan Category | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Commercial | $2,786.0 | $2,752.1 | | NOOCRE | $2,353.0 | $2,350.7 | | Construction and land | $1,568.3 | $1,734.3 | | 1 - 4 family residential | $969.4 | $937.1 | | OOCRE | $788.4 | $794.1 | | Multi-family residential | $751.6 | $605.8 | | MW | $449.5 | $377.8 | | **Total LHI, carried at amortized cost** | **$9,706.0** | **$9,593.1** | Allowance for Credit Loss (ACL) Activity on LHI (in millions) | ACL Activity | Three Months Ended March 31, 2024 | | :--- | :--- | | Beginning Balance | $109.8 | | Credit loss expense (non-PCD) | $11.9 | | Credit (benefit) loss expense (PCD) | ($4.4) | | Charge-offs | ($5.4) | | Recoveries | $0.1 | | **Ending Balance** | **$112.0** | Regulatory Capital Ratios (Company) | Ratio | March 31, 2024 | December 31, 2023 | Well Capitalized Minimum | | :--- | :--- | :--- | :--- | | CET1 (to RWA) | 10.37% | 10.29% | 6.5% (Bank) | | Tier 1 capital (to RWA) | 10.63% | 10.56% | 8.0% (Bank) | | Total capital (to RWA) | 13.33% | 13.18% | 10.0% (Bank) | | Tier 1 capital (to average assets) | 10.12% | 10.03% | 5.0% (Bank) | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=42&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes Q1 2024 financial results, noting a decrease in net income to **$24.2 million** due to net interest margin contraction, and discusses loan and deposit growth, credit quality, noninterest income/expense, and strong capital positions [Results of Operations](index=43&type=section&id=Results%20of%20Operations) Q1 2024 net income decreased to **$24.2 million** with diluted EPS of **$0.44**, primarily due to a **$10.6 million** drop in net interest income from rising deposit costs, coupled with lower noninterest income and higher noninterest expenses Key Performance Metrics | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Income (in millions) | $24.2 | $38.4 | | Diluted EPS | $0.44 | $0.70 | | Net Interest Margin | 3.24% | 3.69% | | Provision for Credit Losses (in millions) | $7.5 | $9.4 | - The decrease in net interest income was primarily due to a **137 basis point increase** in the average cost of interest-bearing deposits, which rose to **4.43%**[134](index=134&type=chunk) - Noninterest income decreased by **$6.9 million**, largely due to a **$7.1 million reduction** in government guaranteed loan income[143](index=143&type=chunk)[144](index=144&type=chunk) - Noninterest expense rose by **$5.5 million**, primarily due to a **$1.5 million increase** in salaries and a **$1.7 million increase** in professional and regulatory fees, including higher FDIC assessments[147](index=147&type=chunk)[148](index=148&type=chunk) [Financial Condition](index=49&type=section&id=Financial%20Condition) As of March 31, 2024, total assets grew to **$12.71 billion**, with LHI increasing to **$9.71 billion** and deposits to **$10.65 billion**, while credit quality metrics like nonperforming assets and ACL remained stable Financial Condition Highlights (in billions) | Metric | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Assets | $12.71 | $12.39 | | Total LHI | $9.71 | $9.59 | | Total Deposits | $10.65 | $10.34 | Credit Quality Metrics | Metric | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Nonperforming assets to total assets | 0.82% | 0.77% | | Nonperforming loans to total loans | 0.88% | 1.00% | | ACL to total LHI | 1.15% | 1.14% | - The loan portfolio's largest segments are Commercial (**28.8%**), NOOCRE (**24.2%**), and Construction and land (**16.2%**), with multifamily loans seeing the largest quarterly growth at **24.1%**[156](index=156&type=chunk) - The company's out-of-state loan portfolio represents **26.8%** of total loans, with significant concentrations in Commercial Real Estate and Lender Finance[161](index=161&type=chunk) [Liquidity and Capital Resources](index=57&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity, primarily funded by deposits, with **$740.8 million** in cash and significant borrowing capacity, while stockholders' equity increased slightly and a **$50 million** stock buyback program was authorized - Primary sources of funds are deposits, which comprised **83.3%** of average total assets in Q1 2024[189](index=189&type=chunk) Available Liquidity Sources (as of March 31, 2024) | Source | Availability (in billions) | | :--- | :--- | | FHLB Borrowing Capacity | $2.21 | | FRB Availability | $2.97 | | Unsecured Lines of Credit | $0.15 | - On March 28, 2024, the Board authorized a new stock buyback program for up to **$50 million** of its common stock, expiring March 31, 2025[198](index=198&type=chunk) - The company and the bank remained in compliance with all regulatory capital requirements and were classified as 'well capitalized' as of March 31, 2024[202](index=202&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=61&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company manages primary market risk from interest rate volatility using a simulation model, projecting that a **100 basis point** rate increase would boost net interest income by **4.67%**, while a decrease would lower it by **5.89%** over 12 months - The primary component of market risk for the company is interest rate volatility, which impacts net interest income and the market value of assets and liabilities[210](index=210&type=chunk) Net Interest Income Sensitivity Analysis (as of March 31, 2024) | Change in Interest Rates (Basis Points) | Simulated % Change in Net Interest Income (12-Month Horizon) | | :--- | :--- | | +300 | 13.54% | | +200 | 9.12% | | +100 | 4.67% | | Base | 0.00% | | -100 | (5.89)% | | -200 | (10.32)% | [Controls and Procedures](index=64&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective as of March 31, 2024[217](index=217&type=chunk) - No significant changes in internal control over financial reporting occurred during the quarter ended March 31, 2024[218](index=218&type=chunk) [PART II — OTHER INFORMATION](index=65&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) [Legal Proceedings](index=65&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course legal proceedings, with management deeming it remote that any current outcome would materially adversely affect financial condition or results of operations - In the opinion of management, the likelihood is remote that the impact of current legal proceedings would have a material adverse effect on the Company's financial position, liquidity, or results of operations[221](index=221&type=chunk) [Risk Factors](index=65&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2023 - There has been no material change in the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2023[223](index=223&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=65&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Board authorized a **$50 million** stock buyback program on March 26, 2024, expiring March 31, 2025, though no shares were repurchased during Q1 2024 - A stock buyback program was authorized on March 26, 2024, for up to **$50 million** of common stock, expiring March 31, 2025[224](index=224&type=chunk) - The Company did not repurchase any shares of its common stock under the program during the three months ended March 31, 2024[224](index=224&type=chunk) [Exhibits](index=66&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Quarterly Report on Form 10-Q, including CEO/CFO certifications and Inline XBRL data files

Financial Data and Key Metrics Changes - The company reported earnings of $29.1 million or $0.53 per share for the first quarter, with a pretax pre-provision return of 1.42% or $43.7 million [5] - Net interest income decreased by $2.7 million to almost $93 million, primarily due to higher deposit yields and an unfavorable asset mix shift [11] - The net interest margin (NIM) decreased by 7 basis points from the previous quarter to 3.24% [11] - The allowance coverage increased to 115 basis points, up significantly over the last four quarters, with reserves increased by over $13 million [7] Business Line Data and Key Metrics Changes - Loans increased by $114.7 million or around 1%, while deposits rose by $316 million or 12% annualized [10] - The loan-to-deposit ratio improved from 107.7% to 91.7% year-over-year, with a significant reduction in reliance on wholesale funding [92] - The company experienced a 44% decrease in charge-offs from the previous quarter, totaling $5.3 million [88] Market Data and Key Metrics Changes - The company noted that deposit growth was strong, with an 18% increase over the last 12 months, while loan growth remained virtually flat [10] - The effective tax rate was higher for the quarter due to the tax treatment of equity awards, expected to return to approximately 21.5% for the remainder of the year [13] Company Strategy and Development Direction - The company is focusing on customer acquisition, particularly in the small business sector, and plans to invest in this area [2] - There is a commitment to reducing commercial real estate (CRE) concentrations, aiming to bring the ratio below 300% of total risk-based capital by the third quarter of 2024 [94] - The company is adopting a more conservative approach to economic assumptions in light of the current rate environment and geopolitical risks [90] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the progress made in strengthening the balance sheet but acknowledged that more work is needed, especially regarding deposits and credit [7] - The outlook for loan growth is projected to be in the low single digits, while deposits are expected to grow in the high single to low double digits [99] - Management highlighted the importance of credit surveillance and monitoring of the loan portfolio amid uncertainty in the market [99] Other Important Information - The company completed a securities loss trade transaction expected to add $0.05 annually to EPS and announced a $50 million stock repurchase program [87] - The company has maintained a strong liquidity position, with cash and borrowing capacity totaling $6.4 billion, representing 1.8 times the level of uninsured deposits [21] Q&A Session Summary Question: Can you discuss the changes in classified assets? - Management noted that substandard assets decreased while special mention assets increased slightly, indicating a need for better management of asset classifications [106] Question: What is the outlook for loan growth and payoffs? - Management indicated that while visibility into payoffs is somewhat uncertain, they expect to achieve close to $1 billion in payoffs for the year, though not necessarily at the same level as the previous year [46] Question: How should we think about noninterest expenses moving forward? - Management expects noninterest expenses to remain stable, with some increases due to investments in compliance and risk management [57][58]

[Executive Summary & Company Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Company%20Highlights) Veritex Holdings, Inc. reported a strong Q1 2024 with growth in deposits, capital, and loans, improved credit metrics, and strategic capital actions [Q1 2024 Performance Overview](index=1&type=section&id=Q1%202024%20Performance%20Overview) Veritex Holdings, Inc. reported a strong start to 2024, demonstrating growth in deposits, capital, and loans, with stable and improving credit metrics. Net income significantly increased quarter-over-quarter, and the company announced a stock buyback program and a quarterly cash dividend - CEO C. Malcolm Holland, III expressed encouragement with the start of 2024, highlighting strategic balance sheet positioning with growth in deposits, capital, and loans, and stable credit metrics showing positive trends[2](index=2&type=chunk) Key Financial Metrics (Q1 2024 vs. Q4 2023 vs. Q1 2023) | Metric | Q1 2024 | Q4 2023 | Q1 2023 | | :--------------------------------------- | :------ | :------ | :------ | | **GAAP** | | | | | Net income (in thousands) | $24,156 | $3,499 | $38,411 | | Diluted EPS | $0.44 | $0.06 | $0.70 | | Book value per common share | $28.23 | $28.18 | $27.54 | | Return on average assets | 0.79 % | 0.11 % | 1.28 % | | Return on average equity | 6.33 % | 0.92 % | 10.55 % | | Efficiency ratio | 62.45 % | 77.49 % | 48.42 % | | **Non-GAAP** | | | | | Operating earnings (in thousands) | $29,137 | $31,625 | $43,274 | | Diluted operating EPS | $0.53 | $0.58 | $0.79 | | Tangible book value per common share | $20.33 | $20.21 | $19.43 | | Operating return on average assets | 0.95 % | 1.02 % | 1.44 % | | Operating efficiency ratio | 58.73 % | 55.50 % | 45.63 % | [Other First Quarter Metrics and Company Highlights](index=1&type=section&id=Other%20First%20Quarter%20Metrics%20and%20Company%20Highlights) The first quarter saw significant deposit growth, a decrease in the loan-to-deposit ratio, an increase in tangible book value per common share, and a strategic sale of lower-yielding securities to reinvest in higher-yielding ones. The company also authorized a stock buyback and declared a quarterly dividend - Total deposits grew **$1.62 billion (18%)** compared to March 31, 2023[4](index=4&type=chunk) - Total loans grew **$46.4 million (0.5%)** compared to March 31, 2023[4](index=4&type=chunk) - Loan to deposit ratio decreased to **91.7%** as of March 31, 2024, from 93.6% (Dec 31, 2023) and 107.7% (Mar 31, 2023)[4](index=4&type=chunk) - Tangible book value per common share increased **0.6% ($0.12)** QoQ and **4.63% ($0.90)** YoY[4](index=4&type=chunk) - Allowance for credit losses (ACL) to total loans increased to **1.15%** from 1.14% (Dec 31, 2023) and 1.02% (Mar 31, 2023)[4](index=4&type=chunk) - Authorized a stock buyback program of up to **$50 million** over a year[4](index=4&type=chunk) - Sold **$120.1 million** of lower-yielding AFS debt securities (**3.11% yield**) and reinvested proceeds in higher-yielding AFS securities (**6.24% yield**)[4](index=4&type=chunk) - Declared a quarterly cash dividend of **$0.20 per share**[4](index=4&type=chunk) [Results of Operations](index=2&type=section&id=Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202024) Veritex Holdings, Inc.'s operational results for Q1 2024 show a decrease in net interest income, a significant increase in noninterest income quarter-over-quarter, and rising noninterest expenses [Net Interest Income](index=2&type=section&id=Net%20Interest%20Income) Net interest income before provision for credit losses decreased both quarter-over-quarter and year-over-year, primarily due to increased funding costs on deposits, despite some offsets from increased interest income on debt securities and decreased FHLB advances Net Interest Income and Margin Trends | Metric | Q1 2024 | Q4 2023 | Change (QoQ) | Q1 2023 | Change (YoY) | | :------------------------------------ | :------ | :------ | :----------- | :------ | :----------- | | Net interest income (in thousands) | $92,806 | $95,533 | -$2,727 (-2.9%) | $103,389 | -$10,583 (-10.2%) | | Net interest margin | 3.24 % | 3.31 % | -7 bps | 3.69 % | -45 bps | - QoQ decrease in net interest income was primarily due to a **$3.5 million** decrease in interest income on loans (lower yields), an **$817 thousand** decrease in interest income on equity securities, and a **$559 thousand** increase in interest expense on transaction and savings deposits (higher funding costs). Partially offset by a **$1.4 million** increase in interest income on debt securities and a **$1.2 million** decrease in FHLB advances[5](index=5&type=chunk) - YoY decrease in net interest income was primarily due to a **$19.5 million** increase in interest expense on certificates and other time deposits and a **$16.9 million** increase in interest expense on transaction and savings deposits. Partially offset by an **$11.0 million** decrease in FHLB advances, a **$10.2 million** increase in interest income on loans (higher yields and average balances), a **$2.7 million** increase in interest income on debt securities, and a **$2.5 million** increase in interest income on deposits in financial institutions[6](index=6&type=chunk) [Noninterest Income](index=2&type=section&id=Noninterest%20Income) Noninterest income saw a substantial increase quarter-over-quarter due to the absence of a prior period's equity method investment write-down, but a significant decrease year-over-year mainly driven by lower government guaranteed loan income Noninterest Income (in thousands) | Metric | Q1 2024 | Q4 2023 | Change (QoQ) | Q1 2023 | Change (YoY) | | :----------------------- | :------ | :------ | :----------- | :------ | :----------- | | Total noninterest income | $6,662 | -$17,792 | +$24,454 (+137.4%) | $13,531 | -$6,869 (-50.8%) | - QoQ increase primarily due to a **$29.4 million** loss in equity method investment income in Q4 2023 (related to Thrive Mortgage write-down) with no corresponding loss in Q1 2024. Also, a **$1.5 million** increase in other income (driven by BOLI income and loan fees). Partially offset by a **$6.3 million** loss on sales of investment securities from a strategic restructuring[7](index=7&type=chunk) - YoY decrease primarily due to a **$7.1 million** decrease in government guaranteed loan income (driven by lower USDA sales), a **$983 thousand** decrease in loss on sales of investment securities, and an **$849 thousand** decrease in other noninterest income[8](index=8&type=chunk) [Noninterest Expense](index=2&type=section&id=Noninterest%20Expense) Noninterest expense increased both quarter-over-quarter and year-over-year, mainly driven by higher salaries and employee benefits and other noninterest expenses, as well as increased professional and regulatory fees Noninterest Expense (in thousands) | Metric | Q1 2024 | Q4 2023 | Change (QoQ) | Q1 2023 | Change (YoY) | | :-------------------- | :------ | :------ | :----------- | :------ | :----------- | | Total noninterest expense | $62,116 | $60,238 | +$1,878 (+3.1%) | $56,615 | +$5,501 (+9.7%) | - QoQ increase primarily due to a **$2.8 million** increase in salaries and employee benefits and an **$892 thousand** increase in other noninterest expense. Partially offset by a **$1.6 million** decrease in professional and regulatory fees, which included a **$768 thousand** FDIC special assessment in Q4 2023[9](index=9&type=chunk) - YoY increase primarily due to a **$3.0 million** increase in other noninterest expense, a **$1.7 million** increase in professional and regulatory fees (due to crossing **$10 billion** in total assets), and a **$1.5 million** increase in salaries and employee benefits[10](index=10&type=chunk) [Income Tax](index=3&type=section&id=Income%20Tax) Income tax expense increased quarter-over-quarter, with an effective tax rate of approximately 23.1% for Q1 2024, influenced by a net discrete tax expense Income Tax (in thousands) | Metric | Q1 2024 | Q4 2023 | Change (QoQ) | | :------------------ | :------ | :------ | :----------- | | Income tax expense | $7,237 | $6,004 | +$1,233 (+20.5%) | | Effective tax rate | 23.1 % | - | - | - The effective tax rate for Q1 2024 was primarily due to a net discrete tax expense of **$384 thousand** associated with the recognition of an excess tax expense realized on share-based payment awards[15](index=15&type=chunk) [Financial Condition](index=3&type=section&id=Financial%20Condition) Veritex Holdings, Inc.'s financial condition in Q1 2024 reflects modest loan growth and significant deposit growth, with shifts in deposit composition [Loans Held for Investment (LHI)](index=3&type=section&id=Loans%20Held%20for%20Investment%20%28LHI%29) Total loans held for investment showed modest annualized growth compared to the previous quarter Loans Held for Investment (in thousands) | Metric | Mar 31, 2024 | Dec 31, 2023 | Change (QoQ) | | :-------------------- | :----------- | :----------- | :----------- | | Total LHI | $9,250,000 | $9,207,000 | +$43,000 (+1.9% annualized) | [Deposits](index=3&type=section&id=Deposits) Total deposits experienced significant annualized growth, driven primarily by increases in certificates and other time deposits, and noninterest-bearing deposits Total Deposits (in thousands) | Metric | Mar 31, 2024 | Dec 31, 2023 | Change (QoQ) | | :------------ | :----------- | :----------- | :----------- | | Total deposits | $10,653,820 | $10,338,195 | +$315,625 (+12.2% annualized) | - The increase in deposits was primarily due to a **$295.1 million** increase in certificates and other time deposits, a **$131.2 million** increase in noninterest-bearing deposits, and a **$17.7 million** increase in correspondent money market account balances. This was partially offset by a **$128.3 million** decrease in interest-bearing transaction and savings deposits[12](index=12&type=chunk) [Credit Quality](index=3&type=section&id=Credit%20Quality) Veritex Holdings, Inc.'s credit quality in Q1 2024 showed an increase in nonperforming assets but a decrease in net charge-offs, with a slight rise in the allowance for credit losses ratio [Nonperforming Assets (NPAs)](index=3&type=section&id=Nonperforming%20Assets%20%28NPAs%29) Nonperforming assets increased both in absolute terms and as a percentage of total assets, indicating a slight deterioration in asset quality Nonperforming Assets (in thousands) | Metric | Mar 31, 2024 | Dec 31, 2023 | Change (QoQ) | | :-------------------- | :----------- | :----------- | :----------- | | Total NPAs | $103,800 | $95,800 | +$8,000 | | NPAs to total assets | 0.82 % | 0.77 % | +0.05 pp | [Net Charge-offs](index=3&type=section&id=Net%20Charge-offs) Net charge-offs decreased significantly quarter-over-quarter, leading to a lower annualized net charge-off ratio Net Charge-offs (in thousands) | Metric | Q1 2024 | Q4 2023 | Change (QoQ) | | :------------------------------------ | :------ | :------ | :----------- | | Net charge-offs | $5,300 | $9,500 | -$4,200 | | Annualized net charge-offs to average loans outstanding | 22 bps | 40 bps | -18 bps | [Allowance for Credit Losses (ACL)](index=3&type=section&id=Allowance%20for%20Credit%20Losses%20%28ACL%29) The Allowance for Credit Losses (ACL) as a percentage of LHI slightly increased, and the provision for credit losses decreased quarter-over-quarter, primarily due to changes in economic factors and a decrease in unfunded commitment balances Allowance for Credit Losses and Provision (in thousands) | Metric | Mar 31, 2024 | Dec 31, 2023 | Change (QoQ) | | :------------------------------------ | :----------- | :----------- | :----------- | | ACL as a percentage of LHI | 1.15 % | 1.14 % | +0.01 pp | | Provision for credit losses | $7,500 | $9,500 | -$2,000 | | Benefit for unfunded commitments | $1,500 | $1,500 | $0 | - The provision for credit losses in Q1 2024 was primarily attributable to an increase in general reserves due to changes in economic factors. The benefit for unfunded commitments was due to a decrease in unfunded commitment balances, partially offset by changes in economic factors[14](index=14&type=chunk) [Capital & Dividends](index=3&type=section&id=Capital%20%26%20Dividends) Veritex Holdings, Inc. maintained strong capital ratios and declared a consistent quarterly cash dividend, reflecting a solid financial position [Dividend Information](index=3&type=section&id=Dividend%20Information) Veritex's Board of Directors declared a consistent quarterly cash dividend for its common stock - A quarterly cash dividend of **$0.20 per share** of outstanding common stock was declared, payable on or after May 24, 2024, to stockholders of record as of May 10, 2024[16](index=16&type=chunk) [Capital Ratios](index=5&type=section&id=Capital%20Ratios) Veritex maintained strong capital ratios, with improvements across key metrics such as Common Equity Tier 1 and Total Capital to risk-weighted assets, indicating a solid capital position Veritex Holdings, Inc. Capital Ratios | Metric | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | | :------------------------------------ | :----------- | :----------- | :----------- | | Average stockholders' equity to average total assets | 12.43 % | 12.27 % | 12.09 % | | Tangible common equity to tangible assets | 9.02 % | 9.18 % | 8.66 % | | Tier 1 capital to average assets (leverage) | 10.12 % | 10.03 % | 9.67 % | | Common equity tier 1 capital | 10.37 % | 10.29 % | 9.32 % | | Tier 1 capital to risk-weighted assets | 10.63 % | 10.56 % | 9.56 % | | Total capital to risk-weighted assets | 13.33 % | 13.18 % | 11.99 % | [Non-GAAP Financial Measures Reconciliation](index=3&type=section&id=Non-GAAP%20Financial%20Measures%20Reconciliation) This section reconciles non-GAAP financial measures to their most directly comparable GAAP measures, providing additional insights into Veritex's operational and financial performance [Overview of Non-GAAP Measures](index=3&type=section&id=Overview%20of%20Non-GAAP%20Measures) Veritex's management utilizes various non-GAAP financial measures to assess operating performance and provide investors with supplementary information, emphasizing that these measures should be considered in addition to, not as a replacement for, GAAP results - Veritex's management uses non-GAAP financial measures to evaluate operating performance and provide important investor information, emphasizing they are supplemental to GAAP results[17](index=17&type=chunk) - Non-GAAP measures include 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, and related diluted EPS and return ratios[17](index=17&type=chunk) [Tangible Book Value Per Common Share](index=13&type=section&id=Tangible%20Book%20Value%20Per%20Common%20Share) Tangible book value per common share, a non-GAAP measure, increased quarter-over-quarter, providing a clearer view of shareholder value by excluding goodwill and core deposit intangibles - Tangible book value per common share is calculated by subtracting goodwill and core deposit intangibles from total stockholders' equity and dividing by common shares outstanding. It is used by analysts to evaluate financial institutions, providing insight into book value exclusive of intangible assets[43](index=43&type=chunk)[44](index=44&type=chunk) Tangible Book Value Per Common Share Reconciliation (in thousands, except per share data) | Metric | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | | :------------------------------------ | :----------- | :----------- | :----------- | | Total stockholders' equity | $1,538,515 | $1,531,323 | $1,493,737 | | Goodwill | ($404,452) | ($404,452) | ($404,452) | | Core deposit intangibles | ($26,057) | ($28,495) | ($35,808) | | Tangible common equity | $1,108,006 | $1,098,376 | $1,053,477 | | Common shares outstanding | 54,496 | 54,338 | 54,229 | | Book value per common share (GAAP) | $28.23 | $28.18 | $27.54 | | Tangible book value per common share (Non-GAAP) | $20.33 | $20.21 | $19.43 | [Tangible Common Equity to Tangible Assets](index=14&type=section&id=Tangible%20Common%20Equity%20to%20Tangible%20Assets) The tangible common equity to tangible assets ratio, a non-GAAP measure, slightly decreased quarter-over-quarter but remained strong, offering a view of capital adequacy adjusted for intangible assets - This ratio is calculated by dividing tangible common equity by tangible assets, both adjusted for goodwill and core deposit intangibles. It is important for investors to understand relative changes in common equity and total assets, excluding intangible assets[48](index=48&type=chunk)[49](index=49&type=chunk) Tangible Common Equity to Tangible Assets Reconciliation (in thousands) | Metric | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | | :------------------------------------ | :----------- | :----------- | :----------- | | Tangible common equity | $1,108,006 | $1,098,376 | $1,053,477 | | Total assets | $12,708,396 | $12,394,337 | $12,609,487 | | Goodwill | ($404,452) | ($404,452) | ($404,452) | | Core deposit intangibles | ($26,057) | ($28,495) | ($35,808) | | Tangible Assets | $12,277,887 | $11,961,390 | $12,169,227 | | Tangible Common Equity to Tangible Assets | 9.02 % | 9.18 % | 8.66 % | [Return on Average Tangible Common Equity](index=15&type=section&id=Return%20on%20Average%20Tangible%20Common%20Equity) Return on average tangible common equity, a non-GAAP measure, significantly improved quarter-over-quarter, reflecting better profitability relative to tangible equity, especially relevant for acquisitive institutions - This measure adjusts net income for amortization of core deposit intangibles and relates it to average tangible common equity. It is important for investors interested in return on common equity, excluding the impact of core deposit intangibles, particularly for acquisitive institutions[52](index=52&type=chunk)[53](index=53&type=chunk) Return on Average Tangible Common Equity Reconciliation (in thousands) | Metric | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | | :------------------------------------ | :----------- | :----------- | :----------- | | Net income (GAAP) | $24,156 | $3,499 | $38,411 | | Net income available for common stockholders adjusted for amortization of core deposit intangibles (Non-GAAP) | $26,082 | $5,425 | $40,337 | | Average tangible common equity | $1,101,760 | $1,075,741 | $1,034,763 | | Return on Average Tangible Common Equity (Annualized) | 9.52 % | 2.00 % | 15.81 % | [Operating Earnings and Related Metrics](index=18&type=section&id=Operating%20Earnings%20and%20Related%20Metrics) Operating earnings and pre-tax, pre-provision operating earnings, along with their related performance metrics, are non-GAAP measures used to provide a clearer view of the company's ongoing operational performance by adjusting for certain non-recurring or non-core items - Operating earnings and pre-tax, pre-provision operating earnings are non-GAAP measures used by management and investors to understand ongoing operating performance and facilitate peer comparisons. Adjustments include severance payments, loss on sale of AFS securities, equity method investment write-down, and FDIC special assessment[56](index=56&type=chunk)[57](index=57&type=chunk) Operating Earnings Reconciliation (in thousands, except per share data) | Metric | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | | :------------------------------------ | :----------- | :----------- | :----------- | | Net income (GAAP) | $24,156 | $3,499 | $38,411 | | Operating earnings (Non-GAAP) | $29,137 | $31,625 | $43,274 | | Diluted EPS (GAAP) | $0.44 | $0.06 | $0.70 | | Diluted operating EPS (Non-GAAP) | $0.53 | $0.58 | $0.79 | Pre-Tax, Pre-Provision Operating Earnings and Related Ratios (in thousands) | Metric | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | | :------------------------------------ | :----------- | :----------- | :----------- | | Pre-tax, pre-provision operating earnings | $43,656 | $47,688 | $66,382 | | Pre-tax, pre-provision operating return on average assets | 1.42 % | 1.54 % | 2.20 % | | Pre-tax, pre-provision operating return on average loans | 1.84 % | 1.97 % | 2.83 % | | Operating return on average assets | 0.95 % | 1.02 % | 1.44 % | | Operating return on average tangible common equity | 11.34 % | 12.37 % | 17.72 % | | Operating efficiency ratio | 58.73 % | 55.50 % | 45.63 % | [Corporate Information & Forward-Looking Statements](index=4&type=section&id=Corporate%20Information%20%26%20Forward-Looking%20Statements) This section provides details on Veritex Holdings, Inc.'s corporate profile, investor communication, and important disclaimers regarding forward-looking statements [Conference Call Details](index=4&type=section&id=Conference%20Call%20Details) Veritex Holdings, Inc. hosted an investor conference call and webcast to discuss the Q1 2024 results, with replay options available - An investor conference call and webcast were held on Wednesday, April 24, 2024, at 8:30 a.m. Central Time. A replay was made available within approximately two hours after the call and accessible for one week[18](index=18&type=chunk)[20](index=20&type=chunk) [About Veritex Holdings, Inc.](index=4&type=section&id=About%20Veritex%20Holdings%2C%20Inc.) Veritex Holdings, Inc. is a Dallas-based bank holding company operating Veritex Community Bank across the Dallas-Fort Worth and Houston metropolitan areas - Veritex is a bank holding company headquartered in Dallas, Texas, conducting banking activities through its wholly-owned subsidiary, Veritex Community Bank, with locations in the Dallas-Fort Worth metroplex and Houston metropolitan area[21](index=21&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) The report includes forward-looking statements subject to various risks and uncertainties that may cause actual results to differ materially from projections, and the company disclaims any obligation to update these statements - The earnings release contains forward-looking statements based on assumptions and expectations, which are subject to known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially[22](index=22&type=chunk) - Readers are cautioned not to place undue reliance on forward-looking statements, and Veritex does not undertake any obligation to update or revise them, except as required by law[22](index=22&type=chunk) [Financial Highlights (Detailed Tables)](index=5&type=section&id=Financial%20Highlights%20%28Detailed%20Tables%29) This section provides comprehensive detailed financial tables, including per share data, balance sheet, income statement, average balances, and asset quality metrics for Veritex Holdings, Inc [Per Share Data, Common Stock Data, and Performance Ratios](index=5&type=section&id=Per%20Share%20Data%2C%20Common%20Stock%20Data%2C%20and%20Performance%20Ratios) This section provides a detailed breakdown of per share data, common stock metrics, credit ratios, and key performance ratios for Veritex Holdings, Inc. across multiple quarters Financial Highlights: Per Share Data, Common Stock Data, Credit Ratios, Performance Ratios (For the Quarter Ended) | Metric | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | | :------------------------------------ | :----------- | :----------- | :----------- | :----------- | :----------- | | **Per Share Data (Common Stock):** | | | | | | | Basic EPS | $0.44 | $0.06 | $0.60 | $0.62 | $0.71 | | Diluted EPS | $0.44 | $0.06 | $0.60 | $0.62 | $0.70 | | Book value per common share | $28.23 | $28.18 | $27.46 | $27.48 | $27.54 | | Tangible book value per common share | $20.33 | $20.21 | $19.44 | $19.41 | $19.43 | | Dividends paid per common share outstanding | $0.20 | $0.20 | $0.20 | $0.20 | $0.20 | | **Common Stock Data:** | | | | | | | Shares outstanding at period end (in thousands) | 54,496 | 54,338 | 54,305 | 54,261 | 54,229 | | Weighted average diluted shares outstanding (in thousands) | 54,842 | 54,691 | 54,597 | 54,486 | 54,606 | | **Summary of Credit Ratios:** | | | | | | | ACL to total LHI | 1.15 % | 1.14 % | 1.14 % | 1.05 % | 1.02 % | | NPAs to total assets | 0.82 % | 0.77 % | 0.65 % | 0.55 % | 0.35 % | | Net charge-offs to average loans outstanding | 0.22 % | 0.40 % | 0.08 % | 0.48 % | 0.04 % | | **Summary Performance Ratios:** | | | | | | | Return on average assets | 0.79 % | 0.11 % | 1.06 % | 1.10 % | 1.28 % | | Return on average equity | 6.33 % | 0.92 % | 8.58 % | 8.96 % | 10.55 % | | Net interest margin | 3.24 % | 3.31 % | 3.46 % | 3.51 % | 3.69 % | | **Selected Performance Metrics - Operating:** | | | | | | | Diluted operating EPS | $0.53 | $0.58 | $0.60 | $0.64 | $0.79 | | Operating efficiency ratio | 58.73 % | 55.50 % | 54.49 % | 48.90 % | 45.63 % | | **Veritex Holdings, Inc. Capital Ratios:** | | | | | | | Common equity tier 1 capital | 10.37 % | 10.29 % | 10.11 % | 9.76 % | 9.32 % | | Total capital to risk-weighted assets | 13.33 % | 13.18 % | 12.95 % | 12.51 % | 11.99 % | [Balance Sheet Highlights](index=6&type=section&id=Balance%20Sheet%20Highlights) This section presents a detailed breakdown of Veritex's assets, liabilities, and stockholders' equity over the past five quarters, highlighting the composition and trends of key balance sheet items Balance Sheet (in thousands) | Metric | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | | :------------------------------------ | :----------- | :----------- | :----------- | :----------- | :----------- | | **ASSETS** | | | | | | | Total loans | $9,763,844 | $9,663,412 | $9,669,527 | $9,723,314 | $9,717,476 | | Total assets | $12,708,396 | $12,394,337 | $12,346,331 | $12,470,368 | $12,609,487 | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | | | | Total deposits | $10,653,820 | $10,338,195 | $10,196,518 | $9,233,909 | $9,034,738 | | Advances from FHLB | $100,000 | $100,000 | $200,000 | $1,325,000 | $1,680,000 | | Total liabilities | $11,169,881 | $10,863,014 | $10,855,165 | $10,979,088 | $11,115,750 | | Total stockholders' equity | $1,538,515 | $1,531,323 | $1,491,166 | $1,491,280 | $1,493,737 | | Total liabilities and stockholders' equity | $12,708,396 | $12,394,337 | $12,346,331 | $12,470,368 | $12,609,487 | [Income Statement Highlights](index=7&type=section&id=Income%20Statement%20Highlights) This section provides a detailed income statement for Veritex Holdings, Inc. over the past five quarters, showing trends in interest income, interest expense, net interest income, noninterest income, noninterest expense, and net income Income Statement (in thousands, except per share data) | Metric | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | | :------------------------------------ | :----------- | :----------- | :----------- | :----------- | :----------- | | Total interest income | $184,587 | $187,604 | $187,115 | $182,518 | $169,637 | | Total interest expense | $91,781 | $92,071 | $87,754 | $81,687 | $66,248 | | Net interest income | $92,806 | $95,533 | $99,361 | $100,831 | $103,389 | | Provision for credit losses | $7,500 | $9,500 | $8,627 | $15,000 | $9,385 | | Total noninterest income (loss) | $6,662 | ($17,792) | $9,674 | $13,692 | $13,531 | | Total noninterest expense | $62,116 | $60,238 | $59,414 | $57,197 | $56,615 | | Income before income tax expense | $31,393 | $9,503 | $41,903 | $43,455 | $49,423 | | Income tax expense | $7,237 | $6,004 | $9,282 | $9,725 | $11,012 | | Net income | $24,156 | $3,499 | $32,621 | $33,730 | $38,411 | | Diluted EPS | $0.44 | $0.06 | $0.60 | $0.62 | $0.70 | [Average Balances and Rates](index=8&type=section&id=Average%20Balances%20and%20Rates) This section details the average balances, interest earned/paid, and yields/rates for interest-earning assets and interest-bearing liabilities, along with net interest rate spread and net interest margin trends over several quarters Average Balances and Rates (For the Quarter Ended) | Metric | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | | :------------------------------------ | :----------- | :----------- | :----------- | | **Interest-earning assets:** | | | | | Average Loans (in thousands) | $9,283,815 | $9,280,439 | $9,141,137 | | Yield on Loans | 6.83 % | 6.88 % | 6.51 % | | Total interest-earning assets (in thousands) | $11,519,228 | $11,440,760 | $11,357,096 | | Yield on Total interest-earning assets | 6.44 % | 6.51 % | 6.06 % | | **Interest-bearing liabilities:** | | | | | Average Interest-bearing demand and savings deposits (in thousands) | $4,639,445 | $4,547,911 | $4,150,995 | | Rate on Interest-bearing demand and savings deposits | 4.06 % | 4.03 % | 2.92 % | | Total interest-bearing liabilities (in thousands) | $8,254,050 | $8,245,658 | $8,093,657 | | Rate on Total interest-bearing liabilities | 4.47 % | 4.43 % | 3.32 % | | Net interest rate spread | 1.97 % | 2.08 % | 2.74 % | | Net interest margin | 3.24 % | 3.31 % | 3.69 % | Supplemental Yield Trend | Metric | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | | :------------------------------------ | :----------- | :----------- | :----------- | :----------- | :----------- | | Average cost of interest-bearing deposits | 4.43 % | 4.38 % | 4.12 % | 3.61 % | 3.06 % | | Average costs of total deposits, including noninterest-bearing | 3.42 % | 3.37 % | 3.15 % | 2.73 % | 2.24 % | [LHI and Deposit Portfolio Composition](index=11&type=section&id=LHI%20and%20Deposit%20Portfolio%20Composition) This section provides a detailed breakdown of the loan held for investment (LHI) and deposit portfolios by type, along with key loan-to-deposit ratios, illustrating the composition of the company's core banking activities LHI Portfolio Composition (in thousands, except percentages) | LHI Category | Mar 31, 2024 | % of Total | Dec 31, 2023 | % of Total | Mar 31, 2023 | % of Total | | :------------------------------------ | :----------- | :--------- | :----------- | :--------- | :----------- | :--------- | | Commercial and Industrial ("C&I") | $2,785,987 | 30.1 % | $2,752,063 | 29.9 % | $2,895,957 | 31.3 % | | Real Estate: Owner occupied commercial ("OOCRE") | $788,376 | 8.5 % | $794,088 | 8.6 % | $631,563 | 6.8 % | | Real Estate: Non-owner occupied commercial ("NOOCRE") | $2,352,993 | 25.5 % | $2,350,725 | 25.5 % | $2,505,344 | 27.1 % | | Real Estate: Construction and land | $1,568,257 | 16.9 % | $1,734,254 | 18.8 % | $1,831,349 | 19.8 % | | 1-4 family residential | $969,401 | 10.5 % | $937,119 | 10.2 % | $896,252 | 9.7 % | | Multi-family residential | $751,607 | 8.1 % | $605,817 | 6.6 % | $432,209 | 4.6 % | | Consumer | $8,882 | 0.1 % | $10,149 | 0.1 % | $8,316 | 0.1 % | | Total LHI | $9,256,482 | 100 % | $9,215,329 | 100 % | $9,252,670 | 100 % | | Mortgage warehouse ("MW") | $449,531 | | $377,796 | | $437,501 | | Deposit Portfolio Composition (in thousands, except percentages) | Deposit Category | Mar 31, 2024 | % of Total | Dec 31, 2023 | % of Total | Mar 31, 2023 | % of Total | | :------------------------------------ | :----------- | :--------- | :----------- | :--------- | :----------- | :--------- | | Noninterest-bearing | $2,349,211 | 22.1 % | $2,218,036 | 21.5 % | $2,212,389 | 24.5 % | | Interest-bearing transaction | $724,171 | 6.8 % | $927,193 | 8.9 % | $866,609 | 9.6 % | | Money market | $3,326,742 | 31.2 % | $3,284,324 | 31.8 % | $2,518,922 | 27.9 % | | Savings | $169,201 | 1.6 % | $136,868 | 1.3 % | $106,480 | 1.2 % | | Certificates and other time deposits | $3,486,805 | 32.7 % | $3,191,737 | 30.9 % | $2,896,870 | 32.0 % | | Correspondent money market accounts | $597,690 | 5.6 % | $580,037 | 5.6 % | $433,468 | 4.8 % | | Total deposits | $10,653,820 | 100 % | $10,338,195 | 100 % | $9,034,738 | 100 % | | Total Loans to Deposits Ratio | 91.7 % | | 93.6 % | | 107.7 % | | [Asset Quality Details](index=12&type=section&id=Asset%20Quality%20Details) This section provides detailed asset quality metrics, including nonperforming assets (NPAs), net charge-offs by loan category, and the allowance for credit losses (ACL), offering a comprehensive view of credit risk Nonperforming Assets (NPAs) (in thousands, except percentages) | Metric | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | | :------------------------------------ | :----------- | :----------- | :----------- | :----------- | :----------- | | Nonaccrual loans | $75,721 | $79,133 | $65,676 | $54,055 | $31,452 | | Nonaccrual PCD loans | $9,419 | $13,715 | $13,718 | $13,721 | $12,784 | | Accruing loans 90 or more days past due | $220 | $2,975 | $474 | $528 | $296 | | Total nonperforming loans held for investment ("NPLs") | $85,360 | $95,823 | $79,868 | $68,304 | $44,532 | | Other real estate owned | $18,445 | — | — | — | — | | Total NPAs | $103,805 | $95,823 | $79,868 | $68,304 | $44,532 | | NPAs to total assets | 0.82 % | 0.77 % | 0.65 % | 0.55 % | 0.35 % | | NPLs to total LHI | 0.88 % | 1.00 % | 0.83 % | 0.70 % | 0.46 % | | ACL to total LHI | 1.15 % | 1.14 % | 1.14 % | 1.05 % | 1.02 % | Net Charge-offs by Loan Category (in thousands) | Category | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | | :------------------------------------ | :----------- | :----------- | :----------- | :----------- | :----------- | | 1-4 family residential | $0 | ($21) | $0 | $0 | $0 | | Multifamily | ($192) | $0 | $0 | $0 | $0 | | OOCRE | ($120) | ($364) | ($375) | $0 | ($116) | | NOOCRE | ($4,293) | ($5,434) | $0 | ($8,215) | $0 | | C&I | ($946) | ($3,893) | ($1,929) | ($3,540) | ($1,051) | | Consumer | ($71) | ($33) | ($49) | ($92) | ($62) | | Total charge-offs | ($5,430) | ($9,937) | ($2,353) | ($11,847) | ($1,229) | | Total recoveries | $146 | $422 | $522 | $303 | $371 | | Net charge-offs | ($5,284) | ($9,515) | ($1,831) | ($11,544) | ($858) | | Provision for credit losses | $7,500 | $9,500 | $8,627 | $15,000 | $9,385 | | ACL | $112,032 | $109,816 | $109,831 | $102,150 | $98,694 |

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ Annual Report to Section 13 OR 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 2023 OR ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission File No. 001-36682 Veritex Holdings, Inc. (Exact name of registrant as specified in its charter) | Texas | 27-0973566 | | --- | --- | | (State or other jurisdiction of | ...

Veritex Holdings, Inc. (NASDAQ:VBTX) Q4 2023 Earnings Conference Call January 24, 2024 9:30 AM ET Company Participants Will Holford - Director of Strategic Corporate Development Malcolm Holland - Chairman and Chief Executive Officer Terry Earley - Chief Financial Officer Clay Riebe - Chief Credit Officer Conference Call Participants Matt Olney - Stephens Brady Gailey - KBW Brett Rabatin - Hovde Group Stephen Scouten - Piper Sandler Ahmad Hasan - D.A. Davidson Michael Rose - Raymond James Operator Good morni ...

1 Past due loans exclude purchased credit deteriorated loans that are accounted for on a pooled basis and non-accrual loans. 2 Total loans excludes Loans Held for Sale, MW and PPP loans. Totals: 0.19% 0.36% 0.38% 0.16% 0.25% 15 Credit Quality (continued) Total CRE Criticized $341.7 MM Summary • Criticized loans = $506.6 MM, down 4% from 3Q23 • 7% decrease in criticized loans compared to December 31, 2022 Quarterly Criticized Loans ($ in millions, excluding PCD loans) $297.7 $204.8 $287.1 $304.5 $293.4 $175. ...

PART I — FINANCIAL INFORMATION [Item 1. Financial Statements – Unaudited](index=3&type=section&id=Item%201.%20Financial%20Statements%20%E2%80%93%20Unaudited) This section presents the unaudited consolidated financial statements of Veritex Holdings, Inc. and its subsidiaries, including the balance sheets, statements of income, comprehensive income, changes in stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies and financial instrument specifics [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights ($ thousands) | Metric | September 30, 2023 | December 31, 2022 | Change (%) | | :-------------------------------- | :------------------- | :------------------ | :--------- | | Total Assets | $12,346,331 | $12,154,361 | 1.58% | | Total Liabilities | $10,855,165 | $10,704,588 | 1.41% | | Total Stockholders' Equity | $1,491,166 | $1,449,773 | 2.86% | | Total Deposits | $10,196,518 | $9,123,234 | 11.76% | | Total LHI, net | $9,518,383 | $9,391,599 | 1.35% | [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) Consolidated Statements of Income Highlights ($ thousands, except per share amounts) | Metric | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net Interest Income | $99,361 | $101,040 | $303,581 | $258,560 | | Provision for credit losses | $8,627 | $6,650 | $33,012 | $15,150 | | Total Noninterest Income | $9,674 | $13,021 | $36,897 | $38,496 | | Total Noninterest Expense | $59,414 | $50,991 | $173,226 | $145,716 | | Net Income | $32,621 | $43,322 | $104,762 | $106,418 | | Basic EPS | $0.60 | $0.80 | $1.93 | $2.01 | | Diluted EPS | $0.60 | $0.79 | $1.92 | $1.98 | [Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) Consolidated Statements of Comprehensive Income (Loss) Highlights ($ thousands) | Metric | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net Income | $32,621 | $43,322 | $104,762 | $106,418 | | Other comprehensive loss, net of tax | $(24,646) | $(53,075) | $(38,430) | $(138,561) | | Comprehensive Income (Loss) | $7,975 | $(9,753) | $66,332 | $(32,143) | [Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Changes in Stockholders' Equity (Nine Months Ended September 30, 2023) ($ thousands) | Item | Amount | | :-------------------------------- | :------- | | Balance at December 31, 2022 | $1,449,773 | | Net income | $104,762 | | Dividends paid | $(32,548) | | Other comprehensive loss | $(38,430) | | Balance at September 30, 2023 | $1,491,166 | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows Highlights (Nine Months Ended September 30) ($ thousands) | Activity | 2023 | 2022 | | :-------------------------------- | :------- | :--------- | | Net cash provided by operating activities | $138,068 | $149,388 | | Net cash provided by (used in) investing activities | $74,898 | $(1,970,773) | | Net cash provided by financing activities | $64,365 | $1,875,498 | | Net increase in cash and cash equivalents | $277,331 | $54,113 | | Cash and cash equivalents at end of period | $713,408 | $433,897 | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) [1. Summary of Significant Accounting Policies](index=10&type=section&id=1.%20Summary%20of%20Significant%20Accounting%20Policies) - Veritex Holdings, Inc. and its subsidiaries, including Veritex Community Bank, operate as a Texas state banking organization, providing commercial and retail banking services primarily in the Dallas-Fort Worth metroplex and Houston metropolitan area[27](index=27&type=chunk)[28](index=28&type=chunk) Earnings Per Share (EPS) ($ thousands, except per share amounts) | Metric | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Basic EPS | $0.60 | $0.80 | $1.93 | $2.01 | | Diluted EPS | $0.60 | $0.79 | $1.92 | $1.98 | - An interim quantitative impairment test for goodwill was performed in Q2 2023 due to significant volatility in the banking industry, concluding that goodwill was not impaired as the fair value of the reporting unit exceeded its carrying value, with no significant changes observed in Q3 2023[38](index=38&type=chunk) [2. Supplemental Statement of Cash Flows](index=12&type=section&id=2.%20Supplemental%20Statement%20of%20Cash%20Flows) Supplemental Cash Flow Information (Nine Months Ended September 30) ($ thousands) | Item | 2023 | 2022 | | :-------------------------------- | :------- | :------- | | Cash paid for interest | $208,668 | $34,647 | | Cash paid for income taxes | $38,893 | $26,000 | | Transfer of AFS debt securities to HTM debt securities | $0 | $117,001 | [3. Securities](index=12&type=section&id=3.%20Securities) Equity Securities with Readily Determinable Fair Value ($ thousands) | Metric | September 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------------- | :------------------ | | Fair Value | $9,457 | $9,792 | | Unrealized loss recognized (9M) | $(335) | $(1,299) | - Equity securities without readily determinable fair values, measured at cost, increased to **$11,256 thousand** as of September 30, 2023, from **$10,072 thousand** as of December 31, 2022[41](index=41&type=chunk) Debt Securities Fair Value ($ thousands) | Category | September 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------------- | :------------------ | | AFS Debt Securities (Fair Value) | $879,083 | $1,096,292 | | HTM Debt Securities (Fair Value) | $147,836 | $158,781 | | Gross Unrealized Losses (AFS) | $130,357 | $101,162 | - The number of AFS debt securities in an unrealized loss position decreased to **148** at September 30, 2023, from **175** at December 31, 2022, with management attributing these losses to noncredit-related factors and not intending to sell these securities before recovery[49](index=49&type=chunk) Sales of AFS Debt Securities (Nine Months Ended September 30) ($ thousands) | Metric | 2023 | 2022 | | :-------------------------------- | :------- | :------- | | Proceeds from sales | $109,793 | $0 | | Gross realized losses | $5,321 | $0 | [4. LHI and ACL](index=18&type=section&id=4.%20LHI%20and%20ACL) Loans Held for Investment (LHI) and Allowance for Credit Losses (ACL) ($ thousands) | Metric | September 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------------- | :------------------ | | Total LHI, carried at amortized cost | $9,638,352 | $9,501,624 | | Less: Allowance for credit losses (ACL) | $(109,831) | $(91,052) | | Total LHI, net | $9,518,383 | $9,391,599 | Provision for Credit Losses on LHI ($ thousands) | Period | 2023 | 2022 | | :-------------------------------- | :------- | :------- | | 3 Months Ended Sep 30 (non-PCD loans) | $8,730 | $9,203 | | 9 Months Ended Sep 30 (non-PCD loans) | $32,947 | $20,908 | Nonaccrual Loans ($ thousands) | Category | September 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------------- | :------------------ | | Total Nonaccrual Loans | $79,394 | $43,542 | | Interest income not recognized (3M) | $1,921 | $434 | | Interest income not recognized (9M) | $4,689 | $1,912 | Loan Modifications to Borrowers Experiencing Financial Difficulty (Nine Months Ended September 30, 2023) ($ thousands) | Type of Concession | Loan Class | Amortized Cost Basis | | :-------------------------------- | :------------------- | :------------------- | | Interest Rate Reduction | 1-4 Family Residential Rentals | $41,066 | | Term Extension | NOOCRE | $22,524 | | Term Extension | Commercial | $26,036 | Loans Held for Sale (LHFS) ($ thousands) | Category | September 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------------- | :------------------ | | Total LHFS | $41,313 | $20,641 | [5. Fair Value](index=29&type=section&id=5.%20Fair%20Value) Financial Assets Measured at Fair Value on a Recurring Basis (Level 2 Inputs) ($ thousands) | Asset | September 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------------- | :------------------ | | AFS debt securities | $879,083 | $1,096,292 | | Interest rate swap designated as hedging instruments | $20,893 | $26,523 | Financial Assets Measured at Fair Value on a Non-Recurring Basis (Level 3 Inputs) ($ thousands) | Asset | September 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------------- | :------------------ | | Collateral dependent loans with an ACL | $11,050 | $7,969 | | Servicing assets with a valuation allowance | $7,088 | $10,984 | Fair Value of Financial Instruments Not Measured at Fair Value (September 30, 2023) ($ thousands) | Instrument | Carrying Amount | Fair Value (Level 2/3) | | :-------------------------------- | :------------------- | :--------------------- | | HTM debt securities | $181,546 | $147,836 | | LHI | $9,507,333 | $9,326,018 | | Deposits | $10,196,518 | $9,418,008 | [6. Derivative Financial Instruments](index=31&type=section&id=6.%20Derivative%20Financial%20Instruments) Derivatives Designated as Hedging Instruments (Cash Flow Hedges) ($ thousands) | Metric | September 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------------- | :------------------ | | Total Notional Amount | $1,275,000 | $1,175,000 | | Total Asset Derivative Fair Value | $20,893 | $26,523 | | Total Liability Derivative Fair Value | $62,077 | $54,171 | | 9M (Loss) recognized in OCI on derivative | $(19,872) | $(43,370) | Derivatives Not Designated as Hedging Instruments ($ thousands) | Metric | September 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------------- | :------------------ | | Total Notional Amount | $2,284,768 | $1,747,362 | | 9M Net gain recognized in other noninterest income | $1,375 | $5,165 | [7. Off-Balance Sheet Loan Commitments](index=36&type=section&id=7.%20Off-Balance%20Sheet%20Loan%20Commitments) Off-Balance Sheet Financial Instruments ($ thousands) | Commitment Type | September 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------------- | :------------------ | | Commitments to extend credit | $3,325,075 | $4,511,671 | | MW commitments | $974,941 | $1,088,558 | | Standby and commercial letters of credit | $101,602 | $98,179 | | Total | $4,401,618 | $5,698,408 | Allowance for Unfunded Commitment Credit Losses ($ thousands) | Metric | September 30, 2023 | September 30, 2022 | | :-------------------------------- | :------------------- | :------------------- | | Ending balance of ACL on unfunded commitments | $9,545 | $10,609 | | 9M (Benefit) provision for credit losses on unfunded commitments | $(541) | $1,343 | [8. Stock-Based Awards](index=37&type=section&id=8.%20Stock-Based%20Awards) Stock Compensation Expense ($ thousands) | Plan | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | 2022 Equity Plan | $2,471 | $2,918 | $7,616 | $8,266 | | Veritex (Green) 2014 Plan | $489 | $197 | $1,398 | $811 | | Total | $2,960 | $3,115 | $9,014 | $9,077 | Outstanding Stock-Based Awards (Units) | Plan/Award Type | September 30, 2023 | September 30, 2022 | | :-------------------------------- | :------------------- | :------------------- | | 2022 Equity Plan - Stock Options | 634,739 | 667,494 | | 2022 Equity Plan - RSUs | 975,883 | 962,956 | | 2022 Equity Plan - PSUs | 129,768 | 132,564 | | Veritex (Green) 2014 Plan - Stock Options | 132,229 | 158,372 | | Veritex (Green) 2014 Plan - RSUs | 64,719 | 85,883 | | Veritex (Green) 2014 Plan - PSUs | 10,642 | 19,173 | | Green 2010 Plan - Stock Options | 10,784 | 43,162 | - Unrecognized compensation expense for RSUs and PSUs under the 2022 Equity Plan totaled **$16,869 thousand** as of September 30, 2023, expected to be recognized over **1.83 years**, while for the Veritex (Green) 2014 Plan, unrecognized expense was **$2,232 thousand**, to be recognized over **0.87 years**[119](index=119&type=chunk)[123](index=123&type=chunk) [9. Income Taxes](index=42&type=section&id=9.%20Income%20Taxes) Income Tax Expense and Effective Tax Rate ($ thousands) | Metric | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Income tax expense | $9,282 | $12,248 | $30,019 | $28,429 | | Effective tax rate | 22.2% | 22.0% | 22.3% | 21.1% | - Excluding discrete tax items, the effective tax rate was **20.9%** for the three months ended September 30, 2023 (due to **$505 thousand** net discrete tax expense) and **21.8%** for the nine months ended September 30, 2023 (due to **$658 thousand** net discrete tax expense)[126](index=126&type=chunk)[128](index=128&type=chunk) [10. Legal Contingencies](index=43&type=section&id=10.%20Legal%20Contingencies) - Management believes that the likelihood of a material adverse outcome on the Company's financial position, liquidity, or results of operations from legal actions arising in the normal course of business is remote[130](index=130&type=chunk) [11. Capital Requirements and Restrictions on Retained Earnings](index=43&type=section&id=11.%20Capital%20Requirements%20and%20Restrictions%20on%20Retained%20Earnings) - Both Veritex Holdings, Inc. and Veritex Community Bank exceeded the capital levels necessary to be categorized as 'well capitalized' as of September 30, 2023, and December 31, 2022[134](index=134&type=chunk) Regulatory Capital Ratios (Company) ($ thousands) | Metric | September 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------------- | :------------------ | | Total capital (to RWA) | 12.95% | 11.63% | | Tier 1 capital (to RWA) | 10.37% | 9.34% | | Common equity tier 1 (to RWA) | 10.11% | 9.09% | | Tier 1 capital (to average assets) | 10.10% | 9.82% | Regulatory Capital Ratios (Bank) ($ thousands) | Metric | September 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------------- | :------------------ | | Total capital (to RWA) | 12.73% | 11.41% | | Tier 1 capital (to RWA) | 11.86% | 10.77% | | Common equity tier 1 (to RWA) | 11.86% | 10.77% | | Tier 1 capital (to average assets) | 11.56% | 11.32% | Dividends Paid ($ thousands) | Recipient | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------------------- | :-------------------------- | :-------------------------- | | Bank to Holdco | $40,000 | $17,500 | | Company (to shareholders) | $32,548 | $31,496 | - The Bank's capital conservation buffer was **4.73%** as of September 30, 2023, exceeding the **2.5%** minimum, indicating strong capital adequacy[140](index=140&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=46&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a detailed analysis of Veritex Holdings, Inc.'s financial condition and results of operations, highlighting its community banking segment, recent industry developments, and performance for the three and nine months ended September 30, 2023, emphasizing the company's robust liquidity and well-capitalized status despite banking sector volatility [Overview](index=46&type=section&id=Overview) - Veritex is a Texas state banking organization focused on relationship-driven commercial banking products and services for small to medium-sized businesses and professionals in the Dallas-Fort Worth metroplex and Houston metropolitan area[144](index=144&type=chunk) - The Company's primary revenue sources include interest income on loans and securities, customer service and loan fees, and gains on sale of government guaranteed and mortgage loans[145](index=145&type=chunk) [Recent Industry Developments](index=46&type=section&id=Recent%20Industry%20Developments) - Despite significant banking industry volatility in early 2023, the Company's liquidity and balance sheet remain robust[147](index=147&type=chunk) Key Financial Metrics Post-Industry Volatility ($ billions) | Metric | September 30, 2023 | | :-------------------------------- | :------------------- | | Total Deposits | $10.20 | | Common Equity Tier 1 (CET1) Capital | 10.11% (up 102 bps from Dec 31, 2022) | - FHLB borrowings decreased by **$1.13 billion** during Q3 2023, and the Company has no outstanding borrowings under the Federal Reserve's Bank Term Funding Program (BTFP)[147](index=147&type=chunk) [Results of Operations for the Three Months Ended September 30, 2023 and June 30, 2023](index=47&type=section&id=Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20September%2030%2C%202023%20and%20June%2030%2C%202023) [General](index=47&type=section&id=General_QoQ) Net Income and EPS (QoQ) ($ millions, except per share amounts) | Metric | Q3 2023 | Q2 2023 | Change (%) | | :-------------------------------- | :------ | :------ | :--------- | | Net Income | $32.6 | $33.7 | (3.3)% | | Basic EPS | $0.60 | $0.62 | (3.2)% | | Diluted EPS | $0.60 | $0.62 | (3.2)% | [Net Interest Income](index=47&type=section&id=Net%20Interest%20Income_QoQ) Net Interest Income and Margin (QoQ) | Metric | Q3 2023 | Q2 2023 | Change (basis points) | | :-------------------------------- | :------ | :------ | :----------- | | Net Interest Income (in millions) | $99.4 | $100.8 | (1.4) | | Net Interest Margin | 3.46% | 3.51% | (5) | | Net Interest Spread | 2.30% | 2.50% | (20) | | Average Cost of Interest-Bearing Deposits | 4.12% | 3.61% | 51 | - The decrease in net interest income was primarily driven by an **$8.1 million** increase in interest expense on certificates and other time deposits and a **$7.0 million** increase in transaction and savings deposits, partially offset by a **$9.0 million** decrease in FHLB advances interest expense and a **$3.6 million** increase in loan interest income[152](index=152&type=chunk) [Provision for Credit Losses](index=49&type=section&id=Provision%20for%20Credit%20Losses_QoQ) Provision for Credit Losses (QoQ) ($ millions) | Metric | Q3 2023 | Q2 2023 | | :-------------------------------- | :------ | :------ | | Provision for credit losses | $8.6 | $15.0 | | Benefit for unfunded commitments | $(0.9) | $(1.1) | - The decrease in provision for credit losses was mainly due to an increase in general reserves from changes in economic factors and specific reserves on individually analyzed loans, while the benefit for unfunded commitments resulted from a reduction in unfunded commitment balances[159](index=159&type=chunk) [Noninterest Income](index=50&type=section&id=Noninterest%20Income_QoQ) Noninterest Income (QoQ) ($ thousands) | Category | Q3 2023 | Q2 2023 | Change ($) | Change (%) | | :-------------------------------- | :------ | :------ | :--------- | :--------- | | Total Noninterest Income | $9,674 | $13,692 | $(4,018) | (29.3)% | | Government guaranteed loan income, net | $1,772 | $4,144 | $(2,372) | (57.2)% | | Equity method investment (loss) income | $(136) | $485 | $(621) | (128.0)% | | Customer swap income | $202 | $961 | $(759) | (79.0)% | - The decrease in government guaranteed loan income was primarily due to a **$5.4 million** decrease in gain on sale of SBA and USDA loans, and the equity method investment shifted to a loss due to the negative impact of rising interest rates on Thrive Mortgage, LLC[162](index=162&type=chunk)[163](index=163&type=chunk) [Noninterest Expense](index=51&type=section&id=Noninterest%20Expense_QoQ) Noninterest Expense (QoQ) ($ thousands) | Category | Q3 2023 | Q2 2023 | Change ($) | Change (%) | | :-------------------------------- | :------ | :------ | :--------- | :--------- | | Total Noninterest Expense | $59,414 | $57,197 | $2,217 | 3.9% | | Salaries and employee benefits | $30,949 | $28,650 | $2,299 | 8.0% | - The increase in salaries and employee benefits was primarily driven by higher lender incentives, contra origination costs, spot bonuses (including for a new Bank President and Chief Banking Officer), and officer salaries, partially offset by a decrease in severance costs[167](index=167&type=chunk) [Income Tax Expense](index=51&type=section&id=Income%20Tax%20Expense_QoQ) Income Tax Expense (QoQ) ($ millions) | Metric | Q3 2023 | Q2 2023 | | :-------------------------------- | :------ | :------ | | Income Tax Expense | $9.3 | $9.7 | | Effective Tax Rate | 22.2% | 22.0% | - The effective tax rate for Q3 2023 was **22.2%**, or **20.9%** excluding a net discrete tax expense of **$505 thousand** related to a return to provision adjustment[169](index=169&type=chunk) [Results of Operations for the Nine Months Ended September 30, 2023 and September 30, 2022](index=52&type=section&id=Results%20of%20Operations%20for%20the%20Nine%20Months%20Ended%20September%2030%2C%202023%20and%20September%2030%2C%202022) [General](index=52&type=section&id=General_YoY) Net Income and EPS (YoY) ($ millions, except per share amounts) | Metric | 9M 2023 | 9M 2022 | Change ($) | Change (%) | | :-------------------------------- | :------ | :------ | :--------- | :--------- | | Net Income | $104.8 | $106.4 | $(1.6) | (1.6)% | | Basic EPS | $1.93 | $2.01 | $(0.08) | (4.0)% | | Diluted EPS | $1.92 | $1.98 | $(0.06) | (3.0)% | [Net Interest Income](index=52&type=section&id=Net%20Interest%20Income_YoY) Net Interest Income and Margin (YoY) | Metric | 9M 2023 | 9M 2022 | Change ($ millions) | Change (basis points) | | :-------------------------------- | :------ | :------ | :--------- | :----------- | | Net Interest Income (in millions) | $303.6 | $258.6 | $45.0 | | | Net Interest Margin | 3.55% | 3.48% | | 7 | | Net Interest Spread | 2.51% | 3.20% | | (69) | | Average Cost of Interest-Bearing Liabilities | 3.80% | 0.81% | | 299 | | Average Cost of Interest-Bearing Deposits | 3.62% | 0.64% | | 298 | - The **$45.0 million** increase in net interest income was primarily driven by a **$220.0 million** increase in interest income on loans and a **$17.3 million** increase in interest income on deposits in financial institutions, largely offset by a **$162.5 million** increase in interest expense on deposit accounts due to higher funding costs[172](index=172&type=chunk) [Provision for Credit Losses](index=54&type=section&id=Provision%20for%20Credit%20Losses_YoY) Provision for Credit Losses (YoY) ($ millions) | Metric | 9M 2023 | 9M 2022 | Change ($) | | :-------------------------------- | :------ | :------ | :--------- | | Provision for credit loan losses | $33.0 | $15.2 | $17.9 | | (Benefit) provision for unfunded commitments | $(0.5) | $1.3 | $(1.8) | - The increase in provision for credit losses was primarily due to changes in the Texas economic forecast and an increase in loan growth[178](index=178&type=chunk) [Noninterest Income](index=55&type=section&id=Noninterest%20Income_YoY) Noninterest Income (YoY) ($ thousands) | Category | 9M 2023 | 9M 2022 | Change ($) | Change (%) | | :-------------------------------- | :------ | :------ | :--------- | :--------- | | Total Noninterest Income | $36,897 | $38,496 | $(1,599) | (4.2)% | | Loan fees | $5,148 | $7,965 | $(2,817) | (35.4)% | | Loss on sales of debt securities | $(5,321) | $0 | $(5,321) | N/A | | Government guaranteed loan income, net | $15,604 | $6,252 | $9,352 | 149.6% | | Equity method investment (loss) income | $(1,172) | $275 | $(1,447) | (526.2)% | | Customer swap income | $1,380 | $5,625 | $(4,245) | (75.5)% | | Other | $5,743 | $2,867 | $2,876 | 100.3% | - The **$5.3 million** loss on sales of debt securities in 9M 2023 was due to the sale of **$116.2 million** of debt securities, while government guaranteed loan income increased significantly due to higher gains on USDA and SBA loans[181](index=181&type=chunk)[182](index=182&type=chunk) - Equity method investment shifted to a loss of **$1.2 million** due to the negative impact of rising interest rates on Thrive Mortgage, and other noninterest income doubled, driven by servicing asset valuation adjustments and BOLI income[183](index=183&type=chunk)[185](index=185&type=chunk) [Noninterest Expense](index=56&type=section&id=Noninterest%20Expense_YoY) Noninterest Expense (YoY) ($ thousands) | Category | 9M 2023 | 9M 2022 | Change ($) | Change (%) | | :-------------------------------- | :------ | :------ | :--------- | :--------- | | Total Noninterest Expense | $173,226 | $145,716 | $27,510 | 18.9% | | Salaries and employee benefits | $91,464 | $84,151 | $7,313 | 8.7% | | Professional and regulatory fees | $18,540 | $9,741 | $8,799 | 90.3% | | Data processing and software expense | $13,970 | $9,816 | $4,154 | 42.3% | | M&A expense | $0 | $1,379 | $(1,379) | (100.0)% | - Professional and regulatory fees increased significantly due to a **$5.6 million** rise in FDIC assessment fees and higher legal, professional, audit, and regulatory services, while data processing and software expense increased due to system enhancement software expenses[187](index=187&type=chunk)[188](index=188&type=chunk) [Income Tax Expense](index=57&type=section&id=Income%20Tax%20Expense_YoY) Income Tax Expense (YoY) ($ millions) | Metric | 9M 2023 | 9M 2022 | | :-------------------------------- | :------ | :------ | | Income Tax Expense | $30.0 | $28.4 | | Effective Tax Rate | 22.3% | 21.1% | - The effective tax rate for 9M 2023 was **22.3%**, or **21.8%** excluding a net discrete tax expense of **$658 thousand**, while for 9M 2022, it was **21.1%**, or **21.9%** excluding a net discrete tax benefit of **$1.1 million**[193](index=193&type=chunk) [Financial Condition](index=58&type=section&id=Financial%20Condition) [Loan Portfolio](index=58&type=section&id=Loan%20Portfolio) - Total assets increased by **1.6%** to **$12.35 billion** as of September 30, 2023, from **$12.15 billion** as of December 31, 2022, driven by continued execution of the Company's growth strategy[195](index=195&type=chunk) Loan Portfolio Summary ($ thousands) | Metric | September 30, 2023 | December 31, 2022 | Change (%) | | :-------------------------------- | :------------------- | :------------------ | :--------- | | Total LHI, excluding ACL | $9,638,352 | $9,501,624 | 1.4% | | Total LHFS | $41,313 | $20,641 | 100.1% | | LHI as % of deposits | 94.5% | 104.1% | | | Multifamily LHI | $603,395 | $322,679 | 87.0% | [Nonperforming Assets](index=59&type=section&id=Nonperforming%20Assets) Nonperforming Assets ($ thousands) | Metric | September 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------------- | :------------------ | | Total Nonperforming Assets | $79,868 | $43,667 | | Nonperforming Assets to Total Assets | 0.65% | 0.36% | | Nonperforming Loans to Total Loans | 0.83% | 0.48% | [Potential Problem Loans](index=60&type=section&id=Potential%20Problem%20Loans) Loan Internal Ratings (September 30, 2023) ($ thousands) | Category | Pass | Special Mention | Substandard | PCD | Total | | :-------------------------------- | :------- | :-------------- | :---------- | :---- | :---------- | | Construction and land | $1,630,155 | $46,376 | $28,522 | $0 | $1,705,053 | | NOOCRE | $2,109,280 | $175,671 | $99,004 | $14,105 | $2,398,060 | | Commercial | $2,744,013 | $31,984 | $61,862 | $3,165 | $2,841,024 | | Total | $9,083,990 | $304,538 | $213,518 | $36,306 | $9,638,352 | [ACL on LHI](index=60&type=section&id=ACL%20on%20LHI) - The Allowance for Credit Losses (ACL) increased by **$18.8 million** to **$109.8 million** as of September 30, 2023, from December 31, 2022, primarily due to changes in economic factors, increases in specific reserves, and loan growth, partially offset by charge-offs[206](index=206&type=chunk) Net Charge-offs (Nine Months Ended September 30) ($ thousands) | Metric | 2023 | 2022 | Change ($) | Change (%) | | :-------------------------------- | :------- | :------- | :--------- | :--------- | | Total Net Charge-offs | $(14,233) | $(7,867) | $(6,366) | 80.9% | [Off-Balance Sheet Credit exposure](index=62&type=section&id=Off-Balance%20Sheet%20Credit%20exposure) - The Allowance for Credit Losses (ACL) on off-balance-sheet credit exposures decreased to **$9.5 million** at September 30, 2023, from **$10.1 million** at December 31, 2022[209](index=209&type=chunk) [Equity Securities](index=62&type=section&id=Equity%20Securities_FC) Equity Securities ($ millions) | Category | September 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------------- | :------------------ | | Readily Determinable Fair Value | $9.5 | $9.8 | | Without Readily Determinable Fair Value (at cost) | $11.3 | $10.1 | [FHLB Stock and FRB Stock](index=63&type=section&id=FHLB%20Stock%20and%20FRB%20Stock) FHLB Stock and FRB Stock ($ millions) | Metric | September 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------------- | :------------------ | | Total FHLB and FRB Stock | $59.1 | $101.6 | [Debt Securities](index=63&type=section&id=Debt%20Securities_FC) Debt Securities ($ billions) | Metric | September 30, 2023 | December 31, 2022 | Change (%) | | :-------------------------------- | :------------------- | :------------------ | :--------- | | Carrying Amount | $1.06 | $1.28 | (17.3)% | | As % of Total Assets | 8.6% | 10.6% | | - The decrease in debt securities was primarily due to the sale of **$109.8 million** of debt securities, resulting in a net loss of **$5.3 million**, with no ACL on debt securities recognized[213](index=213&type=chunk)[215](index=215&type=chunk) [Equity Method Investments](index=63&type=section&id=Equity%20Method%20Investments) - The Company held **$54.4 million** in equity method investments as of September 30, 2023, reporting a **$1.2 million** loss for the nine months ended September 30, 2023, primarily due to the negative impact of rising interest rates on Thrive Mortgage, LLC[217](index=217&type=chunk) [Deposits](index=63&type=section&id=Deposits) Total Deposits ($ billions) | Metric | September 30, 2023 | December 31, 2022 | Change (%) | | :-------------------------------- | :------------------- | :------------------ | :--------- | | Total Deposits | $10.20 | $9.12 | 11.8% | Deposit Composition (as % of Total Deposits) | Deposit Type | September 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------------- | :------------------ | | Noninterest-bearing | 23.2% | 28.9% | | Certificates and other time deposits | 33.4% | 22.9% | - The increase in total deposits was primarily driven by a **$1.32 billion** increase in certificates and other time deposits and a **$421.3 million** increase in interest-bearing transaction deposits, partially offset by decreases in noninterest-bearing demand deposits and correspondent money market deposits[218](index=218&type=chunk) [Borrowings](index=64&type=section&id=Borrowings) [FHLB Advances](index=64&type=section&id=FHLB%20Advances) FHLB Advances ($ millions) | Metric | September 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------------- | :------------------ | | Outstanding Balances | $200.0 | $1,175.0 | | Total Available Borrowing Capacity | $2,240.0 | $787.3 | | Weighted Average Interest Rate (9M) | 4.65% (2023) | 1.73% (2022) | [FRB](index=64&type=section&id=FRB) FRB Borrowing Capacity ($ millions) | Program | September 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------------- | :------------------ | | FRB Discount Window | $2,650.0 | $1,140.0 | | BTFP | $434.3 | N/A | | Outstanding Borrowings | $0 | $0 | [Junior subordinated debentures and subordinated notes](index=65&type=section&id=Junior%20subordinated%20debentures%20and%20subordinated%20notes) Junior Subordinated Debentures and Subordinated Notes (September 30, 2023) ($ thousands) | Instrument | Balance | Rate | | :-------------------------------- | :------ | :----- | | Parkway National Capital Trust I | $3,093 | 7.52% | | SovDallas Capital Trust I | $8,609 | 9.53% | | Patriot Bancshares Capital Trust I | $5,155 | 7.42% | | Patriot Bancshares Capital Trust II | $17,011 | 7.47% | | 4.75% Fixed-to-Floating Rate Subordinated Notes | $75,000 | 4.75% | | 4.125% Fixed-to-Floating Rate Subordinated Notes | $125,000 | 4.13% | [Liquidity and Capital Resources](index=65&type=section&id=Liquidity%20and%20Capital%20Resources) [Liquidity](index=65&type=section&id=Liquidity) - The Company's liquidity needs are primarily met by core deposits, wholesale borrowings, and asset maturities, maintaining lines of credit with commercial banks with no outstanding advances as of September 30, 2023[226](index=226&type=chunk) Key Liquidity Ratios | Metric | 9 Months Ended Sep 30, 2023 | Year Ended Dec 31, 2022 | | :-------------------------------- | :-------------------------- | :------------------------ | | Average noninterest-bearing deposits to average deposits | 24.9% | 33.4% | | Average loans to average deposits | 99.7% | 94.6% | Cash and Cash Equivalents ($ millions) | Metric | September 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------------- | :------------------ | | Cash and Cash Equivalents | $713.4 | $436.1 | [Analysis of Cash Flows](index=67&type=section&id=Analysis%20of%20Cash%20Flows) Net Change in Cash and Cash Equivalents (Nine Months Ended September 30) ($ thousands) | Activity | 2023 | 2022 | | :-------------------------------- | :------- | :------- | | Net cash provided by operating activities | $138,068 | $149,388 | | Net cash provided by (used in) investing activities | $74,898 | $(1,970,773) | | Net cash provided by financing activities | $64,365 | $1,875,498 | | Net change in cash and cash equivalents | $277,331 | $54,113 | - Net cash provided by investing activities significantly improved in 2023, primarily due to a **$1.46 billion** decrease in originations of net LHI and increased proceeds from sales and maturities of AFS debt securities[235](index=235&type=chunk) - Net cash provided by financing activities decreased substantially in 2023, mainly due to a **$1.35 billion** decrease in FHLB advances and a **$311.5 million** decrease in new deposits[236](index=236&type=chunk) [Capital Resources](index=67&type=section&id=Capital%20Resources) Total Stockholders' Equity ($ billions) | Metric | September 30, 2023 | December 31, 2022 | Change (%) | | :-------------------------------- | :------------------- | :------------------ | :--------- | | Total Stockholders' Equity | $1.49 | $1.45 | 2.9% | - The increase in stockholders' equity was primarily driven by **$104.8 million** in net income, **$9.0 million** in stock-based compensation, and **$803 thousand** from employee stock option exercises, partially offset by **$32.5 million** in dividends and **$38.4 million** in accumulated other comprehensive income[238](index=238&type=chunk) - Both the Company and the Bank were in compliance with all applicable regulatory capital requirements and classified as 'well capitalized' as of September 30, 2023[240](index=240&type=chunk) [Contractual Obligations](index=68&type=section&id=Contractual%20Obligations) - There have been no significant changes in the types or amounts of contractual obligations since December 31, 2022, other than normal changes in the ordinary course of business and those discussed under 'Financial Condition—Borrowings'[243](index=243&type=chunk) [Critical Accounting Policies](index=68&type=section&id=Critical%20Accounting%20Policies) - No changes in critical accounting policies since December 31, 2022, except for updates discussed in Note 1, which include Allowance for Credit Losses (ACL), business combinations, debt securities, and goodwill[244](index=244&type=chunk) [Goodwill](index=68&type=section&id=Goodwill_MD%26A) - Goodwill is not amortized but is reviewed annually for potential impairment, or when a triggering event occurs, with the Company performing a qualitative or quantitative assessment[245](index=245&type=chunk)[246](index=246&type=chunk) - An interim quantitative impairment test was performed in Q2 2023 due to significant banking industry volatility, concluding that the fair value of the reporting unit exceeded its carrying value, and thus goodwill was not impaired, with no significant changes observed in Q3 2023[249](index=249&type=chunk) [Special Cautionary Notice Regarding Forward-Looking Statements](index=70&type=section&id=Special%20Cautionary%20Notice%20Regarding%20Forward-Looking%20Statements) - The report contains forward-looking statements subject to risks and uncertainties, including those related to business concentration in Texas, market interest rate changes, lending to small-to-medium businesses, sufficiency of loan loss reserves, growth strategy, and regulatory compliance[250](index=250&type=chunk)[251](index=251&type=chunk) - The Company assumes no obligation to update any forward-looking statements unless required by law[251](index=251&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=72&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The Company manages interest rate risk as its primary market risk component, utilizing an asset, liability, and funds management policy, employing an interest rate risk simulation model and shock analysis to assess the potential impact of interest rate changes on net interest income and the fair value of equity, adhering to internal policy limits for acceptable declines - The Company's primary market risk is interest rate volatility, managed through its Asset-Liability Committee and a measurement system for net interest rate sensitivity[252](index=252&type=chunk)[255](index=255&type=chunk) Simulated Change in Net Interest Income and Fair Value of Equity (12-month horizon) | Change in Interest Rates (Basis Points) | % Change in Net Interest Income (Sep 30, 2023) | % Change in Fair Value of Equity (Sep 30, 2023) | | :-------------------------------- | :--------------------------------------------- | :-------------------------------------------- | | +300 | 14.38% | 3.72% | | +200 | 9.67% | 2.72% | | +100 | 4.90% | 1.49% | | Base | —% | —% | | -100 | (5.19)% | (1.82)% | | -200 | (10.31)% | (4.13)% | - Internal policy specifies that estimated net income at risk for the subsequent one-year period should not decline by more than **5.0%** for a **100 basis point** shift, **10.0%** for a **200 basis point** shift, and **15.0%** for a **300 basis point** shift[257](index=257&type=chunk) [Item 4. Controls and Procedures](index=73&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective as of September 30, 2023, with no significant changes in internal control over financial reporting occurring during the quarter - The Company's disclosure controls and procedures were evaluated and deemed effective as of September 30, 2023[260](index=260&type=chunk) - No significant changes in internal control over financial reporting occurred during the quarter ended September 30, 2023[261](index=261&type=chunk) PART II — OTHER INFORMATION [Item 1. Legal Proceedings](index=74&type=section&id=Item%201.%20Legal%20Proceedings) The Company is subject to various claims and litigation in the ordinary course of business, and management believes that the likelihood of any material adverse effect on the Company's financial position, liquidity, or results of operations from these proceedings is remote - Management assesses the likelihood of a material adverse effect from legal proceedings as remote[263](index=263&type=chunk) [Item 1A. Risk Factors](index=74&type=section&id=Item%201A.%20Risk%20Factors) This section updates risk factors, emphasizing the adverse impact of recent negative developments in the banking industry, including market volatility, increased competition for deposits, potential losses from securities sales, and heightened regulatory scrutiny, with a special assessment on banks for FDIC Deposit Insurance Fund losses also expected - Recent bank failures and industry volatility have negatively impacted customer confidence in regional banks, leading to increased competition for deposits and higher funding costs, which pressure net interest margin[266](index=266&type=chunk) - The Company anticipates increased regulatory scrutiny and initiatives, which may raise costs and reduce profitability, and a special assessment for FDIC Deposit Insurance Fund losses from recent bank failures is expected to negatively impact operating results[267](index=267&type=chunk) - There has been no material change in previously disclosed risk factors, other than the new risk factor related to recent negative developments in the banking industry[265](index=265&type=chunk)[266](index=266&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=74&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Company reported no unregistered sales of equity securities or use of proceeds during the period - No unregistered sales of equity securities or use of proceeds were reported[268](index=268&type=chunk) [Item 5. Other Information](index=75&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended September 30, 2023 - No directors or officers adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' during the three months ended September 30, 2023[269](index=269&type=chunk) [Item 6. Exhibits](index=75&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including organizational documents, certifications, and financial statements in Inline XBRL format - Key exhibits include the Agreement and Plan of Reorganization, Third Amended and Restated Bylaws, Certifications of Principal Executive and Financial Officers (pursuant to Sections 302 and 906 of Sarbanes-Oxley Act), and Inline XBRL formatted financial statements[270](index=270&type=chunk) SIGNATURES

Veritex Holdings, Inc. (NASDAQ:VBTX) Q3 2023 Earnings Conference Call October 25, 2023 9:30 AM ET Company Participants Susan Caudle - Investor Relations Officer and Secretary of the Board Malcolm Holland - Chairman and Chief Executive Officer Terry Earley - Chief Financial Officer Clay Riebe - Chief Credit Officer Conference Call Participants Stephen Scouten - Piper Sandler Brady Gailey - KBW Gary Tenner - D.A. Davidson Michael Rose - Raymond James Matt Olney - Stephens Operator Good morning, and welcome to ...

Veritex Holdings, Inc. Third Quarter 2023 Results Earnings Release October 24, 2023 NASDAQ: VBTX A BETTER STATE OF BANKING Forward-Looking Statements This presentation 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 ov ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission File Number: 001-36682 VERITEX HOLDINGS, INC. (Exact name of registrant as specified in its charter) Texas 27-0973566 (State or other jurisdiction of (I.R. ...