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Veritex (VBTX) - 2024 Q1 - Quarterly Results
Veritex Veritex (US:VBTX)2024-04-23 20:01

Executive Summary & Company Highlights 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 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 trends2 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 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, 20234 - Total loans grew $46.4 million (0.5%) compared to March 31, 20234 - 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 - Tangible book value per common share increased 0.6% ($0.12) QoQ and 4.63% ($0.90) YoY4 - 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 - Authorized a stock buyback program of up to $50 million over a year4 - 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 - Declared a quarterly cash dividend of $0.20 per share4 Results of Operations 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 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 advances5 - 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 institutions6 Noninterest Income 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 restructuring7 - 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 income8 Noninterest Expense 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 20239 - 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 benefits10 Income Tax 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 awards15 Financial Condition 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) 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 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 deposits12 Credit Quality 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) 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 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) 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 factors14 Capital & Dividends Veritex Holdings, Inc. maintained strong capital ratios and declared a consistent quarterly cash dividend, reflecting a solid financial position Dividend Information 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, 202416 Capital Ratios 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 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 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 results17 - 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 ratios17 Tangible Book Value Per Common Share 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 assets4344 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 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 assets4849 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 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 institutions5253 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 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 assessment5657 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 This section provides details on Veritex Holdings, Inc.'s corporate profile, investor communication, and important disclaimers regarding forward-looking statements Conference Call Details 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 week1820 About Veritex Holdings, Inc. 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 area21 Forward-Looking Statements 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 materially22 - 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 law22 Financial Highlights (Detailed Tables) 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 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 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 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 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 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 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 |