Veritex (US:VBTX)2023-08-01 15:33Financial Data and Key Metrics Changes - For Q2 2023, the company reported net operating income of $34.7 million or $0.64 per share, with a pre-tax pre-provision of $58.5 million or 1.9% [6] - The company experienced a decline in income due to two charge-offs totaling $11.4 million and a lack of USDA fee income, but still achieved a 1.13% return on average assets and a 13.7% return on total common equity [7][8] - Operating earnings increased by 23% to $78 million from 2022 to 2023, with operating EPS up 19% and pre-tax pre-provision operating earnings rising 41% to $125 million [14] Business Line Data and Key Metrics Changes - Loan growth was flat for the first time in many years, with pay-offs reaching $400 million, up 58% from the previous quarter, primarily in commercial real estate [10][11] - The company shifted focus from commercial real estate to C&I and small businesses, with a goal to improve deposit relationships [16] - The loan portfolio saw a decline in acquisition, development, and construction (ADC) loans by $172 million or 9.4% during Q2 [20] Market Data and Key Metrics Changes - Deposits grew by $200 million or 8.8% annualized in Q2, with a reduction in reliance on wholesale funding from 32% to 29% [9] - The average deposit account balance was around $124,000, with uninsured and uncollateralized deposits at about 33% [19] - The net interest margin decreased by 18 basis points to 3.51%, impacted by higher cash balances and interest reversals on problem credits [22] Company Strategy and Development Direction - The company has focused on improving its deposit funding side, with strategies showing positive results in a challenging market [9] - Marketing spend has been reallocated to deposit products, and a direct marketing campaign launched in February has yielded impressive results [17] - The company aims to continue reducing its concentration in commercial real estate and improve its liquidity profile [20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in the marketplace but noted progress in various areas, with expectations for mid-single-digit loan growth in Q3 [6][11] - The company anticipates that deposit betas will continue to increase due to competitive pressures [19] - Management expressed confidence that the net interest margin is nearing the bottom, assuming stable deposit mix [22] Other Important Information - The company has grown CET1 by 51 basis points to 9.76% over the last year while growing loans by $1.1 billion [14] - The company’s liquidity capacity exceeds uninsured deposits by $2.2 billion, representing over 70% of uninsured [17] Q&A Session Summary - The conference call was concluded prematurely due to technical difficulties, and no questions were addressed during the Q&A session [24][25]