Veritex (US:VBTX)2021-01-27 20:45Financial Data and Key Metrics Changes - The company recorded operating earnings of $29.7 million or $0.60 per share, a 31% linked quarter increase [8] - Pre-tax pre-provision earnings were $38.4 million or $0.77 per share, with a return on average assets of 1.75% for the quarter [8] - Tangible book value per share increased to $15.70, reflecting an 11% increase on a linked quarter annualized basis [14] - Operating return on average tangible common equity remained strong at 16.4% [14] - The operating efficiency ratio has been below 50% for the last five quarters [14] Business Line Data and Key Metrics Changes - Loan growth excluding PPP and mortgage warehouse was 4.3% annualized for the quarter and 2% for the year ended 2020 [8] - Mortgage warehouse portfolio grew 24% annualized for the quarter and 215% year-over-year, representing 8.5% of outstanding loans at year-end 2020 [9] - Total deposits grew 18.7% linked quarter, with non-interest bearing deposits growing 35% year-over-year [12] - Net interest income increased to $67 million for the quarter, despite lower purchase accounting accretion and interest expense from subordinated debt [15] Market Data and Key Metrics Changes - The company experienced strong growth in transactional deposits, which increased by $312 million [19] - Average cost of total deposits declined by eight basis points in Q4, now at 38 basis points [20] - The commercial real estate business remains strong, with a mortgage warehouse portfolio growth of $33 million in Q4 [21] Company Strategy and Development Direction - The company aims to continue attracting talent, with recent hires primarily being revenue producers [42] - Management anticipates 2021 will be an active year for M&A in the industry, with hopes to be an active participant for the right fit [43] - The company is focused on maintaining positive loan growth and improving net interest margin through deposit repricing and loan growth [54][78] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the economic outlook and credit quality, stating that charge-off expectations have not changed meaningfully [66] - The company is encouraged by the direction and momentum building, particularly in Texas, which is experiencing population and business growth [44] - Management believes that the loan growth will be positive in 2021, targeting mid-single digits excluding PPP and mortgage warehouse [54] Other Important Information - The company declared a regular quarterly dividend of $0.17 per share, representing a 28% payout ratio of operating EPS [27] - The company repurchased 347,000 shares at an average price of $22.90, with $23 million remaining on the buyback authorization [27] Q&A Session Summary Question: Can you talk about defending core loan yield in the current environment? - Management noted that they have not seen significant pricing pressure and have been able to maintain stable yields through effective relationship management [49][50] Question: What is the outlook for loan growth in 2021? - Management expects positive loan growth in 2021, targeting mid-single digits excluding PPP and mortgage warehouse [54] Question: Can you provide insights on talent acquisition and future opportunities? - Management confirmed ongoing efforts to invest in talent, with significant opportunities remaining in the current market [62][64] Question: What are the expectations for charge-offs moving forward? - Management does not expect charge-off estimates to change significantly, maintaining a conservative outlook based on prior assessments [66][68] Question: What are the M&A targets and considerations? - Management expressed interest in both larger acquisitions that could push them over $10 billion in assets and smaller tuck-in deals, remaining opportunistic in their approach [80][96]