Veritex (US:VBTX)2025-04-23 14:30Financial Data and Key Metrics Changes - The company reported a net operating profit of $29 million or $0.54 per share for the quarter, with pretax pre-provision earnings at $43.4 million or 1.41% [4] - Total loans decreased by $125 million or 5% annualized, while average balances were down $135 million compared to Q4 [5] - The tangible book value per share increased to $22.33, up from $21.61 at year-end, marking a 13.8% year-over-year increase [16] - The net interest margin (NIM) increased by 11 basis points to 3.31% [25] Business Line Data and Key Metrics Changes - Gross loan production for Q1 was $750 million, with only 31% or $237 million funded [6] - Operating non-interest income increased by 2.4% to $14.8 million on a linked quarter basis, with fee income as a percentage of total revenue rising to 13.4% [29] - Operating non-interest expense declined by $2.8 million for the quarter, leading to an operating efficiency ratio of 60.4% [30] Market Data and Key Metrics Changes - The company moved out over $440 million in wholesale funding during the quarter, reducing reliance on higher-cost deposits [7] - The loan-to-deposit ratio decreased from 104% to 89% over the last two years, with a target to remain below 90% going forward [12][22] Company Strategy and Development Direction - The company aims to achieve a return on assets (ROA) exceeding 1% in the latter half of the year, focusing on disciplined loan growth despite current challenges [5] - The bank plans to continue reducing reliance on unattractively priced deposits and is actively managing its capital and liquidity [14][31] - The company has increased its quarterly dividend by 10% to $0.22 per share, reflecting confidence in its growth outlook and capital generation [16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future loan growth, citing a significant increase in loan production over the past year, which is expected to translate into growth in 2026 and beyond [20][42] - The management acknowledged the challenges posed by economic uncertainties, including tariffs and interest rates, but remains committed to delivering value to shareholders [33] - The company is focused on maintaining a conservative allowance for credit losses, with 65% of the weighting on downside scenarios in its economic modeling [18] Other Important Information - The company repurchased 377,000 shares during the quarter, with $37 million remaining on the authorization for further buybacks [17] - Nonperforming assets increased from $79 million at year-end to $97 million, primarily due to two loans in retail and office sectors [10] Q&A Session Summary Question: What is the outlook for deposits and their stickiness? - Management noted that some deposit fluctuations are seasonal, with good work by banking teams contributing to core deposit growth [35] Question: What are the expectations for expenses moving forward? - Management indicated that while expenses are expected to rise slightly due to new hires, there is a strong focus on managing overall costs [37][40] Question: What is the updated outlook for loan growth? - Management anticipates flat loan growth for the year, with potential for improvement in the second half based on pipeline strength [42][43] Question: How does the company view the government-guaranteed business? - Management remains bullish on the government-guaranteed business, expecting it to outperform in the latter half of the year [70][78] Question: What is the strategy regarding the securities portfolio and reinvestment? - The company is currently using cash flows to pay down wholesale funding but will become more active in investments once loan growth picks up [106] Question: What is the outlook for credit trends and non-accrual loans? - Management expressed confidence in managing non-accrual loans, with strategies in place to resolve them by early third quarter [117]