DALLAS, Jan. 26, 2021 (GLOBE NEWSWIRE) -- Veritex Holdings, Inc. (Nasdaq: VBTX), the holding company for Veritex Community Bank, today announced the results for the fourth quarter and full year of 2020. Net income for the quarter ended December 31, 2020 totaled $22.8 million, or $0.46 diluted earnings per share ("EPS"), compared to $22.9 million, or $0.46 diluted EPS, for the quarter ended September 30, 2020 and $29.1 million, or $0.56 diluted EPS, for the quarter ended December 31, 2019. Operating earnings for the quarter ended December 31, 2020 totaled $29.7 million, or $0.60 diluted operating EPS¹, compared to $22.9 million, or $0.46 diluted operating EPS¹, for the quarter ended September 30, 2020 and $30.3 million, or $0.58 diluted operating EPS¹, for the quarter ended December 31, 2019.

“2020 certainly proved to be a very challenging year given the economic disruption from the pandemic. Yet through it all, the team executed well and delivered strong results,” said C Malcolm Holland, III, the Company’s Chairman and Chief Executive Officer. The 4^th quarter reflects continued loan growth, strong deposit results, higher capital levels and continued strong pre-tax, pre-provision operating earnings. Our business momentum and loan pipelines are the strongest we have seen since 2019. This momentum is supported by the recovering economy, the strength of the Texas economy and our significant investment during 2020 in new team members to support our continued success.”

Fourth Quarter and 2020 Highlights:

• Net income of $22.8 million, or $0.46 diluted EPS, compared to $22.9 million, or $0.46 diluted EPS, for the quarter ended September 30, 2020 and $29.1 million, or $0.56 diluted EPS, for the quarter ended December 31, 2019. Net income of $73.9 million, or $1.48 diluted EPS, for the year ended December 31, 2020 compared to $90.7 million, or $1.68 diluted EPS, for the year ended December 31, 2019;
• Pre-tax, pre-provision operating earnings¹ totaled $38.4 million, compared to $39.3 million for the quarter ended September 30, 2020 and $42.1 million for the quarter ended December 31, 2019;
• Total loans held for investment, excluding Paycheck Protection Program ("PPP") loans, grew $91.3 million, from the third quarter of 2020, or 5.8% annualized. Total loans held for investment, excluding PPP loans, grew $504.3 million, or 8.5%, year over year;
• Total deposits grew $290.3 million for the fourth quarter of 2020, or 18.7% annualized, with the average cost of total deposits decreasing to 0.38% for the three months ended December 31, 2020 from 0.46% for the three months ended September 30, 2020. Total deposits grew $618.5 million, or 10.5%, year over year;
• Return on average tangible common equity¹ of 12.84% and operating return on average tangible common equity¹ of 16.44% for the three months ended December 31, 2020;
• Repurchased 347,428 shares of outstanding common stock under the stock buyback program during the three months ended December 31, 2020 at an average price of $22.90. Since inception, the Company has repurchased 11.1% of issued common stock under the stock buyback program;
• Declared quarterly cash dividend of $0.17 payable on February 18, 2021.

Result of Operations for the Three Months Ended December 31, 2020

Net Interest Income

For the three months ended December 31, 2020, net interest income before provision for loan losses was $66.8 million and net interest margin was 3.29% compared to $65.9 million and 3.32%, respectively, for the three months ended September 30, 2020. The $896 thousand increase in net interest income was primarily due to a $951 thousand increase in interest income on loans driven by an increase in average balances. Net interest margin decreased 3 basis points from the three months ended September 30, 2020, primarily due to a 1 basis point decrease in yields earned on loan balances. As a result, the average cost of interest-bearing deposits decreased to 0.55% for the three months ended December 31, 2020 from 0.67% for the three months ended September 30, 2020.

Net interest income before provision for loan losses decreased by $3.1 million from $69.9 million to $66.8 million and net interest margin decreased 52 basis points from 3.81% to 3.29% for the three months ended December 31, 2020 as compared to the same period in 2019. The decrease in net interest income before provision for loan losses was primarily due to a $15.5 million decrease in interest income on loans, excluding MW and PPP, partially offset by a $6.1 million and $5.5 million decrease in interest expenses on transaction and savings deposits and certificates and other time deposits, respectively, during the three months ended December 31, 2020 compared to the three months ended December 31, 2019. Net interest margin decreased 52 basis points compared to the three months ended December 31, 2019 primarily due to a decrease in yields earned on loan balances, partially offset by decreases in the average rate paid on interest-bearing demand and savings deposits and certificates and other time deposits for the three months ended December 31, 2020. As a result, the average cost of interest-bearing deposits decreased to 0.55% for the three months ended December 31, 2020 from 1.59% for the three months ended December 31, 2019.

Noninterest Income

Noninterest income for the three months ended December 31, 2020 was $9.0 million, a decrease of $783 thousand, or 8.0% compared to the three months ended September 30, 2020. The decrease in noninterest income is primarily due to a $1.8 million decrease in government guaranteed loan income, net, and a $1.1 million decrease in loan fees. This is partially offset by a $841 thousand increase in service fees and a $830 thousand net increase in derivative income.

Compared to the three months ended December 31, 2019, noninterest income for the three months ended December 31, 2020 grew $1.9 million or 26.4%. The increase was primarily due to a $1.1 million increase in derivative income and a $771 thousand increase in gain on sale of other real estate owned.

Noninterest Expense

Noninterest expense was $47.4 million for the three months ended December 31, 2020, compared to $36.4 million and $36.3 million for the three months ended September 30, 2020 and December 31, 2019, respectively. The increase was primarily driven by a $9.7 million increase in debt extinguishment costs on Federal Home Loan Bank ("FHLB") advances that were pre-paid in the fourth quarter of 2020 with no corresponding FHLB advance prepayments during the three months ended September 30, 2020 or December 31, 2019.

Financial Condition

Total loans were $6.8 billion at December 31, 2020, an increase of $51.4 million, or 3.04% annualized, compared to September 30, 2020 and an increase of $869.6 million, or 14.65%, compared to December 31, 2019. These increases were the result of the continued execution and success of our loan growth strategy.

Total deposits were $6.5 billion at December 31, 2020, an increase of $290.3 million, or 18.7% annualized, compared to September 30, 2020 and an increase of $618.5 million, or 10.49%, compared to December 31, 2019. The increase from September 30, 2020 was primarily the result of an increase of $176.4 million in non-interest bearing demand deposits and an increase of $136.5 million in interest-bearing transaction and savings deposits accounts. The increase from December 31, 2019 was primarily the result of an increase of $540.6 million in non-interest bearing demand deposits and an increase of $303.5 million in interest-bearing transaction and savings deposits accounts, partially offset by a decrease of $225.6 million in certificates and other time deposits.

Asset Quality

Nonperforming assets totaled $87.6 million, or 0.99% of total assets, at December 31, 2020, compared to $96.4 million, or 1.11% of total assets, at September 30, 2020. The Company had net charge-offs of $16.5 million for the quarter, which is primarily the result of one lending relationship.

The Company recorded no provision for credit losses for the three months ended December 31, 2020, compared to $8.7 million and $3.5 million for the three months ended September 30, 2020 and December 31, 2019, respectively. The decrease in the recorded provision for credit losses for the three months ended December 31, 2020, compared to the three months ended September 30, 2020, was primarily attributable to improvement in the Texas economic forecasts used in the Current Expected Credit Losses (“CECL”) model in the fourth quarter of 2020 to reflect the expected impact of the COVID-19 pandemic as of December 31, 2020, as compared to our Texas economic forecasts and expected impact of the COVID-19 pandemic as of September 30, 2020. In the fourth quarter of 2020, we recorded a $902 thousand provision for unfunded commitments which was attributable to higher unfunded balances compared to a $1.4 million provision for unfunded commitments recorded for the three months ended September 30, 2020. Allowance for credit losses ("ACL") as a percentage of loans held for investment ("LHI"), excluding mortgage warehouse and PPP loans, was 1.80%, 2.10% and 0.50% at December 31, 2020, September 30, 2020 and December 31, 2019, respectively.

Income Tax

Income tax expense for the three months ended December 31, 2020 totaled $4.7 million, a decrease of $1.5 million, or 24.1%, compared to the three months ended September 30, 2020. The Company’s effective tax rate was approximately 17.1% and 21.3% for the three months ended December 31, 2020 and the three months ended September 30, 2020, respectively. The change in the effective tax rate from the three months ended September 30, 2020 was primarily due to the reversal of acquired deferred tax liabilities resulting in a tax benefit of $1.2 million offset by tax expense of $550 thousand for setting up an uncertain tax position liability for state nexus tax exposure for the three months ended December 31, 2020.

Dividend Information

On January 26, 2021, Veritex's Board of Directors declared a quarterly cash dividend of $0.17 per share on its outstanding shares of common stock. The dividend will be paid on or after February 18, 2021 to stockholders of record as of the close of business on February 4, 2021.

Non-GAAP Financial Measures

Veritex’s management uses certain non-GAAP (U.S. generally accepted accounting principles) financial measures to evaluate its operating performance and provide information that is important to investors. However, non-GAAP financial measures are supplemental and should be viewed in addition to, and not as an alternative for, Veritex’s reported results prepared in accordance with GAAP. Specifically, Veritex reviews and reports 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, pre-tax, pre-provision operating return on average assets, diluted operating earnings per share, operating return on average assets, operating return on average tangible common equity and operating efficiency ratio. Veritex has included in this earnings release information related to these non-GAAP financial measures for the applicable periods presented. Please refer to “Reconciliation of Non-GAAP Financial Measures” after the financial highlights at the end of this earnings release for a reconciliation of these non-GAAP financial measures.

About Veritex Holdings, Inc.

Headquartered in Dallas, Texas, Veritex is a bank holding company that conducts banking activities through its wholly-owned subsidiary, Veritex Community Bank, with locations throughout the Dallas-Fort Worth metroplex and in the Houston metropolitan area. Veritex Community Bank is a Texas state chartered bank regulated by the Texas Department of Banking and the Board of Governors of the Federal Reserve System. For more information, visit www.veritexbank.com.