DALLAS, Oct. 23, 2017 (GLOBE NEWSWIRE) -- Veritex Holdings, Inc. (“Veritex” or the “Company”) (NASDAQ:VBTX), the holding company for Veritex Community Bank, announced today the results for the quarter ended September 30, 2017. The Company reported net income available to common stockholders of $5.1 million, or $0.25 diluted earnings per share (“EPS”), compared to $3.6 million, or $0.23 diluted EPS, for the quarter ended June 30, 2017 and $3.4 million, or $0.31 diluted EPS, for the quarter ended September 30, 2016.

Core net income, calculated as net income adjusted for the impact of income recognized on acquired loans and merger and acquisition costs, totaled $5.7 million for the quarter ended September 30, 2017, an increase of $2.0 million and $2.2 million from the quarters ended June 30, 2017 and September 30, 2016, respectively. Core diluted EPS for the quarter ended September 30, 2017 was $0.28, compared to $0.23 and $0.31 for the quarters ended June 30, 2017 and September 30, 2016, respectively.⁽¹⁾

C. Malcolm Holland, the Company’s Chairman and Chief Executive Officer, said, “I am thrilled with our third quarter accomplishments. We closed the acquisition of Sovereign Bancshares, Inc., announced the merger with Liberty Bancshares, Inc. and successfully completed a public offering of our common stock. Our organic growth continued to be strong. Loan balances, excluding acquired Sovereign loans, have grown $183.9 million over December 31, 2016 balances, or at a 24.8% annualized rate. As we finish out 2017, we are excited about all the opportunities in the thriving business communities we currently serve and the new partnerships we will create through our merger with Liberty.

Third Quarter 2017 Highlights

• Closed Sovereign Bancshares, Inc. (“Sovereign”) acquisition on August 1, 2017 and completed system conversion and integration during the third quarter
• Announced acquisition of Liberty Bancshares, Inc. (“Liberty”) on August 1, 2017
• Completed a public offering of 2,285,050 shares of common stock with net proceeds of $56.7 million
• Organic loan growth, excluding loans acquired from Sovereign, was 4.8% or 18.9% annualized compared to June 30, 2017 and 18.5% or 24.8% annualized compared to December 31, 2016
• Received American Bankers’  “Best Bank to Work For” for the fourth consecutive year

Result of Operations for the Three Months Ended September 30, 2017
Net Interest Income

For the three months ended September 30, 2017, net interest income before provision for loan losses was $19.1 million and net interest margin was 3.78% compared to $12.4 million and 3.53%, respectively, for the three months ended June 30, 2017. The $6.7 million increase from the three months ended June 30, 2017 was primarily due to an increase in interest income on loans, which was driven by increased volume in all loan categories resulting from loans acquired from Sovereign on August 1, 2017 of $750.9 million, as well as organic loan growth during the third quarter of 2017 of $53.3 million. Net interest margin increased 25 basis points from the three months ended June 30, 2017 primarily due to a change in mix of earning assets resulting from increases in loans, which tend to yield greater interest rates than other interest earning assets such as investment securities and interest bearing deposits in other banks. Average loan balances represented 81.9% of average interest-earnings assets for the three months ended September 30, 2017 compared to 76.2% for the three months ended June 30, 2017. In addition, the average yield on loan balances increased to 5.00% from 4.88% for the three months ended September 30, 2017 compared to the three months ended June 30, 2017 which was primarily driven by $585 thousand in estimated accretion during the third quarter of 2017 on loans acquired from Sovereign. The estimated accretion on the estimated purchase discount for loans acquired from Sovereign increased the average yield on loans by approximately 14 basis points for the three months ended September 30, 2017.

⁽¹⁾ As used in this release, core net income and core diluted EPS are non-GAAP financial measures. For a reconciliation of these non-GAAP financial measures to their comparable GAAP measures, see pages 10 and 11 of this release.

Net interest income before provision for loan losses increased by $8.6 million from $10.5 million to $19.1 million for the three months ended September 30, 2017 as compared to the same period during 2016. The increase in net interest income before provision for loan losses was primarily driven by higher loan balances resulting from the merger with Sovereign and organic loan growth. For the quarter ended September 30, 2017, the average loan balance increased by $689.0 million compared to the quarter ended September 30, 2016, which resulted in a $9.1 million increase in interest income. The net interest margin increased to 3.78% during the three months ended September 30, 2017 from 3.70% for the same three-month period in 2016. The 8 basis point increase in net interest margin was primarily due to a change in mix of earning assets resulting from increases in loan balances. The average yield on loan balances increased to 5.00% from 4.83% for the three months ended September 30, 2017 compared to the same period during 2016. The increase in the average yield for loans is due to the aforementioned 14 basis points attributable to the estimated accretion on loans acquired from Sovereign as well as the associated increases in the targeted Fed Funds rate which resulted in increases in yields in prime-based loans since September 30, 2017.

Noninterest Income

Noninterest income for the three months ended September 30, 2017 was $2.0 million, an increase of $211 thousand or 11.9% compared to the three months ended June 30, 2017. The net increase was primarily due to a $205 thousand increase in the gain on sale of securities which resulted from the sale of Sovereign investment securities that did not fit our investment strategy. In addition, the increase was due to a $114 thousand increase in services charges and fees on deposit accounts resulting from the additional acquired Sovereign deposit accounts and the associated income from these accounts. This increase was partially offset by a $102 thousand decrease in gain on sale of mortgage loans as a result in the decline in mortgage originations for the three months ended September 30, 2017 compared to the three months ended June 30, 2017.

Compared to the three months ended September 30, 2016, noninterest income for the three months ended September 30, 2017 grew $84 thousand or 4.4%. The increase was primarily due to a $205 thousand increase in gain on sale of securities as referenced above and a $236 thousand increase in services charges and fees on deposit accounts as described above. This increase was partially offset by a $331 thousand decrease in gain on sale of mortgage loans for the three months ended September 30, 2017 compared to the three months ended September 30, 2017.

Noninterest Expense

Noninterest expense was $12.5 million for the three months ended September 30, 2017, compared to $7.8 million for the three months ended June 30, 2017, an increase of $4.7 million or 60.9%. The increase was primarily driven by a $2.3 million increase in salaries and employee benefits expense, primarily due to the addition of 100 full-time equivalent employees related to the Sovereign acquisition. Compared to the second quarter of 2017, professional fees increased $785 thousand which were primarily a result of the use of legal and other professional services associated with the Sovereign and Liberty acquisitions. Occupancy and equipment expense increased $581 thousand primarily due to the addition of six owned buildings and five property leases from the Sovereign acquisition. Data processing and software expense increased by $347 thousand as the Company converted Sovereign’s operating systems into the Veritex information technology infrastructure.

Compared to the three months ended September 30, 2016, noninterest expense for the three months ended September 30, 2017 increased $5.5 million, or 78.1%. The increase was primarily related to the Sovereign acquisition for the reasons described in the preceding paragraph.

Income Taxes

Income tax expense for the three months ended September 30, 2017 totaled $2.7 million, an increase of $848 thousand, or 47.1%, compared to the three months ended June 30, 2017. The Company’s effective tax rate, before reporting the net impact of discrete items, was approximately 34.2% and 34.5% for the three months ended September 30, 2017 and the three months ended June 30, 2017, respectively. The change in income tax expense from the three months ended June 30, 2017 was primarily due to the $2.4 million increase in net operating income and decrease in net discrete tax benefit from $83 thousand for the three months ended June 30, 2017 to $30 thousand for the three months ended September 30, 2017. The net discrete tax benefit for the three months ended September 30, 2017 was primarily associated with the recognition of excess tax benefit realized on share-based payment awards. The Company’s effective tax rate, after including the net impact of discrete tax items, was approximately 33.8% and 32.0%, respectively for the three months ended September 30, 2017 and June 30, 2017, respectively.

Compared to the three months ended September 30, 2016, income tax expense increased $882 thousand, or 49.9%, to $2.7 million for the three months ended September 30, 2017. The Company’s effective tax rate, before reporting the net impact of discrete items, was approximately 34.2% for the three months ended September 30, 2017 compared to 34.4% for the three months ended September 30, 2016. There were no discrete tax items during the three months ended September 30, 2016. The change in income tax expense from the three months ended September 30, 2016 was primarily due to the increase in net operating income of $2.7 million offset by the impact of the net discrete tax benefit of $30 thousand during the three months ended September 30, 2017. The Company’s effective tax rate, after including the net impact of discrete tax items, was approximately 33.8% and 34.4% for the three months ended September 30, 2017 and 2016, respectively.

Financial Condition

Loans (excluding loans held for sale and deferred loan fees) at September 30, 2017 were $1.9 billion, an increase of $785.0 million or 69.9% compared to $1.1 billion at June 30, 2017, with $731.6 million of growth resulting from loans acquired from Sovereign. The below table details the components of linked quarter growth in loans compared to June 30, 2017:

	Acquired from Sovereign				Change in Sovereign loan balances since acquisition				Organic growth (legacy Veritex balances)				Total linked- quarter growth				% Change excluding acquired loans			% Change including acquired loans
Real Estate	$	538,025			$	(23,134	)		$	38,788			$	553,679			5.0	%		71.7	%
Commercial	211,588				4,071				15,262				230,921				4.4	%		66.5	%
Consumer	1,243				$	(98	)		$	(704	)		441				(19.1	)%		12.0	%
Total linked-quarter growth	750,856				(19,161		)		53,346				785,041				4.8	%		69.9	%

Loans (excluding loans held for sale and deferred loan fees) at September 30, 2017 increased $980.8 million, or 105.8%, compared to $926.7 million at September 30, 2016, with $731.6 million of growth resulting from loans acquired from Sovereign. The below table details the components of the year-over-year growth in loans compared to September 30, 2016:

	Acquired from Sovereign				Change in Sovereign loan balances since acquisition				Organic growth (legacy Veritex balances)				Total year-over- year Growth				% Change excluding acquired loans			% Change including acquired loans
Real Estate	$	538,025			$	(23,134	)		$	161,541			$	676,432			24.9	%		104.2	%
Commercial	211,588				4,071				88,870				304,529				32.5	%		111.4	%
Consumer	1,243				$	(98	)		$	(1,309	)		(164		)		(30.5	)%		(3.8	)%
Total year-over-year growth	750,856				(19,161		)		249,102				980,797				26.9	%		105.8	%

Deposits at September 30, 2017 were $2.0 billion, an increase of $774.6 million, or 64.0%, compared to June 30, 2017 with $809.4 million resulting from deposits assumed from Sovereign. The table below breaks out the growth in deposits compared to June 30, 2017.

	Acquired from Sovereign				Change in deposits balances from linked- quarter				Total linked- quarter Growth				% Change excluding acquired deposits			% Change including acquired deposits
Non-interest bearing	$	176,260			$	(17,690	)		$	158,570			(5.2	)%		47.0	%
Interest-bearing	633,106				(17,125		)		615,981				(2.0	)%		70.5	%
Total linked-quarter growth	809,366				(34,815		)		774,551				(2.9	)%		64.0	%

Deposits increased $908.4 million, or 84.3%, compared to $1.1 billion at September 30, 2016 with $809.4 million resulting from deposits assumed from Sovereign. The table below breaks out the growth in deposits compared to September 30, 2016.

	Acquired from Sovereign				Change in deposits balances year- over-year				Total year-over- year Growth				% Change excluding acquired deposits			% Change including acquired deposits
Non-interest bearing	$	176,260			$	14,395			$	190,655			4.7	%		62.5	%
Interest-bearing	633,106				84,680				717,786				11.0	%		92.9	%
Total year-over-year growth	809,366				99,075				908,441				9.2	%		84.3	%

Asset Quality

The allowance for loan losses as a percentage of loans was 0.55%, 0.87%, and 0.87% of total loans at September 30, 2017, June 30, 2017, and September 30, 2016, respectively. The allowance for loan losses as a percentage of total loans over the three quarter periods was determined by the qualitative factors around the nature, volume and mix of the loan portfolio. The decrease in the allowance for loan loss as a percentage of loans was attributable to the Sovereign acquisition as acquired loans are recorded at fair value.

The provision for loan losses for the three months ended September 30, 2017 totaled $752 thousand compared to $943 thousand and $238 thousand for three months ended June 30, 2017 and September 30, 2016, respectively. The decrease in provision for loan losses for the three months ended September 30, 2017 compared to June 30, 2017 was due to the general provision required from a decrease in organic loan growth compared to the prior period. The increase of $514 thousand in provision for loan losses from September 30, 2016 to September 30, 2017 was due to the general provision required from an increase in organic loan growth compared to the same period in 2016.

Non-accrual loans were $1.9 million at September 30, 2017 compared to $1.5 million at June 30, 2017 and $1.1 million at September 30, 2016.  At September 30, 2017 and June 30, 2017, non-accrual loans to our total loans held for investment was minimal at 0.10% and 0.13%, respectively.

Nonperforming assets totaled $2.6 million, or 0.11%, of total assets at September 30, 2017 compared to $2.0 million, or 0.13%, of total assets at June 30, 2017 and $2.1 million, or 0.17%, of total assets at September 30, 2016. The increase of $626 thousand in nonperforming assets compared to June 30, 2017 was primarily due to a net increase in other real estate owned of $245 thousand. The increase of $542 thousand in nonperforming assets compared to September 30, 2016 was primarily due to an increase of $466 thousand in nonperforming loans.

Non-GAAP Financial Measures

The Company’s management uses certain non-GAAP (generally accepted accounting principles) financial measures to evaluate its performance. Specifically, the Company reviews and reports core interest income, core non-interest expense, core net income, core basic and diluted earnings per share, core efficiency ratio, core net interest margin, tangible book value per common share and the tangible common equity to tangible assets ratio. The Company has included in this release information related to these non-GAAP financial measures for the applicable periods presented. Please refer to “Reconciliation of Non-GAAP Financial Measures” at the end of this release for a reconciliation of these non-GAAP financial measures.

Conference Call

The Company will also host an investor conference call to review the results on Tuesday, October 24, 2017 at 8:30 a.m. Central Time. Participants may pre-register for the call by visiting http://edge.media-server.com/m6/p/fbog48pq and will receive a unique pin number, which can be used when dialing in for the call. This will allow attendees to enter the call immediately. Alternatively, participants may call toll-free at (833) 696-8362.

The call and corresponding presentation slides will be webcast live on the home page of the Company's website, www.veritexbank.com. An audio replay will be available one hour after the conclusion of the call at (855) 859-2056, Conference #97830254. This replay, as well as the webcast, will be available until October 31, 2017.

About Veritex Holdings, Inc.

Headquartered in Dallas, Texas, Veritex Holdings, Inc. is a bank holding company that conducts banking activities through its wholly-owned subsidiary, Veritex Community Bank, with seventeen branch locations throughout the Dallas/Fort Worth metropolitan area, two branches in the Austin metropolitan area, two branches in the Houston metropolitan area and one mortgage office. 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

Media Contact:
LaVonda Renfro
972-349-6200
lrenfro@veritexbank.com

Investor Relations:
Susan Caudle
972-349-6132
scaudle@veritexbank.com

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: This release may contain certain forward-looking statements within the meaning of the securities laws that are based on various facts and derived utilizing important assumptions, current expectations, estimates and projections about the Company and its subsidiaries. Forward-looking statements include information regarding the Company’s future financial performance, business and growth strategy, projected plans and objectives, and related transactions, integration of the acquired businesses, ability to recognize  anticipated operational efficiencies, and other projections based on macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact economic trends, and any such variations may be material. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing. Further, certain factors that could affect our future results and cause actual results to differ materially from those expressed in the forward-looking statements include, but are not limited to whether the Company can: successfully implement its growth strategy, including identifying acquisition targets and consummating suitable acquisitions; continue to sustain internal growth rate; provide competitive products and services that appeal to its customers and target market; continue to have access to debt and equity capital markets; and achieve its performance goals. For discussion of these and other risks that may cause actual results to differ from expectations, please refer to “Special Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in Veritex’s Annual Report on Form 10-K filed with the SEC on March 10, 2017 and any updates to those risk factors set forth in Veritex’s subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K. If one or more events related to these or other risks or uncertainties materialize, or if Veritex’s underlying assumptions prove to be incorrect, actual results may differ materially from what Veritex anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and Veritex does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New risks and uncertainties arise from time to time, and it is not possible for us to predict those events or how they may affect us. In addition, Veritex cannot assess the impact of each factor on Veritex’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements, expressed or implied, included in this communication are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that Veritex or persons acting on Veritex’s behalf may issue. Annualized, pro forma, projected and estimated numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results.

VERITEX HOLDINGS, INC. AND SUBSIDIARY Consolidated Financial Highlights - (Unaudited) (In thousands, except percentages)
		At and For the Three Months Ended
		September 30, 2017				June 30, 2017				March 31, 2017				December 31, 2016				September 30, 2016
Selected Financial Data:
Net income		$	5,182			$	3,615			$	3,098			$	3,190			$	3,375
Total assets		2,494,861				1,508,589				1,522,015				1,408,507				1,269,194
Total loans(1)		1,907,509				1,122,468				1,020,970				991,897				926,712
Provision for loan losses		752				943				890				440				238
Allowance for loan losses		10,492				9,740				8,816				8,524				8,102
Noninterest-bearing deposits		495,627				337,057				338,226				327,614				304,972
Total deposits		1,985,658				1,211,107				1,221,696				1,119,630				1,077,217
Total stockholders’ equity		445,929				247,602				242,725				239,088				142,423
Summary Performance Ratios:
Return on average assets(2)		0.94		%		0.97		%		0.83		%		0.97		%		1.10		%
Return on average equity(2)		5.44				5.89				5.20				8.11				9.50
Net interest margin(3)		3.78				3.53				3.21				3.44				3.70
Efficiency ratio(4)		59.33				55.03				58.26				57.39				56.64
Noninterest expense to average assets(2)		2.26				2.08				1.99				2.16				2.29
Summary Credit Quality Data:
Nonaccrual loans		$	1,856			$	1,514			$	1,686			$	941			$	1,087
Accruing loans 90 or more days past due(5)		54				15				212				835				357
Other real estate owned		738				493				998				662				662
Nonperforming assets to total assets		0.11		%		0.13		%		0.19		%		0.17		%		0.17		%
Nonperforming loans to total loans		0.10				0.14				0.19				0.18				0.16
Allowance for loan losses to total loans		0.55				0.87				0.86				0.86				0.87
Net charge-offs to average loans outstanding		—				—				0.06				0.03				0.03
Capital Ratios:
Total stockholders’ equity to total assets		17.87		%		16.41		%		15.95		%		16.97		%		11.22		%
Tangible common equity to tangible assets(6)		12.76				14.77				14.31				15.23				9.14
Tier 1 capital to average assets		15.26				15.09				14.65				16.82				9.82
Tier 1 capital to risk-weighted assets		14.17				18.17				19.94				20.72				12.04
Common equity tier 1 (to risk weighted assets)		13.65				17.92				19.66				20.42				11.72
Total capital to risk-weighted assets		14.87				19.37				21.20				22.02				13.38

___________________________

1. Total loans does not include loans held for sale and deferred fees. Loans held for sale were $2.2 million at September 30, 2017, $4.1 million at June 30, 2017, $1.9 million at March 31, 2017, $5.2 million at December 31, 2016 and $4.9 million at September 30, 2016. Deferred fees were $28 thousand at September 30, 2017, $40 thousand at June 30, 2017, $48 thousand at March 31, 2017, $55 thousand at December 31, 2016, and $51 thousand at September 30, 2016.
2. We calculate our average assets and average equity for a period by dividing the sum of our total assets or total stockholders’ equity, as the case may be, at the close of business on each day in the relevant period, by the number of days in the period. We have calculated our return on average assets and return on average equity for a period by dividing net income for that period by our average assets and average equity, as the case may be, for that period.
3. Net interest margin represents net interest income, annualized on a fully tax equivalent basis, divided by average interest-earning assets.
4. Efficiency ratio represents noninterest expense divided by the sum of net interest income and noninterest income.
5. Accruing loans 90 or more days past due excludes $3.3 million of PCI loans acquired from Sovereign as of September 30, 2017. No PCI loans were considered non-performing loans as of September 30, 2017.
6. We calculate tangible common equity as total stockholders’ equity less preferred stock, goodwill, core deposit intangibles and other intangible assets, net of accumulated amortization, and we calculate tangible assets as total assets less goodwill, and core deposit intangibles and other intangible assets, net of accumulated amortization. Tangible common equity to tangible assets is a non-GAAP financial measure, and, as we calculate tangible common equity to tangible assets, the most directly comparable GAAP financial measure is total stockholders’ equity to total assets. Our management believe that this measure is important to many investors in the market place who are interested in relative changes from period to period in common equity and total assets, each exclusive of changes in intangible assets. Goodwill and other intangible assets have the effect of increasing both total stockholders’ equity and assets while not increasing our tangible common equity or tangible assets. See our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures in the table captioned “Reconciliation of Non-GAAP Financial Measures – (Unaudited).”

VERITEX HOLDINGS, INC. AND SUBSIDIARY Condensed Consolidated Balance Sheets - (Unaudited) (In thousands)
		September 30, 2017				June 30, 2017				March 31, 2017				December 31, 2016				September 30, 2016
ASSETS
Cash and due from banks		$	21,879			$	28,687			$	23,021			$	15,631			$	15,837
Interest bearing deposits in other banks		129,497				144,459				262,714				219,160				162,750
Total cash and cash equivalents		151,376				173,146				285,735				234,791				178,587
Investment securities		204,788				134,708				138,698				102,559				86,772
Loans held for sale		2,179				4,118				1,925				5,208				4,856
Loans, net		1,896,989				1,112,688				1,012,106				983,318				918,559
Accrued interest receivable		6,387				3,333				2,845				2,907				2,414
Bank-owned life insurance		20,517				20,369				20,224				20,077				19,922
Bank premises, furniture and equipment, net		40,129				17,978				17,521				17,413				17,501
Non-marketable equity securities		10,283				7,407				7,375				7,366				7,358
Investment in unconsolidated subsidiary		352				93				93				93				93
Other real estate owned		738				493				998				662				662
Intangible assets, net		10,531				2,171				2,161				2,181				2,257
Goodwill		135,832				26,865				26,865				26,865				26,865
Other assets		14,760				5,220				5,469				5,067				3,348
Total assets		$	2,494,861			$	1,508,589			$	1,522,015			$	1,408,507			$	1,269,194
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Noninterest-bearing		$	495,627			$	337,057			$	338,226			$	327,614			$	304,972
Interest-bearing		1,490,031				874,050				883,470				792,016				772,245
Total deposits		1,985,658				1,211,107				1,221,696				1,119,630				1,077,217
Accounts payable and accrued expenses		4,017				2,574				1,631				2,914				2,082
Accrued interest payable and other liabilities		4,368				1,032				9,655				534				1,098
Advances from Federal Home Loan Bank		38,200				38,235				38,271				38,306				38,341
Junior subordinated debentures		11,702				3,093				3,093				3,093				3,093
Subordinated notes		4,987				4,946				4,944				4,942				4,940
Total liabilities		2,048,932				1,260,987				1,279,290				1,169,419				1,126,771
Commitments and contingencies
Stockholders’ equity:
Common stock		227				152				152				152				107
Additional paid-in capital		404,900				211,901				211,512				211,173				116,315
Retained earnings		41,143				36,003				32,388				29,290				26,101
Unallocated Employee Stock Ownership Plan shares		(209		)		(209		)		(209		)		(209		)		(309		)
Accumulated other comprehensive (loss) income		(62		)		(175		)		(1,048		)		(1,248		)		279
Treasury stock		(70		)		(70		)		(70		)		(70		)		(70		)
Total stockholders’ equity		445,929				247,602				242,725				239,088				142,423
Total liabilities and stockholders’ equity		$	2,494,861			$	1,508,589			$	1,522,015			$	1,408,507			$	1,269,194

VERITEX HOLDINGS, INC. AND SUBSIDIARY Condensed Consolidated Statements of Income - (Unaudited) (In thousands, except per share data)
		Nine Months Ended
		September 30, 2017				September 30, 2016
Interest income:
Interest and fees on loans		$	45,613			$	32,996
Interest on investment securities		2,251				1,014
Interest on deposits in other banks		1,787				302
Interest on other		4				2
Total interest income		49,655				34,314
Interest expense:
Interest on deposit accounts		6,201				3,388
Interest on borrowings		696				491
Total interest expense		6,897				3,879
Net interest income		42,758				30,435
Provision for loan losses		2,585				1,610
Net interest income after provision for loan losses		40,173				28,825
Noninterest income:
Service charges and fees on deposit accounts		1,733				1,309
Gain on sales of investment securities		205				15
Gain on sales of loans		2,259				2,318
Bank-owned life insurance		561				577
Other		520				460
Total noninterest income		5,278				4,679
Noninterest expense:
Salaries and employee benefits		13,471				10,683
Occupancy and equipment		3,622				2,718
Professional fees		3,959				1,861
Data processing and software expense		1,451				850
FDIC assessment fees		1,061				447
Marketing		905				704
Other assets owned expenses and write-downs		109				139
Amortization of intangibles		413				285
Telephone and communications		438				295
Other		2,325				1,323
Total noninterest expense		27,754				19,305
Net income from operations		17,697				14,199
Income tax expense		5,802				4,837
Net income		$	11,895			$	9,362
Preferred stock dividends		42				—
Net income available to common stockholders		$	11,853			$	9,362
Basic earnings per share		$	0.70			$	0.88
Diluted earnings per share		$	0.69			$	0.85
Weighted average basic shares outstanding		16,813				10,698
Weighted average diluted shares outstanding		17,232				10,992

VERITEX HOLDINGS, INC. AND SUBSIDIARY Condensed Consolidated Statements of Income - (Unaudited) (In thousands, except per share data)
		For the Three Months Ended
		September 30, 2017				June 30, 2017				March 31, 2017				December 31, 2016				September 30, 2016
Interest income:
Interest and fees on loans		$	20,706			$	13,024			$	11,883			$	11,684			$	11,589
Interest on investment securities		941				735				575				396				335
Interest on deposits in other banks		629				548				610				200				129
Interest on other		3				—				1				1				1
Total interest income		22,279				14,307				13,069				12,281				12,054
Interest expense:
Interest on deposit accounts		2,812				1,742				1,647				1,600				1,381
Interest on borrowings		338				189				169				161				156
Total interest expense		3,150				1,931				1,816				1,761				1,537
Net interest income		19,129				12,376				11,253				10,520				10,517
Provision for loan losses		752				943				890				440				238
Net interest income after provision for loan              losses		18,377				11,433				10,363				10,080				10,279
Noninterest income:
Service charges and fees on deposit accounts		669				555				509				537				433
Gain on sales of investment securities		205				—				—				—				—
Gain on sales of loans		705				807				747				970				1,036
Bank-owned life insurance		188				186				187				194				193
Other		210				218				92				123				231
Total noninterest income		1,977				1,766				1,535				1,824				1,893
Noninterest expense:
Salaries and employee benefits		5,921				3,642				3,908				3,650				3,920
Occupancy and equipment		1,596				1,015				1,011				949				923
Professional fees		1,973				1,188				798				943				785
Data processing and software expense		719				372				360				308				296
FDIC assessment fees		410				393				258				213				179
Marketing		436				225				244				279				293
Other assets owned expenses and write- downs		71				13				25				24				9
Amortization of intangibles		223				95				95				95				95
Telephone and communications		230				106				102				107				98
Other		943				733				649				516				431
Total noninterest expense		12,522				7,782				7,450				7,084				7,029
Net income from operations		7,832				5,417				4,448				4,820				5,143
Income tax expense		2,650				1,802				1,350				1,630				1,768
Net income		$	5,182			$	3,615			$	3,098			$	3,190			$	3,375
Preferred stock dividends		42				—				—				—				—
Net income available to common stockholders		$	5,140			$	3,615			$	3,098			$	3,190			$	3,375
Basic earnings per share		$	0.26			$	0.24			$	0.20			$	0.28			$	0.32
Diluted earnings per share		$	0.25			$	0.23			$	0.20			$	0.27			$	0.31
Weighted average basic shares outstanding		19,976				15,211				15,200				11,299				10,705
Weighted average diluted shares outstanding		20,392				15,637				15,632				11,653				11,025

VERITEX HOLDINGS, INC. AND SUBSIDIARY
Reconciliation of Non-GAAP Financial Measures - (Unaudited)
(In thousands except per share data and percentages)

The following table reconciles, at the dates set forth below, GAAP net income available to common shareholders to core (non-GAAP) net income, core basic and diluted earnings per share and core efficiency ratio:

		For the Three Months Ended
		September 30, 2017				June 30, 2017					March 31, 2017				December 31, 2016				September 30, 2016
Net interest income (as reported)		$	19,129			$	12,376				$	11,253			$	10,520			$	10,517
Adjustment:
Income recognized on acquired loans		637				$	135				$	55			$	61			$	120
Core net interest income		18,492				12,241					11,198				10,459				10,397
Provision for loan losses (as reported)		752				$	943				$	890			$	440			$	238
Noninterest income (as reported)		1,977				1,766					1,535				1,824				1,893
Noninterest expense (as reported)		12,522				7,782					7,450				7,084				7,029
Adjustment:
Merger and acquisition costs(1)		(1,391		)		(193		)			(89		)		(279		)		(195		)
Core noninterest expense		11,131				7,589					7,361				6,805				6,834
Core net income from operations		8,586				5,475					4,482				5,038				5,218
Income tax expense (as reported)		2,650				1,802					1,350				1,630				1,768
Tax impact of adjustments		264				20					12				76				26
Core net income		$	5,672			$	3,653				$	3,120			$	3,332			$	3,424
Preferred stock dividends (as reported)		42				—					—				—				—
Core net income available to common stockholders		$	5,630			$	3,653				$	3,120			$	3,332			$	3,424
Weighted average diluted shares outstanding		20,392				15,637					15,632				11,653				11,025
Diluted earnings per share (as reported)		0.25				0.23					0.20				0.27				0.31
Core diluted earnings per share		0.28				0.23					0.20				0.29				0.31
Efficiency Ratio
Efficiency ratio (as reported)		61.52		%		58.96		%			62.62		%		59.51		%		57.75		%
Core efficiency ratio(2)		56.45		%		58.09		%			62.15		%		57.46		%		56.70		%
Net Interest Margin
Net interest margin (as reported)		3.78		%		3.53		%			3.21		%		3.44		%		3.70		%
Core net interest margin(3)		3.66		%		3.49		%			3.19		%		3.42		%		3.65		%

___________________________

1. Merger and acquisition costs for the quarters ended September 30, 2017, June 30, 2017 and March 31, 2017 include merger costs related to the Sovereign and Liberty acquisitions. Merger and acquisition costs for the quarters ended December 31, 2016 and September 30, 2016 only include merger costs related to the Sovereign acquisition.
2. We calculate core efficiency ratio as core noninterest expense divided by the sum of net interest income after provision for loan losses (as reported) and noninterest income (as reported).
3. Core net interest margin is equal to core net interest income divided by average interest-earning assets.

               

VERITEX HOLDINGS, INC. AND SUBSIDIARY
Reconciliation of Non-GAAP Financial Measures - (Unaudited)
(In thousands except per share data and percentages)

The following table reconciles, at the dates set forth below, total stockholders’ equity to tangible common equity and total assets to tangible assets and presents our book value per common share to our tangible book value per share:

		For the Three Months Ended
		September 30, 2017				June 30, 2017				March 31, 2017				December 31, 2016				September 30, 2016
Tangible Common Equity
Total stockholders’ equity		$	445,929			$	247,602			$	242,725			$	239,088			$	142,423
Adjustments:
Goodwill		(135,832		)		(26,865		)		(26,865		)		(26,865		)		(26,865		)
Intangible assets, net		(10,531		)		(2,171		)		(2,161		)		(2,181		)		(2,257		)
Total tangible common equity		$	299,566			$	218,566			$	213,699			$	210,042			$	113,301
Tangible Assets
Total assets		$	2,494,861			$	1,508,589			$	1,522,015			$	1,408,507			$	1,269,194
Adjustments:
Goodwill		(135,832		)		(26,865		)		(26,865		)		(26,865		)		(26,865		)
Intangible assets		(10,531		)		(2,171		)		(2,161		)		(2,181		)		(2,257		)
Total tangible assets		$	2,348,498			$	1,479,553			$	1,492,989			$	1,379,461			$	1,240,072
Tangible Common Equity to Tangible Assets		12.76		%		14.77		%		14.31		%		15.23		%		9.14		%
Common shares outstanding		22,644				15,233				15,229				15,195				10,736
Book value per common share(1)		$	19.69			$	16.25			$	15.94			$	15.73			$	13.27
Tangible book value per common share(2)		$	13.23			$	14.35			$	14.03			$	13.82			$	10.55

___________________________

1. We calculate book value per common share as stockholders’ equity at the end of the relevant period divided by the outstanding number of shares of our common stock at the end of the relevant period.
2. We calculate tangible book value per common share as total tangible common equity, divided by the outstanding number of shares of our common stock at the end of the relevant period. Tangible book value per common share is a non-GAAP financial measure, and, as we calculate tangible book value per common share, the most directly comparable GAAP financial measure is book value per common share. Our management believes that this measure is important to many investors in the market place who are interested in changes from period to period on book value per common share exclusive of changes in intangible assets. Goodwill and other intangible assets have the effect of increasing total book value while not increasing our tangible book value.

VERITEX HOLDINGS, INC. AND SUBSIDIARY Net Interest Margin - (Unaudited) (In thousands except percentages)
		For the Three Months Ended
		September 30, 2017											June 30, 2017											September 30, 2016
		Average Outstanding Balance				Interest Earned/ Interest Paid				Average Yield/ Rate			Average Outstanding Balance				Interest Earned/ Interest Paid				Average Yield/ Rate			Average Outstanding Balance				Interest Earned/ Interest Paid				Average Yield/ Rate
Assets
Interest-earning assets:
Total loans(1)		$	1,643,077			$	20,706			5.00	%		$	1,070,436			$	13,024			4.88	%		$	954,053			$	11,589			4.83	%
Securities available for sale		191,265				941				1.95			135,795				735				2.17			83,233				335				1.60
Interest-bearing deposits in other banks		171,461				629				1.46			199,050				548				1.10			94,596				129				0.54
Investment in unconsolidated  subsidiary		265				3				4.49			93				—				—			93				1				4.28
Total interest-earning assets		2,006,068				22,279				4.41			1,405,374				14,307				4.08			1,131,975				12,054				4.24
Allowance for loan losses		(9,910		)									(9,117		)									(8,115		)
Noninterest-earning assets		202,352											104,819											95,901
Total assets		$	2,198,510										$	1,501,076										$	1,219,761
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Interest-bearing deposits		$	1,294,187			$	2,812			0.86	%		$	870,542			$	1,742			0.80	%		$	726,958			$	1,381			0.76	%
Advances from FHLB		53,222				160				1.19			38,258				89				0.93			38,363				59				0.61
Other borrowings		13,793				178				5.12			8,067				100				4.97			8,078				97				4.78
Total interest-bearing liabilities		1,361,202				3,150				0.92			916,867				1,931				0.84			773,399				1,537				0.79
Noninterest-bearing liabilities:
Noninterest-bearing deposits		452,426											334,813											301,740
Other liabilities		6,898											3,156											3,284
Total noninterest- bearing liabilities		459,324											337,969											305,024
Stockholders’ equity		377,984											246,240											141,338
Total liabilities and stockholders’ equity		$	2,198,510										$	1,501,076										$	1,219,761
Net interest rate spread(2)										3.49	%										3.24	%										3.45	%
Net interest income						$	19,129										$	12,376										$	10,517
Net interest margin(3)										3.78	%										3.53	%										3.70	%

___________________________

1. Includes average outstanding balances of loans held for sale of $1,553, $3,169 and $6,047 for the three months ended September 30, 2017, June 30, 2017, and September 30, 2016, respectively.
2. Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
3. Net interest margin is equal to net interest income divided by average interest-earning assets.