Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Veritex Holdings, Inc. | vbtx-8kearningsreleasex930.htm |
| EX-99.1 - EXHIBIT 99.1 - Veritex Holdings, Inc. | vbtx-ex991x93017.htm |
V E R I T E X
Earnings Presentation
Third Quarter 2017
2
Safe Harbor Statement
ABOUT VERITEX HOLDINGS, INC.
Headquartered in Dallas, Texas, Veritex Holdings, Inc. (“VBTX”, “Veritex” or the “Company”) is a bank holding company that conducts banking activities
through its wholly-owned subsidiary, Veritex Community Bank, with locations throughout the Dallas/Fort Worth (“DFW”) metroplex and in the Houston
and Austin metropolitan areas. 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.
NO OFFER OR SOLICITATION
This communication does not constitute an offer to sell, a solicitation of an offer to sell, the solicitation or an offer to buy any securities or a solicitation
of any vote or approval. There will be no sale of securities in any jurisdiction in which such an offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus
meeting the requirement of Section 10 of the Securities Act of 1933, as amended.
ADDITIONAL INFORMATION ABOUT THE MERGER AND WHERE TO FIND IT
In connection with the proposed merger of Veritex and Liberty Bancshares, Inc. (“Liberty”), Veritex filed with the Securities and Exchange Commission
(the “SEC”) a registration statement on Form S-4 that includes a proxy statement of Liberty and a prospectus of Veritex, as well as other relevant
documents concerning the proposed merger. WE URGE INVESTORS AND SECURITY HOLDERS TO READ THE REGISTRATION STATEMENT ON FORM S-4
AND THE PROXY STATEMENT/PROSPECTUS INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM S-4 AS WELL AS ANY AMENDMENTS OR
SUPPLEMENTS TO THESE DOCUMENTS AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SEC IN CONNECTION WITH THE MERGER
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT VERITEX, LIBERTY AND THE MERGER. Investors and security holders may obtain free
copies of the registration statement on Form S-4 and the related proxy statement/prospectus, as well as other documents filed with the SEC by Veritex
through the web site maintained by the SEC at www.sec.gov. Documents filed with the SEC by Veritex are available free of charge by directing a written
request to Veritex Holdings, Inc., 8214 Westchester Drive, Suite 400, Dallas, Texas 75225 Attn: Investor Relations. Veritex’s telephone number is (972)
349-6200.
NON-GAAP FINANCIAL MEASURES
Veritex reports its results in accordance with United States generally accepted accounting principles (“GAAP”). However, management believes that
certain non-GAAP performance measures used in managing the business may provide meaningful information about underlying trends in its business.
Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, Veritex’s reported results prepared in accordance with
GAAP. Please see Reconciliation of Non-GAAP Measures at the end of this presentation for a reconciliation to the nearest GAAP financial measure.
PARTICIPANTS IN THE TRANSACTION
Veritex, Liberty and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the
shareholders of Liberty in connection with the proposed merger. Certain information regarding the interests of these participants and a description of
their direct and indirect interests, by security holdings or otherwise, are included in the proxy statement/prospectus regarding the proposed transaction.
Additional information about Veritex and its directors and officers may be found in the definitive proxy statement of Veritex relating to its 2017 Annual
Meeting of Stockholders filed with the SEC on April 10, 2017. The definitive proxy statement can be obtained free of charge from the sources described
above.
3
Forward Looking Statements
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: This presentation 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.
Executive
Management
C. Malcolm Holland, III
Chairman of the Board,
Chief Executive Officer
34 years of Texas banking experience, all in the
Dallas metropolitan area
Former CEO of Texas region for Colonial Bank,
which grew from $625 million to $1.6 billion
Former President of First Mercantile Bank
Noreen E. Skelly
Chief Financial Officer
30 years of banking experience
Former CFO of Highlands Bancshares, Inc.
Former Senior Vice President responsible for
finance functions at Comerica Bank and
LaSalle Bank
Clay Riebe
Chief Credit Officer
34 years of banking experience
Former Chief Lending Officer of American
Momentum Bank
Former senior executive responsible for
various credit and lending functions at
Citibank and First American Bank Texas
Today’s Presenters
4
5
Established in 2010 and headquartered in Dallas, Texas
21 locations within several of the fastest growing
metropolitan markets in the U.S.
Strong commercial lending focus and core deposit mix
Significant organic growth profile complemented by
disciplined M&A
Strategic focus on DFW and Houston markets
Acquisition of Fort Worth-based Liberty Bancshares,
Inc. announced on August 1, 2017
Liberty is the largest remaining independent bank with
5 branches in Fort Worth and Tarrant County. Pro forma
Tarrant County deposit franchise:
̶ Ranked 11th in deposits in Tarrant County
̶ Ranked 5th among Texas-based banks
Focus on DFW and Houston markets result in sale of
Austin branches
Overview
Veritex – “Truth in Texas Banking”
Source: Weighted deposit market share rank based upon SNL Branch Analytics .
D/FW Metroplex
Current Veritex
Proforma Liberty
Franchise Footprint
Completed a public offering of 2,285,050 share of Veritex common
stock on August 7, 2017 with net proceeds of $56.7 million to support
growth initiatives
Core efficiency ratio improved from 58.1% over prior quarter to
56.5% for the quarter ending September 30,2017
CAPITAL STEWARDSHIP
6
Converted and integrated Sovereign acquisition
Engaged teams in the integration and conversion planning process for
the Liberty acquisition
Invested in finance and compliance staffing to support current and
future acquisitions
OPERATIONAL
EXCELLENCE
Closed Sovereign acquisition which contributed $1.1 billion of growth
in assets over prior quarter
Organic loan growth from the legacy Veritex portfolio was $53.3
million, 4.8% growth from prior quarter end or 18.9% annualized
STRATEGIC GROWTH
Received American Bankers’ “Best Bank to Work For” for the fourth
consecutive year
Continued commitment to local community investments including
outreach to those in the Houston area impacted by Hurricane Harvey
CULTURE
Third Quarter Highlights
Third Quarter Financial Highlights
Source: Company documents.
(1) As used in this presentation, core net interest margin, core noninterest expense, core net income, core diluted EPS, core efficiency ratio, tangible common equity to tangible assets and tangible book value per
common share are non-GAAP financial measures. For a reconciliation of these non-GAAP financial measures to their comparable GAAP measures, see slides 15 and 16 of this presentation.
7
For the quarter ended
Sept 30,
2017
June 30,
2017
Sept 30,
2016
Linked
Q Δ YoY Q Δ
Selected balance sheet
Total loans $ 1,907,509 $ 1,122,468 $ 926,712 69.9 % 105.8%
Total deposits 1,985,658 1,211,107 1,221,696 64.0 84.3
Total assets 2,494,861 1,508,859 1,269,194 65.3 96.6
Selected profitability
Net interest income $ 19,129 $ 12,376 $ 10,517 54.6% 81.9%
Net interest margin 3.78% 3.53% 3.70% 25 bps 8 bps
Core net interest margin(1) 3.66 3.49 3.65 17 bps 1 bp
Noninterest expense $ 12,522 $ 7,782 $ 7,029 60.9% 78.1%
Core noninterest expense(1) 11,131 7,589 6,834 46.7 62.9
Net income available to common 5,140 3,615 3,375 42.2 52.3
Core net income available to common(1) 5,630 3,653 3,424 54.1 64.4
Reported diluted EPS 0.25 0.23 0.31 8.7 -19.4
Core diluted EPS(1) 0.28 0.23 0.31 21.7 -9.7
Reported efficiency ratio 61.52% 58.96% 57.75% 4.3 6.5
Core efficiency ratio(1) 56.45 58.09 56.70 -2.8 -0.4
Tangible common equity to tangible assets(1) 12.76 14.77 9.14 13.6 39.6
Tangible book value per common share(1) $ 13.23 $ 14.35 $ 10.55 7.8 25.4
Successful Growth of a Diversified Loan Portfolio
Total Loans Held for Investment
Source: Company documents.
Commercial &
Industrial
27%
Energy
2%
1-4 Family &
Consumer
12%
Commercial
Real Estate
59%
As of September 30, 2017
$298
$398
$495
$603
$821
$992
$1,908
2011 2012 2013 2014 2015 2016 3Q17
Ending Balances
$ in millions
Third quarter yield on loans(1) was 5.00% including 14
basis points of estimated purchase discount
accretion relating to loans acquired from Sovereign
For the period ended Sept. 30, 2017, loan balances increased $785.0 million over June 30, 2017
Legacy Veritex loan portfolio grew $53.3 million, 4.8% over prior quarter end or 19.2% annualized
Acquired Sovereign loans at quarter end represented $731.6 million of the increase and included an
estimated accretable purchase discount of $6.4 million
8
(1) Includes average outstanding balance of loans held for sale of $1.5 million.
Superior Credit Quality
Credit Quality – Nonperforming Loans, Net Charge-Offs and PCI Loans
Source: Company documents.
0.33%
0.21%
0.19%
0.23%
0.02%
0.13%
0.07% 0.08%
0.10%
0.08%
0.01% n/m
0.18%
0.03%
n/m
0.10%
0.05%
1.95%
Nonperforming loans to total loans Net charge-offs to average loans PCI loans to average loans
2012 2013 2014 2015 2016 09/30/17
Originated loans from the legacy Veritex portfolio continue to have limited credit issues
Purchase credit impaired (“PCI”) loans are carried at $32.2 million and are 1.95% of average loans
outstanding
Nonperforming assets, which excludes PCI loans, represents 0.11% of total assets as of Sept. 30, 2017
9
Core Funded Deposit Mix
Total Funding Sources
Source: Company documents.
Noninteres
t-bearing
24%
NOW/Savings
12%
Money
Market
38%
Time
20%
Wholesale/
Borrowed
6%
As of September 30, 2017
$365
$448
$574 $639
$868
$1,120
$1,986
2011 2012 2013 2014 2015 2016 3Q17
Ending Balances
$ in millions
Third quarter average rates:
• interest-bearing deposits 0.86%
• Total cost of funds 0.62%
Total Deposits
For the period ended Sept 30, 2017, deposit balances increased $774.6 million over June 30, 2017
Assumed $809.4 million of deposits from Sovereign
Sold $118 million of acquired investment securities, as a result, did not renew $80 million of assumed
short term FHLB borrowings
10
Core Net Interest Income and Margin Growth
Source: Company documents.
$10,397 $10,459 $11,198
$12,241
$18,492
3.65%
3.42%
3.19%
3.49%
3.66%
3Q16 4Q16 1Q2017 2Q2017 3Q2017
Quarterly Net Interest Trend
Core Net interest income Core Net interest margin
(1)
72%
20%
8%
1Q2017
76%
14%
10%
2Q2017
82%
9%
9%
3Q2017
84%
9%
7%
3Q2016
80%
12%
8%
4Q2016
Interest-bearing deposits
in other banks
Investment Securities Loans
Average
Yield/Rate
Loans 4.78% 4.76% 4.76% 4.83% 4.85%
Deposits 0.76 0.81 0.78 0.80 0.86
Quarterly Average Earning Asset Mix
(1) Excludes 5 bps, 2 bps, 2 bps, 5 bps and 15 bps of income recognized on acquired loans for 3Q16, 4Q16, 1Q2017, 2Q2017 and 3Q2017, respectively. See Reconciliation of Non-GAAP Financial Measures
(1)
11
12
Acquisition and Integration Update
August
2017
September
2017
Fourth
Quarter
2017
First
Quarter
2018
Second
Quarter
2018
Sovereign
acqusition
closed
Liberty
Bancshares,
Inc. definitive
agreement
announced
Sovereign
Integration
and system
conversion
completed
Liberty
transaction
anticipated
closing
Expected
substantial
Sovereign cost
savings
realization
Anticipated
closing on sale
of Austin
branches
Liberty
expected
integration
and
conversion
Successful Organic Growth and M&A Strategy
Source: SNL Financial and Company documents.
(1) Combined assets is the sum of ending balance assets for Veritex Holdings, Inc. at 9/30/2017 and Liberty Bancshares, Inc. as of 6/30/17. 13
Founded Veritex
Holdings &
acquired $182
million asset
Professional Bank
Acquired $166
million asset
Fidelity Bank and
$54 million asset
Bank of Las
Colinas
Grew $86
million
organically
and hit $500
million in
total assets
Grew $141
million
organically
Completed $40
million Initial
Public Offering
and grew $137
million
organically
Acquired
$121 million
asset IBT
Bancorp, Inc.
Grew $369
million or 35.5%
organically
in 2016
(Dollars in Thousands) Acquired $1.1
billion assets in
Sovereign
acquisition and
raised $60
million in public
offering
(1)2010 2011 2012 2013 2014 2015 2016 9/30/2017 Combined
9/30/2017Total Assets at Year End Assets Acquired During the Year
$2,954,148
$2,494,861
$1,408,507
$1,039,551
$802,286
$197,949
$437,820
$524,127
$664,971
Disciplined acquisition management
Management of efficiencies, particularly cost savings targets
Focus on EPS, ROAA, and efficiency ratios
CAPITAL STEWARDSHIP
14
Consolidation of backroom operations and acquisition integrations
Addition and integration of Chief Information Officer
Dedication to maintaining excellence in compliance, BSA, and CRA
OPERATIONAL
EXCELLENCE
Focused loan originations with continued emphasis on credit quality
and relationship banking
Strategically grow line of businesses: Community Banking, C&I, CRE,
Government Lending, and Correspondent Banking
STRATEGIC GROWTH
Investment in our communities and people with a focus on
maintaining our “Best Bank to Work For” status
Respectful management of teammates impacted by the pace of
acquisitions and growth
Commitment to employee ownership through stock ownership plan
CULTURE
Source: VBTX earnings release. Figures represent Veritex standalone for the periods noted.
Look Forward
15
Reconciliation of Non-GAAP Measures
The Company’s management uses certain non-GAAP (generally accepted accounting principles) financial measures to evaluate its
performance. The Company has included in this presentation information related to these non-GAAP financial measures for the applicable
periods presented. Reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures are
presented in the table below.
(Dollars in Thousands, Except Per Share)
Source: Company documents.
As of or For the Quarter 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 (1,391) (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
Adjustment: Tax impact of adjustments 264 20 12 76 26
Core net income 5,672 3,653 3,120 3,332 3,424
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
Earnings Per Share
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 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 3.66% 3.49% 3.19% 3.42% 3.65%
16
Reconciliation of Non-GAAP Measures
The Company’s management uses certain non-GAAP (generally accepted accounting principles) financial measures to
evaluate its performance including tangible book value per common share and tangible common equity to tangible assets.
The Company has included in this presentation information related to these non-GAAP financial measures for the applicable
periods presented. Reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial
measures are presented in the table below.
(Dollars in Thousands, Except Per Share)
Source: Company documents.
For the Three Months Ended
September 30, June 30, March 31, December 31. September 30,
2017 2017 2017 2016 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 (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 $ 19.69 $ 16.25 $ 15.94 $ 15.73 $ 13.27
Tangible book value per common share 13.23 14.35 14.03 13.82 10.55
17