EX-99.1 2 a2021-q4xex991xearningspre.htm EX-99.1 Document
Exhibit 99.1

Veritex Holdings, Inc. Reports Fourth Quarter and Year-End 2021 Operating Results

Dallas, TX — January 25, 2022 —Veritex Holdings, Inc. (“Veritex” or the “Company”) (Nasdaq: VBTX), the holding company for Veritex Community Bank, today announced the results for the fourth quarter and full year of 2021.
“We reported strong fourth quarter and 2021 results as the Texas economy continues to improve and we remained focused on our organic growth strategy," said President and Chief Executive Officer, Malcolm C. Holland, III. "Deposit growth remained strong and loan balances increased for the sixth quarter in a row with loan balances, excluding our mortgage warehouse and PPP loans, growing approximately 16% during 2021.”

"We remained laser focused and delivered on one of our main strategies as a company....be transformative and deliver top tier financial results. With our 49% investment in Thrive Mortgage, LLC ("Thrive"), which has contributed $6 million of increased noninterest income since July 2021, and our acquisition of North Avenue Capital, LLC ("NAC"), the nation’s leader in USDA lending, which has contributed $1.3 million of increased noninterest income since November 1, 2021, we transformed, delivered and positioned Veritex to further diversify revenue streams as we continue to organically grow."

"Asset quality continues to improve, with loss rates driven by economic forecasts approaching pre-pandemic levels, leading to a release in credit reserves. Nonperforming assets ("NPAs") to total assets improved 26 basis points to 0.51% during the fourth quarter, the lowest level since December 31, 2019."

"Business momentum, continued organic growth, investment in talent, revenue diversification, improving credit metrics, a recovering economy, maintaining our strong culture and pursuit of opportunities to further scale have me excited for 2022 and the future of this Company."

Financial Highlights
Quarter to DateYear to Date
Q4 2021Q3 202120212020
(Dollars in thousands, except per share data)
(unaudited)
GAAP  
Net income$41,506 $36,835 $139,584 $73,883 
Diluted EPS0.82 0.73 2.77 1.48 
Book value per common share26.64 26.09 26.64 24.39 
Return on average assets2
1.68 %1.56 %1.49 %0.87 %
Efficiency ratio48.53 47.55 49.45 50.90 
Return on average equity2
12.65 11.32 11.01 6.34 
Non-GAAP1
Operating earnings$42,410 $35,072 $139,647 $77,980 
Diluted operating EPS0.84 0.70 2.77 1.56 
Tangible book value per common share17.49 17.53 17.49 15.70 
Pre-tax, pre-provision operating earnings48,640 43,858 171,205 162,447 
Pre-tax, pre-provision operating return on average assets2
1.97 %1.85 %1.83 %1.91 %
Operating return on average assets2
1.72 1.48 1.49 0.91 
Operating efficiency ratio47.64 48.51 49.27 47.69 
Return on average tangible common equity2
20.06 17.72 17.57 11.16 
Operating return on average tangible common equity2
20.48 16.92 17.58 11.72 
1 Refer to the section titled "Reconciliation of Non-GAAP Financial Measures" for a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures.
2 Annualized ratio.

Other Fourth Quarter and 2021 Highlights:
•Total loans held for investment ("LHI"), excluding Paycheck Protection Program ("PPP") and mortgage warehouse ("MW") loans, grew $150.1 million, from the third quarter of 2021, or 9.1% annualized, and grew $918.1 million, or 15.7%, year-over-year;
•Total deposits grew $184.9 million for the fourth quarter of 2021, or 10.3% annualized, with the average cost of total deposits decreasing to 0.18% for the three months ended December 31, 2021 from 0.20% for the three months ended September 30, 2021. Total deposits grew $850.8 million, or 13.1%, year-over-year;
•NPAs to total assets decreased to 0.51% , or 26 basis points from September 30, 2021, and decreased 48 basis points from December 31, 2020;
•Announced the completion of the Company’s 49% investment in Thrive during the third quarter of 2021 and recognized $5.8 million of equity method investment income, which includes $1.9 million of PPP loan forgiveness income;
•Closed the acquisition of NAC on November 1, 2021; and
•Declared quarterly cash dividend of $0.20 per share of outstanding common stock payable on February 25, 2022.
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Result of Operations for the Three Months Ended December 31, 2021
 
Net Interest Income

For the three months ended December 31, 2021, net interest income before provision for credit losses was $76.7 million and net interest margin was 3.37% compared to $71.3 million and 3.26%, respectively, for the three months ended September 30, 2021. The $5.4 million increase in net interest income before provision for credit losses was primarily due to a $3.0 million increase in interest income on loans driven by an increase in average balances and the recognition of $2.1 million of prepayment penalty income on debt securities during three months ended December 31, 2021. Net interest margin increased 11 basis points from the three months ended September 30, 2021 primarily due to the increase in yields earned on debt securities as a result of the recognition of $2.1 million of prepayment penalty income during three months ended December 31, 2021. The average cost of interest-bearing deposits decreased 4 basis points to 0.26% for the three months ended December 31, 2021 from 0.30% for the three months ended September 30, 2021.
Net interest income before provision for credit losses increased by $9.9 million from $66.8 million to $76.7 million and net interest margin increased 8 basis points from 3.29% to 3.37% for the three months ended December 31, 2021 as compared to the same period in 2020. The increase in net interest income before provision for credit losses was primarily due to a $4.6 million increase in interest income on loans driven by an increase in average balances, the recognition of $2.1 million of prepayment penalty income on debt securities and a $2.3 million decrease in interest expenses on certificates and other time deposits during the three months ended December 31, 2021 compared to the three months ended December 31, 2020. Net interest margin increased 8 basis points compared to the three months ended December 31, 2020 primarily due to an increase in yields earned on debt securities as a result of the recognition of $2.1 million of prepayment penalty income and 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, 2021. As a result, the average cost of interest-bearing deposits decreased to 0.26% for the three months ended December 31, 2021 from 0.55% for the three months ended December 31, 2020.

Noninterest Income
Noninterest income for the three months ended December 31, 2021 was $16.2 million, an increase of $523 thousand, or 3.3% compared to the three months ended September 30, 2021. The increase in noninterest income was primarily due to a $1.1 million increase in government guaranteed loan income, net, and a $951 thousand increase in loan fees. These increases were partially offset by a $3.2 million decrease in equity method investment income.
Compared to the three months ended December 31, 2020, noninterest income for the three months ended December 31, 2021 grew $7.1 million, or 79.2%. The increase was primarily due to a $3.0 million increase in government guaranteed loan income, a $2.0 million increase in loan fees, a $1.2 million increase in equity method investment income and a $811 thousand increase in service charges and fees on deposit accounts.

Noninterest Expense
Noninterest expense was $45.1 million for the three months ended December 31, 2021, compared to $41.3 million for the three months ended September 30, 2021, an increase of $3.8 million, or 9.1%. The increase was primarily driven by a $2.4 million increase in salaries and employee benefits and a $826 thousand increase in merger and acquisition expenses incurred as a result of the acquisition of NAC in November of 2021.
Noninterest expense was $45.1 million for the three months ended December 31, 2021, compared to $47.4 million for the three months ended December 31, 2020, a decrease of $2.3 million, or 4.8%. The decrease in noninterest expense was primarily due to debt extinguishment costs of $9.7 million incurred in the three months ended December 31, 2020 with no corresponding expense in the same period in 2021. The decrease was partially offset by an increase of $5.4 million in salaries and employee benefits, a $826 thousand increase in merger and acquisition expenses incurred related to the acquisition of NAC, a $498 thousand increase in marketing expense and a $359 thousand increase in data processing and software expense.

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Financial Condition
Total LHI, excluding MW and PPP, were $6.8 billion at December 31, 2021, an increase of $150.1 million, or 9.1% annualized, compared to September 30, 2021, and an increase of $918.1 million, or 15.7%, compared to December 31, 2020. These increases were the result of the continued execution and success of our loan growth strategy.
Total deposits were $7.4 billion at December 31, 2021, an increase of $184.9 million, or 10.3% annualized, compared to September 30, 2021 and an increase of $850.8 million, or 13.1%, compared to December 31, 2020. The increase from September 30, 2021 was primarily the result of increase of $207.8 million in non-interest bearing demand deposits and an increase of $48.0 million in interest-bearing transaction and savings deposits accounts. The increase from December 31, 2020 was primarily the result of increases of $413.6 million, $317.9 million and $119.3 million in non-interest bearing demand deposits, interest-bearing transaction and savings deposits accounts and certificates and other time deposits, respectively.

Asset Quality
NPAs decreased to $50.1 million, or 0.51% of total assets, at December 31, 2021, compared to $74.0 million, or 0.77% of total assets, at September 30, 2021. The Company had net charge-offs of $12.7 million for the quarter, which were substantially reserved against in prior quarters under our allowance for credit loss model.
The Company recorded a benefit for credit losses of $3.3 million for the three months ended December 31, 2021, compared to no provision for credit losses for the three months ended September 30, 2021 and December 31, 2020. The benefit for credit losses reported for the three months ended December 31, 2021, compared to the three months ended September 30, 2021 and December 31, 2020, was attributable to improvement in the Texas economic forecasts used in the Current Expected Credit Losses (“CECL”) model in the fourth quarter of 2021 to reflect the expected impact of the COVID-19 pandemic as of December 31, 2021, as compared to our Texas economic forecasts and expected impact of the COVID-19 pandemic as of September 30, 2021 and December 31, 2020. During the three months ended December 31, 2021, we recorded a $1.0 million benefit for unfunded commitments, which was also attributable to improvement in the Texas economic forecasts.
Allowance for credit losses ("ACL") as a percentage of LHI, excluding MW and PPP loans, was 1.15%, 1.42% and 1.80% at December 31, 2021, September 30, 2021 and December 31, 2020, respectively.

Dividend Information
On January 25, 2022, Veritex's Board of Directors declared a quarterly cash dividend of $0.20 per share on its outstanding shares of common stock. The dividend will be paid on or after February 25, 2022 to stockholders of record as of the close of business on February 11, 2022.
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.
Conference Call
The Company will host an investor conference call to review the results on Wednesday, January 26, 2021 at 8:30 a.m. Central Time. Participants may pre-register for the call by visiting https://edge.media-server.com/mmc/p/rcmgsdby 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 (877) 703-9880.

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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 #9296970. This replay, as well as the webcast, will be available until February 2, 2021.
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.

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

Investor Relations:
Susan Caudle
972-349-6132
scaudle@veritexbank.com
Forward-Looking Statements
This earnings release contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on various facts and derived utilizing assumptions, current expectations, estimates and projections and are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements include, without limitation, statements relating to the expected payment date of Veritex’s quarterly cash dividend, the impact of certain changes in Veritex’s accounting policies, standards and interpretations, the effects of the COVID-19 pandemic and actions taken in response thereto, Veritex’s future financial performance, business and growth strategy, projected plans and objectives, as well as other projections based on macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact broader economic and industry 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 words. Further, certain important factors could affect future results and cause actual results to differ materially from those expressed in the forward-looking statements, including, but not limited to, that the businesses of the Company and NAC will not be integrated successfully, that the cost savings and any synergies from the acquisition may not be fully realized or may take longer to realize than expected, disruption from the acquisition making it more difficult to maintain relationships with employees, customers or other parties with whom the Company or NAC have business relationships, diversion of management time on acquisition-related issues, the reaction to the transaction of the companies’ customers, employees and counterparties and other factors, many of which are beyond the control of the Company and NAC. Further, certain important factors could affect future results and cause actual results to differ materially from those expressed in the forward-looking statements, including, but not limited to, that the businesses of the Company and NAC will not be integrated successfully, that the cost savings and any synergies from the acquisition may not be fully realized or may take longer to realize than expected, disruption from the acquisition making it more difficult to maintain relationships with employees, customers or other parties with whom the Company or NAC have business relationships, diversion of management time on acquisition-related issues, the reaction to the transaction of the companies’ customers, employees and counterparties and other factors, many of which are beyond the control of the Company and NAC. We refer you to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Veritex’s Annual Report on Form 10-K for the year ended December 31, 2020 and any updates to those risk factors set forth in Veritex’s Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings with the Securities and Exchange Commission (“SEC”), which are available on the SEC’s website at www.sec.gov. 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.
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Veritex does not undertake any obligation, and specifically declines any obligation, to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by law. All forward-looking statements, expressed or implied, included in this earnings release 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.
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VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(Unaudited)
 For the Quarter EndedFor the Year Ended
Dec 31, 2021Sep 30, 2021Jun 30, 2021Mar 31, 2021Dec 31, 2020Dec 31, 2021Dec 31, 2020
(Dollars and shares in thousands, except per-share data)
Per Share Data (Common Stock):
Basic EPS$0.84 $0.75 $0.60 $0.64 $0.46 $2.83 $1.48 
Diluted EPS0.82 0.73 0.59 0.64 0.46 2.77 1.48 
Book value per common share26.64 26.09 25.72 24.96 24.39 26.64 24.39 
Tangible book value per common share1
17.49 17.53 17.16 16.34 15.70 17.49 15.70 
Dividends paid per common share outstanding2
0.20 0.20 0.20 0.17 0.17 0.77 0.68 
Common Stock Data:
Shares outstanding at period end49,372 49,229 49,498 49,433 49,340 49,372 49,340 
Weighted average basic shares outstanding for the period49,329 49,423 49,476 49,394 49,571 49,405 49,884 
Weighted average diluted shares outstanding for the period50,441 50,306 50,331 49,998 49,837 50,352 50,036 
Summary of Credit Ratios:
ACL to total LHI, excluding MW and PPP loans1.15 %1.42 %1.59 %1.76 %1.80 %1.15 %1.80 %
NPAs to total assets0.51 0.77 0.85 0.92 0.99 0.51 0.99 
Net charge-offs to average loans outstanding0.19 0.09 0.09 — 0.28 0.38 0.36 
Summary Performance Ratios:   
Return on average assets3
1.68 %1.56 %1.27 %1.44 %1.04 %1.49 %0.87 %
Return on average equity3
12.65 11.32 9.42 10.53 7.58 11.01 6.34 
Return on average tangible common equity1, 3
20.06 17.72 15.18 17.17 12.84 17.57 11.16 
Efficiency ratio48.53 47.55 52.42 49.62 62.52 49.45 50.90 
Net interest margin3.37 3.26 3.11 3.22 3.29 3.24 3.39 
Selected Performance Metrics - Operating:
Diluted operating EPS1
$0.84 $0.70 $0.60 $0.64 $0.60 $2.77 $1.56 
Pre-tax, pre-provision operating return on average assets1, 2
1.97 %1.85 %1.66 %1.82 %1.75 %1.83 %1.91 %
Operating return on average assets1, 3
1.72 1.48 1.29 1.46 1.35 1.49 0.91 
Operating return on average tangible common equity1, 3
20.48 16.92 15.42 17.39 16.44 17.58 11.72 
Operating efficiency ratio1
47.64 48.51 51.63 49.62 49.49 49.27 47.69 
Veritex Holdings, Inc. Capital Ratios:   
Average stockholders' equity to average total assets13.30 %13.75 %13.46 %13.69 %13.67 %13.54 %13.66 %
Tangible common equity to tangible assets1
9.28 9.43 9.51 9.17 9.23 9.28 9.23 
Tier 1 capital to average assets (leverage)9.05 9.54 9.38 9.50 9.43 9.05 9.43 
Common equity tier 1 capital8.58 8.75 9.03 9.27 9.30 8.58 9.30 
Tier 1 capital to risk-weighted assets8.89 9.06 9.36 9.61 9.66 8.89 9.66 
Total capital to risk-weighted assets11.60 12.31 12.86 13.38 13.56 11.60 13.56 
1Refer to "Reconciliation of Non-GAAP Financial Measures" after the financial highlights for a reconciliation of this non-GAAP financial measure to its most directly comparable GAAP measure.
2 Dividend amount represents dividend paid per common share subsequent to each respective quarter end.
3Annualized ratio for quarterly metrics.
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VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(in thousands)
Dec 31, 2021Sep 30, 2021Jun 30, 2021Mar 31, 2021Dec 31, 2020
(unaudited)(unaudited)(unaudited)(unaudited)
ASSETS    
Cash and cash equivalents$379,784 $229,712 $390,027 $468,029 $230,825 
Debt securities1,052,494 1,103,745 1,125,877 1,077,860 1,055,201 
Other investments190,591 191,786 87,558 87,226 87,192 
Loans held for sale26,007 18,896 12,065 19,864 21,414 
LHI PPP loans, carried at fair value53,369 135,842 291,401 407,353 358,042 
LHI, MW565,645 615,045 559,939 599,001 577,594 
LHI, excluding MW and PPP6,766,009 6,615,905 6,272,087 5,963,493 5,847,862 
Total loans7,411,030 7,385,688 7,135,492 6,989,711 6,804,912 
ACL(77,754)(93,771)(99,543)(104,936)(105,084)
Bank-owned life insurance83,194 83,781 83,304 83,318 82,855 
Bank premises, furniture and equipment, net109,271 116,063 123,504 114,585 115,063 
Other real estate owned ("OREO")— — 2,467 2,337 2,337 
Intangible assets, net of accumulated amortization66,017 54,682 57,143 59,236 61,733 
Goodwill403,771 370,840 370,840 370,840 370,840 
Other assets138,851 129,774 72,856 89,304 114,997 
Total assets$9,757,249 $9,572,300 $9,349,525 $9,237,510 $8,820,871 
LIABILITIES AND STOCKHOLDERS’ EQUITY     
Deposits:     
Noninterest-bearing deposits$2,510,723 $2,302,925 $2,388,068 $2,171,719 $2,097,099 
Interest-bearing transaction and savings deposits3,276,312 3,228,306 3,112,974 3,189,693 2,958,456 
Certificates and other time deposits1,576,580 1,647,521 1,477,860 1,543,158 1,457,291 
Total deposits7,363,615 7,178,752 6,978,902 6,904,570 6,512,846 
Accounts payable and other liabilities69,160 66,571 55,499 55,902 61,928 
Advances from Federal Home Loan Bank ("FHLB")777,562 777,601 777,640 777,679 777,718 
Subordinated debentures and subordinated notes227,764 262,761 262,766 262,774 262,778 
Securities sold under agreements to repurchase4,069 2,455 1,811 2,777 2,225 
Total liabilities8,442,170 8,288,140 8,076,618 8,003,702 7,617,495 
Commitments and contingencies    
Stockholders’ equity:     
Common stock560 559 558 557 555 
Additional paid-in capital1,142,758 1,137,889 1,134,603 1,131,324 1,126,437 
Retained earnings275,273 243,633 216,704 195,661 172,232 
Accumulated other comprehensive income64,070 69,661 77,189 62,413 56,225 
Treasury stock(167,582)(167,582)(156,147)(156,147)(152,073)
Total stockholders’ equity1,315,079 1,284,160 1,272,907 1,233,808 1,203,376 
Total liabilities and stockholders’ equity$9,757,249 $9,572,300 $9,349,525 $9,237,510 $8,820,871 









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VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(in thousands, except per share data)
 For the Quarter EndedFor the Year Ended
Dec 31, 2021Sep 30, 2021Jun 30, 2021Mar 31, 2021Dec 31, 2020Dec 31, 2021Dec 31, 2020
Interest income:    
Loans, including fees$74,174 $71,139 $67,814 $67,399 $69,597 $280,526 $286,583 
Debt securities9,553 7,613 7,529 7,437 7,652 32,132 30,726 
Deposits in financial institutions and Fed Funds sold165 130 167 127 99 589 1,221 
Equity securities and other investments1,004 898 672 663 752 3,237 3,320 
Total interest income84,896 79,780 76,182 75,626 78,100 316,484 321,850 
Interest expense:     
Transaction and savings deposits1,629 1,588 1,661 1,980 2,105 6,858 13,233 
Certificates and other time deposits1,661 1,934 2,423 3,061 3,919 9,079 23,678 
Advances from FHLB1,847 1,848 1,829 1,812 2,222 7,336 10,609 
Subordinated debentures and subordinated notes3,018 3,134 3,138 3,138 3,088 12,428 8,532 
Total interest expense8,155 8,504 9,051 9,991 11,334 35,701 56,052 
Net interest income76,741 71,276 67,131 65,635 66,766 280,783 265,798 
(Benefit) provision for credit losses(3,349)— — — — (3,349)56,640 
(Benefit) provision for unfunded commitments(1,040)(448)577 (570)902 (1,481)9,029 
Net interest income after provisions81,130 71,724 66,554 66,205 65,864 285,613 200,129 
Noninterest income:     
Service charges and fees on deposit accounts4,782 4,484 3,847 3,629 3,971 16,742 13,703 
Loan fees2,697 1,746 1,823 1,341 684 7,607 4,556 
(Loss) gain on sales of investment securities— (188)— — (256)(188)2,615 
Gain on sales of mortgage loans held for sale293 407 385 507 317 1,592 1,239 
Government guaranteed loan income, net3,423 2,341 3,448 6,548 448 15,760 14,150 
Equity method investment income1,238 4,522 — — — 5,760 — 
Other3,717 2,315 2,953 2,147 3,848 11,132 11,081 
Total noninterest income16,150 15,627 12,456 14,172 9,012 58,405 47,344 
Noninterest expense:     
Salaries and employee benefits25,401 22,964 23,451 22,932 20,011 94,748 79,453 
Occupancy and equipment4,398 4,536 4,233 4,096 4,116 17,263 16,363 
Professional and regulatory fees3,017 3,401 3,086 3,441 3,578 12,945 11,729 
Data processing and software expense2,597 2,494 2,536 2,319 2,238 9,946 9,213 
Marketing1,443 1,151 1,841 909 945 5,344 3,651 
Amortization of intangibles2,494 2,509 2,517 2,537 2,558 10,057 10,790 
Telephone and communications380 380 337 337 340 1,434 1,312 
Merger and acquisition expense826 — — — — 826 — 
COVID expenses— — — — — — 1,377 
Debt extinguishment costs— — — — 9,746 — 11,307 
Other4,521 3,886 3,716 3,026 3,841 15,149 14,192 
Total noninterest expense45,077 41,321 41,717 39,597 47,373 167,712 159,387 
Income before income tax expense52,203 46,030 37,293 40,780 27,503 176,306 88,086 
Income tax expense10,697 9,195 7,837 8,993 4,702 36,722 14,203 
Net income$41,506 $36,835 $29,456 $31,787 $22,801 $139,584 $73,883 
Basic EPS$0.84 $0.75 $0.60 $0.64 $0.46 $2.83 $1.48 
Diluted EPS$0.82 $0.73 $0.59 $0.64 $0.46 $2.77 $1.48 
Weighted average basic shares outstanding49,329 49,423 49,476 49,394 49,571 49,405 49,884 
Weighted average diluted shares outstanding50,441 50,306 50,331 49,998 49,837 50,352 50,036 

8


VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(Unaudited)
 For the Quarter Ended
 December 31, 2021September 30, 2021December 31, 2020
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
(Dollars in thousands)
Assets         
Interest-earning assets:         
Loans1
$6,777,397 $70,334 4.12 %$6,384,856 $66,911 4.16 %$5,798,692 $65,259 4.48 %
LHI, MW483,850 3,629 2.98 465,945 3,697 3.15 446,027 3,355 2.99 
PPP loans83,553 211 1.00 210,092 531 1.00 390,509 983 1.00 
Debt securities1,092,089 9,553 3.47 1,119,952 7,613 2.70 1,076,031 7,652 2.83 
Interest-earning deposits in other banks417,266 165 0.16 336,289 130 0.15 258,687 99 0.15 
Equity securities and other investments191,031 1,004 2.09 167,242 898 2.13 95,706 752 3.13 
Total interest-earning assets9,045,186 84,896 3.72 8,684,376 79,780 3.64 8,065,652 78,100 3.85 
ACL(95,218) (99,482)  (121,162) 
Noninterest-earning assets838,703  800,576   805,651  
Total assets$9,788,671  $9,385,470   $8,750,141  
Liabilities and Stockholders’ Equity     
Interest-bearing liabilities:     
Interest-bearing demand and savings deposits$3,357,958 1,629 0.19 %$3,201,409 $1,588 0.20 %$2,862,084 2,105 0.29 %
Certificates and other time deposits1,615,066 1,661 0.41 1,519,824 1,934 0.50 1,467,250 3,919 1.06 
Advances from FHLB777,577 1,847 0.94 777,617 1,848 0.94 885,014 2,222 1.00 
Subordinated debentures and subordinated notes259,191 3,018 4.62 264,714 3,134 4.70 259,581 3,088 4.73 
Total interest-bearing liabilities6,009,792 8,155 0.54 5,763,564 8,504 0.59 5,473,929 11,334 0.82 
Noninterest-bearing liabilities:     
Noninterest-bearing deposits2,413,443  2,271,197   2,011,995  
Other liabilities63,760  60,181   67,943  
Total liabilities8,486,995  8,094,942   7,553,867  
Stockholders’ equity1,301,676  1,290,528   1,196,274  
Total liabilities and stockholders’ equity$9,788,671  $9,385,470   $8,750,141  
Net interest rate spread2
3.18 %  3.05 %3.03 %
Net interest income and margin3
$76,741 3.37 % $71,276 3.26 %$66,766 3.29 %

1 Includes average outstanding balances of loans held for sale of $8,987, $8,542 and $11,938 for the three months ended December 31, 2021, September 30, 2021 and December 31, 2020, respectively, and average balances of LHI, excluding MW and PPP loans.
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.
9


VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(Unaudited)
 For the Year Ended December 31,
 20212020
Average
Outstanding
Balance		Interest
Earned/
Interest
Paid		Average
Yield/
Rate		Average
Outstanding
Balance		Interest
Earned/
Interest
Paid		Average
Yield/
Rate
(Dollars in thousands)
Assets      
Interest-earning assets:      
Loans1
$6,285,510 $263,583 4.19 %$5,770,228 $273,999 4.97 %
LHI, MW468,001 14,219 3.04 318,657 9,672 3.04 
PPP loans272,770 2,724 1.00 290,851 2,912 1.00 
Debt securities1,092,967 32,132 2.94 1,083,633 30,726 2.84 
Interest-earning deposits in other banks410,785 589 0.14 276,970 1,221 0.44 
Equity securities and other investments133,594 3,237 2.42 100,556 3,320 3.30 
Total interest-earning assets8,663,627 316,484 3.65 7,840,895 321,850 4.10 
ACL(101,383)(98,527)
Noninterest-earning assets799,334 782,907 
Total assets$9,361,578 $8,525,275 
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Interest-bearing demand and savings deposits$3,198,225 6,858 0.21 $2,726,462 13,233 0.49 
Certificates and other time deposits1,540,188 9,079 0.59 1,550,995 23,678 1.53 
Advances from FHLB777,635 7,336 0.94 1,024,142 10,609 1.04 
Subordinated debentures and subordinated notes263,535 12,428 4.72 172,594 8,532 4.94 
Total interest-bearing liabilities5,779,583 35,701 0.62 5,474,193 56,052 1.02 
Noninterest-bearing liabilities:
Noninterest-bearing deposits2,256,546 1,825,806 
Other liabilities57,457 60,303 
Total liabilities8,093,586 7,360,302 
Stockholders’ equity1,267,992 1,164,973 
Total liabilities and stockholders’ equity$9,361,578 $8,525,275 
Net interest rate spread2
3.03 %3.08 %
Net interest income and margin3
$280,783 3.24 %$265,798 3.39 %

1Includes average outstanding balances of loans held for sale of $12,093 and $15,315 for the twelve months ended December 31, 2021 and 2020, respectively, and average balances of LHI, excluding MW and PPP loans.
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.

10


VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(Unaudited)

Yield Trend
 For the Quarter Ended
Dec 31,
2021		Sep 30,
2021		Jun 30,
2021		Mar 31,
2021		Dec 31,
2020
Average yield on interest-earning assets:   
Loans1
4.12 %4.16 %4.16 %4.31 %4.48 %
LHI, MW2.98 3.15 3.06 3.03 2.99 
PPP loans1.00 1.00 1.00 1.00 1.00 
Debt securities3.47 2.70 2.76 2.84 2.83 
Interest-bearing deposits in other banks0.16 0.15 0.12 0.15 0.15 
Equity securities and other investments2.09 2.13 3.08 3.08 3.13 
Total interest-earning assets3.72 %3.64 %3.53 %3.71 %3.85 %
Average rate on interest-bearing liabilities:
Interest-bearing demand and savings deposits0.19 %0.20 %0.21 %0.26 %0.29 %
Certificates and other time deposits0.41 0.50 0.64 0.82 1.06 
Advances from FHLB0.94 0.94 0.94 0.94 1.00 
Subordinated debentures and subordinated notes4.62 4.70 4.75 4.80 4.73 
Total interest-bearing liabilities0.54 %0.59 %0.63 %0.72 %0.82 %
Net interest rate spread2
3.18 %3.05 %2.90 %2.99 %3.03 %
Net interest margin3
3.37 %3.26 %3.11 %3.22 %3.29 %
1 Includes average outstanding balances of loans held for sale of $8,987, $8,542, $14,364, $16,602 and $11,938 for the three months ended December 31, 2021, September 30, 2021, June 30, 2021, March 31, 2021 and December 31, 2020, respectively, and average balances of LHI, excluding MW and PPP loans.
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.

Supplemental Yield Trend
 For the Quarter Ended
Dec 31,
2021		Sep 30,
2021		Jun 30,
2021		Mar 31,
2021		Dec 31,
2020
Average cost of interest-bearing deposits0.26 %0.30 %0.35 %0.45 %0.55 %
Average costs of total deposits, including noninterest-bearing0.18 0.20 0.23 0.31 0.38 


11


VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(Unaudited)

LHI and Deposit Portfolio Composition
Dec 31, 2021Sep 30, 2021Jun 30, 2021Mar 31, 2021Dec 31, 2020
(Dollars in thousands)
LHI1
Commercial$2,006,876 29.6 %$1,793,740 27.1 %$1,771,100 28.2 %$1,632,040 27.4 %$1,559,546 26.7 %
Real Estate:
Owner occupied commercial ("OOCRE")665,537 9.8 711,476 10.7 744,899 11.9 733,310 12.3 717,472 12.3 
Non-owner occupied commercial ("NOOCRE")2,120,309 31.3 2,194,438 33.1 1,986,538 31.6 1,970,945 33.0 1,904,132 32.5 
Construction and land1,062,144 15.7 936,174 14.1 871,765 13.9 723,444 12.1 693,030 11.8 
Farmland55,827 0.8 73,550 1.1 13,661 0.2 14,751 0.2 13,844 0.2 
1-4 family residential542,566 8.0 543,518 8.2 513,635 8.2 492,609 8.3 524,344 9.0 
Multi-family residential310,241 4.6 356,885 5.4 367,445 5.9 386,844 6.5 424,962 7.3 
Consumer11,998 0.2 14,266 0.2 10,530 0.1 12,431 0.2 13,000 0.2 
Total LHI$6,775,498 100 %$6,624,047 100 %$6,279,573 100 %$5,966,374 100 %$5,850,330 100 %
MW565,645 615,045 559,939 599,001 577,594 
PPP loans53,369 135,842 291,401 407,353 358,042 
Total LHI1
$7,394,512 $7,374,934 $7,130,913 $6,972,728 $6,785,966 
Deposits
Noninterest-bearing$2,510,723 34.1 %$2,302,925 32.1 %$2,388,068 34.3 %$2,171,719 31.6 %$2,097,099 32.2 %
Interest-bearing transaction579,408 7.9 514,537 7.2 451,307 6.5 463,343 6.7 453,110 7.0 
Money market2,568,843 34.9 2,585,926 36.0 2,539,061 36.4 2,602,903 37.7 2,398,526 36.8 
Savings128,061 1.7 127,843 1.8 122,606 1.8 123,447 1.8 106,820 1.6 
Certificates and other time deposits1,576,580 21.4 1,647,521 22.9 1,477,860 21.2 1,543,158 22.2 1,457,291 22.4 
Total deposits$7,363,615 100 %$7,178,752 100 %$6,978,902 100 %$6,904,570 100 %$6,512,846 100 %
Loan to Deposit Ratio100.4 %102.7 %102.2 %101.0 %104.2 %
Loan to Deposit Ratio, excluding MW and PPP loans92.0 %92.3 %90.0 %86.4 %89.8 %

1 Total LHI does not include deferred fees of $8.1 million September 30, 2021 and deferred costs of $9.5 million, $7.5 million, $2.9 million and $2.5 million at December 31, 2021, June 30, 2021, March 31, 2021 and December 31, 2020, respectively.

12


VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Financial Highlights
(Unaudited)

Asset Quality
 For the Quarter EndedFor the Year Ended
Dec 31,
2021		Sep 30,
2021		Jun 30,
2021		Mar 31,
2021		Dec 31,
2020		Dec 31,
2021		Dec 31,
2020
(Dollars in thousands)
NPAs:    
Nonaccrual loans$49,687 $72,317 $76,994 $73,594 $81,096 $49,687 $81,096 
Accruing loans 90 or more days past due1
441 1,711 462 9,093 4,204 441 4,204 
Total nonperforming loans held for investment ("NPLs")50,128 74,028 77,456 82,687 85,300 50,128 85,300 
OREO— — 2,467 2,337 2,337 — 2,337 
Total NPAs$50,128 $74,028 $79,923 $85,024 $87,637 $50,128 $87,637 
Charge-offs:
Residential$— $(64)$(300)$(15)$(18)$(379)$(18)
OOCRE(898)(813)(689)— — (2,400)(2,421)
NOOCRE(7,936)— — — (2,865)(7,936)(2,865)
Commercial(4,114)(5,508)(5,608)(346)(13,699)(15,576)(15,507)
Consumer(44)(17)(20)(18)(26)(99)(162)
Total charge-offs(12,992)(6,402)(6,617)(379)(16,608)(26,390)(20,973)
Recoveries:
Residential6 26 29 3 49 64 57 
OOCRE— — 500 — — 500 — 
Commercial61 596 659 226 52 1,542 102 
Consumer257 8 36 2 — 303 287 
Total recoveries324 630 1,224 231 101 2,409 446 
Net charge-offs$(12,668)$(5,772)$(5,393)$(148)$(16,507)$(23,981)$(20,527)
CECL transition adjustment$— $— $— $— $— $— $39,137 
ACL at end of period$77,754 $93,771 $99,543 $104,936 $105,084 $77,754 $105,084 
Asset Quality Ratios:
NPAs to total assets0.51 %0.77 %0.85 %0.92 %0.99 %0.51 %0.99 %
NPLs to total LHI, excluding MW and PPP loans0.74 1.12 1.23 1.39 1.46 0.74 1.46 
ACL to total LHI, excluding MW and PPP loans1.15 1.42 1.59 1.76 1.80 1.15 1.80 
Net charge-offs to average loans outstanding0.19 0.09 0.09 — 0.28 0.38 0.36 

1 Accruing loans greater than 90 days past due exclude purchase credit deteriorated loans greater than 90 days past due that are accounted for on a pooled basis.

13


VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)

We identify certain financial measures discussed in this earnings release as being “non-GAAP financial measures.” In accordance with SEC rules, we classify a financial measure as being a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with GAAP, in our statements of income, balance sheets or statements of cash flows. Non-GAAP financial measures do not include operating and other statistical measures or ratios calculated using exclusively either one or both of (i) financial measures calculated in accordance with GAAP and (ii) operating measures or other measures that are not non-GAAP financial measures.

The non-GAAP financial measures that we present in this earnings release should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which we calculate the non-GAAP financial measures that we present in this earnings release may differ from that of other companies reporting measures with similar names. You should understand how such other financial institutions calculate their financial measures that appear to be similar or have similar names to the non-GAAP financial measures we have discussed in this earnings release when comparing such non-GAAP financial measures.

Tangible Book Value Per Common Share. Tangible book value per common share is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) tangible common equity as total stockholders’ equity less goodwill and core deposit intangibles, net of accumulated amortization; and (b) tangible book value per common share as tangible common equity (as described in clause (a)) divided by number of common shares outstanding. For tangible book value per common share, the most directly comparable financial measure calculated in accordance with GAAP is book value per common share.

We believe that this measure is important to many investors in the marketplace who are interested in changes from period to period in book value per common share exclusive of changes in core deposit intangibles. Goodwill and other intangible assets have the effect of increasing total book value while not increasing our tangible book value.

The following table reconciles, as of the dates set forth below, total stockholders’ equity to tangible common equity and presents our tangible book value per common share compared with our book value per common share:
 As of
Dec 31, 2021Sep 30, 2021Jun 30, 2021Mar 31, 2021Dec 31, 2020
(Dollars in thousands, except per share data)
Tangible Common Equity   
Total stockholders' equity$1,315,079 $1,284,160 $1,272,907 $1,233,808 $1,203,376 
Adjustments:
Goodwill(403,771)(370,840)(370,840)(370,840)(370,840)
Core deposit intangibles(47,998)(50,436)(52,873)(55,311)(57,758)
Tangible common equity$863,310 $862,884 $849,194 $807,657 $774,778 
Common shares outstanding49,372 49,229 49,498 49,433 49,340 
Book value per common share$26.64 $26.09 $25.72 $24.96 $24.39 
Tangible book value per common share$17.49 $17.53 $17.16 $16.34 $15.70 


14



VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)

Tangible Common Equity to Tangible Assets. Tangible common equity to tangible assets is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) tangible common equity as total stockholders’ equity, less goodwill and core deposit intangibles, net of accumulated amortization; (b) tangible assets as total assets less goodwill and core deposit intangibles, net of accumulated amortization; and (c) tangible common equity to tangible assets as tangible common equity (as described in clause (a)) divided by tangible assets (as described in clause (b)). For tangible common equity to tangible assets, the most directly comparable financial measure calculated in accordance with GAAP is total stockholders’ equity to total assets.

We believe that this measure is important to many investors in the marketplace who are interested in the relative changes from period to period in common equity and total assets, in each case, exclusive of changes in core deposit intangibles. 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.

The following table reconciles, as of the dates set forth below, total stockholders’ equity to tangible common equity and total assets to tangible assets and presents our tangible common equity to tangible assets:
 As of
Dec 31, 2021Sep 30, 2021Jun 30, 2021Mar 31, 2021Dec 31, 2020
(Dollars in thousands)
Tangible Common Equity   
Total stockholders' equity$1,315,079 $1,284,160 $1,272,907 $1,233,808 $1,203,376 
Adjustments:
Goodwill(403,771)(370,840)(370,840)(370,840)(370,840)
Core deposit intangibles(47,998)(50,436)(52,873)(55,311)(57,758)
Tangible common equity$863,310 $862,884 $849,194 $807,657 $774,778 
Tangible Assets
Total assets$9,757,249 $9,572,300 $9,349,525 $9,237,510 $8,820,871 
Adjustments:
Goodwill(403,771)(370,840)(370,840)(370,840)(370,840)
Core deposit intangibles(47,998)(50,436)(52,873)(55,311)(57,758)
Tangible Assets$9,305,480 $9,151,024 $8,925,812 $8,811,359 $8,392,273 
Tangible Common Equity to Tangible Assets9.28 %9.43 %9.51 %9.17 %9.23 %


15


VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)

Return on Average Tangible Common Equity. Return on average tangible common equity is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) net income available for common stockholders adjusted for amortization of core deposit intangibles (which we refer to as “return”) as net income, plus amortization of core deposit intangibles, less tax benefit at the statutory rate; (b) average tangible common equity as total average stockholders’ equity less average goodwill and average core deposit intangibles, net of accumulated amortization; and (c) return (as described in clause (a)) divided by average tangible common equity (as described in clause (b)). For return on average tangible common equity, the most directly comparable financial measure calculated in accordance with GAAP is return on average equity.

We believe that this measure is important to many investors in the marketplace who are interested in the return on common equity, exclusive of the impact of core deposit intangibles. Goodwill and core deposit intangibles have the effect of increasing total stockholders’ equity while not increasing our tangible common equity. This measure is particularly relevant to acquisitive institutions that may have higher balances in goodwill and core deposit intangibles than non-acquisitive institutions.

The following table reconciles, as of the dates set forth below, average tangible common equity to average common equity and net income available for common stockholders adjusted for amortization of core deposit intangibles, net of taxes to net income and presents our return on average tangible common equity:
 For the Quarter EndedFor the Year Ended
Dec 31,
2021		Sep 30,
2021		Jun 30,
2021		Mar 31,
2021		Dec 31,
2020		Dec 31,
2021		Dec 31,
2020
(Dollars in thousands)
Net income available for common stockholders adjusted for amortization of core deposit intangibles
Net income$41,506 $36,835 $29,456 $31,787 $22,801 $139,584 $73,883 
Adjustments:       
Plus: Amortization of core deposit intangibles2,438 2,438 2,438 2,447 2,451 9,761 9,804 
Less: Tax benefit at the statutory rate512 512 512 514 515 2,050 2,060 
Net income available for common stockholders adjusted for amortization of core deposit intangibles$43,432 $38,761 $31,382 $33,720 $24,737 $147,295 $81,627 
       
Average Tangible Common Equity
Total average stockholders' equity$1,301,676 $1,290,528 $1,254,371 $1,224,294 $1,196,274 $1,267,992 $1,164,973 
Adjustments:      
Average goodwill(393,220)(370,840)(370,840)(370,840)(370,840)(376,480)(370,840)
Average core deposit intangibles(49,596)(52,043)(54,471)(56,913)(59,010)(53,233)(62,803)
Average tangible common equity$858,860 $867,645 $829,060 $796,541 $766,424 $838,279 $731,330 
Return on Average Tangible Common Equity (Annualized)20.06 %17.72 %15.18 %17.17 %12.84 %17.57 %11.16 %


16


VERITEX HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)

Operating Earnings, Pre-tax, Pre-provision Operating Earnings and performance metrics calculated using Operating Earnings and Pre-tax, Pre-provision Operating Earnings, including Diluted Operating Earnings per Share, Operating Return on Average Assets, Pre-tax, Pre-Provision Operating Return on Average Assets, Operating Return on Average Tangible Common Equity and Operating Efficiency Ratio. Operating earnings, pre-tax, pre-provision operating earnings and the performance metrics calculated using these metrics, listed below, are non-GAAP measures used by management to evaluate the Company’s financial performance. We calculate (a) operating earnings as net income plus severance payments, plus loss (gain) on sale of securities, net, plus debt extinguishment costs, less Thrive PPP loan forgiveness income, plus merger and acquisition expenses, less tax impact of adjustments, plus nonrecurring tax adjustments. We calculate (b) diluted operating earnings per share as operating earnings as described in clause (a) divided by weighted average diluted shares outstanding. We calculate (c) pre-tax, pre-provision operating earnings as operating earnings as described in clause (a) plus provision for income taxes, plus benefit (provision) for credit losses and unfunded commitments. We calculate (d) pre-tax, pre-provision operating return on average assets as pre-tax, pre-provision operating earnings as described in clause (a) divided by total average assets. We calculate (e) operating return on average assets as operating earnings as described in clause (a) divided by total average assets. We calculate (f) operating return on average tangible common equity as operating earnings as described in clause (a), adjusted for the amortization of intangibles and tax benefit at the statutory rate, divided by total average tangible common equity (average stockholders’ equity less average goodwill and average core deposit intangibles, net of accumulated amortization). We calculate (g) operating efficiency ratio as non interest expense plus adjustments to operating non interest expense divided by non interest income plus adjustments to operating non interest income, plus net interest income.

We believe that these measures and the operating metrics calculated utilizing these measures are important to management and many investors in the marketplace who are interested in understanding the ongoing operating performance of the Company and provide meaningful comparisons to its peers.

The following tables reconcile, as of the dates set forth below, operating net income and pre-tax, pre-provision operating earnings and related metrics:
 For the Quarter EndedFor the Year Ended
Dec 31,
2021		Sep 30,
2021		Jun 30,
2021		Mar 31,
2021		Dec 31,
2020		Dec 31,
2021		Dec 31,
2020
(Dollars in thousands)
Operating Earnings
Net income$41,506 $36,835 $29,456 $31,787 $22,801 $139,584 $73,883 
Plus: Severance payments1
— — 627 — — 627 — 
Plus: Loss (gain) on sale of securities available for sale, net— 188 — — 256 188 (2,615)
Plus: Debt extinguishment costs2
— — — — 9,746 — 11,307 
Less: Thrive PPP loan forgiveness income3
— 1,912 — — — 1,912 — 
Plus: Merger and acquisition expenses826 — — — — 826 — 
Operating pre-tax income42,332 35,111 30,083 31,787 32,803 139,313 82,575 
Less: Tax impact of adjustments(78)39 131 — 2,100 92 1,823 
Plus: Nonrecurring tax adjustments4
— — — 426 (973)426 (2,772)
Operating earnings$42,410 $35,072 $29,952 $32,213 $29,730 $139,647 $77,980 
Weighted average diluted shares outstanding50,441 50,306 50,331 49,998 49,837 50,352 50,036 
Diluted EPS$0.82 $0.73 $0.59 $0.64 $0.46 $2.77 $1.48 
Diluted operating EPS$0.84 $0.70 $0.60 $0.64 $0.60 $2.77 $1.56 
1 Severance payments relate to branch restructurings made during the three months ended June 30, 2021.
2 Debt extinguishment costs relate to prepayment penalties paid in connection with the early payoff of FHLB structured advances.
3 During the third quarter of 2021, Thrive’s PPP loan with another bank was 100% forgiven by the Small Business Administration. As a result of our 49% investment in Thrive, the $1.9 million represents our portion of the PPP loan forgiveness. PPP fee income is not taxable and as such has no tax impact.
4 A nonrecurring tax adjustment of $426 thousand recorded in the first quarter of 2021 was due to a true-up of a deferred tax liability. A nonrecurring tax adjustment of $973 thousand recorded in the fourth quarter of 2020 was primarily due the reversal of acquired deferred tax liabilities resulting in a tax benefit of $1.2 million offset by tax expense of $281 thousand for the setup of an uncertain tax position liability relating to state tax exposure for tax years prior to the year ending December 31, 2020. A nonrecurring tax adjustment of $1,799 was recorded in the second quarter of 2020 as a result of the Company amending a prior year Green Bancorp, Inc. tax return to carry back a net operating loss ("NOL") incurred by Green Bancorp, Inc. on January 1, 2019. The Company was allowed to carry back this NOL as result of a provision in the Coronavirus Aid, Relief, and Economic Security Act, which permits NOL generated in tax years 2018, 2019 or 2020 to be carried back five years.
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 For the Quarter EndedFor the Year Ended
Dec 31,
2021		Sep 30,
2021		Jun 30,
2021		Mar 31,
2021		Dec 31,
2020		Dec 31,
2021		Dec 31,
2020
(Dollars in thousands)
Pre-Tax, Pre-Provision Operating Earnings
Net Income $41,506 $36,835 $29,456 $31,787 $22,801 $139,584 $73,883 
Plus: Provision for income taxes10,697 9,195 7,837 8,993 4,702 36,722 14,203 
Plus: (Benefit) provision for credit losses and unfunded commitments(4,389)(448)577 (570)902 (4,830)65,669 
Plus: Severance payments— — 627 — — 627 — 
Plus: Loss (gain) on sale of securities, net— 188 — — 256 188 (2,615)
Less: Thrive PPP loan forgiveness income— 1,912 — — — 1,912 — 
Plus: Debt extinguishment costs— — — — 9,746 — 11,307 
Plus: Merger and acquisition expenses826 — — — — 826 — 
Net pre-tax, pre-provision operating earnings$48,640 $43,858 $38,497 $40,210 $38,407 $171,205 $162,447 
Total average assets$9,788,671 $9,385,470 $9,321,279 $8,941,271 $8,750,141 $9,361,578 $8,525,275 
Pre-tax, pre-provision operating return on average assets1
1.97 %1.85 %1.66 %1.82 %1.75 %1.83 %1.91 %
Average Total Assets$9,788,671 $9,385,470 $9,321,279 $8,941,271 $8,750,141 $9,361,578 $8,525,275 
Return on average assets1
1.68 %1.56 %1.27 %1.44 %1.04 %1.49 %0.87 %
Operating return on average assets1
1.72 1.48 1.29 1.46 1.35 1.49 0.91 
Operating earnings adjusted for amortization of core deposit intangibles
Operating earnings$42,410 $35,072 $29,952 $32,213 $29,730 $139,647 $77,980 
Adjustments:
Plus: Amortization of core deposit intangibles2,438 2,438 2,438 2,447 2,451 9,761 9,804 
Less: Tax benefit at the statutory rate512 512 512 514 515 2,050 2,060 
Operating earnings adjusted for amortization of core deposit intangibles$44,336 $36,998 $31,878 $34,146 $31,666 $147,358 $85,724 
Average Tangible Common Equity
Total average stockholders' equity$1,301,676 $1,290,528 $1,254,371 $1,224,294 $1,196,274 $1,267,992 $1,164,973 
Adjustments:      
Average goodwill(393,220)(370,840)(370,840)(370,840)(370,840)(376,480)(370,840)
Average core deposit intangibles(49,596)(52,043)(54,471)(56,913)(59,010)(53,233)(62,803)
Average tangible common equity$858,860 $867,645 $829,060 $796,541 $766,424 $838,279 $731,330 
Operating return on average tangible common equity1
20.48 %16.92 %15.42 %17.39 %16.44 %17.58 %11.72 %
Efficiency ratio48.53 %47.55 %52.42 %49.62 %62.52 %49.45 %50.90 %
Operating efficiency ratio
Net interest income$76,741 $71,276 $67,131 $65,635 $66,766 $280,783 $265,798 
Noninterest income16,150 15,627 12,456 14,172 9,012 58,405 47,344 
Plus: Loss (gain) on sale of securities available for sale, net— 188 — — 256 188 (2,615)
Less: Thrive's PPP loan forgiveness income— 1,912 — — — 1,912 — 
Operating noninterest income16,150 13,903 12,456 14,172 9,268 56,681 49,959 
Noninterest expense45,077 41,321 41,717 39,597 47,373 167,712 159,387 
Less: Severance payments— — 627 — — 627 — 
Less: Debt extinguishment costs— — — — 9,746 — 11,307 
Less: Merger and acquisition expenses826 — — — — 826 — 
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Operating noninterest expense$44,251 $41,321 $41,090 $39,597 $37,627 $166,259 $148,080 
Operating efficiency ratio47.64 %48.51 %51.63 %49.62 %49.49 %49.27 %47.69 %
1 Annualized ratio for quarterly metrics.
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