Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 8-K
 

 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 
Date of Report (date of earliest event reported): October 22, 2018


VERITEX HOLDINGS, INC.
(Exact name of Registrant as specified in its charter)
 

 
Texas
 
001-36682
 
27-0973566
(State or other jurisdiction of
incorporation or organization)
 
(Commission File Number)
 
(I.R.S. Employer
Identification Number)
 
8214 Westchester Drive, Suite 800
Dallas, Texas 75225
(Address of principal executive offices)
 
(972) 349-6200
(Registrant’s telephone number, including area code)
 

 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
☒ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒





Item 2.02 Results of Operations and Financial Condition
Item 7.01 Regulation FD Disclosure
 
On October 22, 2018, Veritex Holdings, Inc. (the “Company”), the holding company for Veritex Community Bank, a Texas state chartered bank, issued a press release describing its results of operations for the third quarter ended September 30, 2018. A copy of the press release is included as Exhibit 99.1 hereto and is incorporated herein by reference.
On Tuesday, October 23, 2018 at 8:30 a.m. Central Time, the Company will host an investor conference call and webcast to review their third quarter 2018 financial results. The webcast will include a slide presentation which consists of information regarding the Company’s operating and growth strategies and financial performance. The presentation materials will be posted on the Company’s website on October 22, 2018. The presentation materials are attached hereto as Exhibit 99.2, which is incorporated herein by reference.    
As provided in General Instructions B.2 to Form 8-K, the information furnished in Items 2.02, 7.01, Exhibit 99.1 and Exhibit 99.2 of this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and such information shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 8.01 Other Events
The only information contained in this Form 8-K being filed for the purposes of Rule 425 of the Securities Act is the information relating solely to the proposed merger between the Company and Green Bancorp, Inc. contained in the press release and presentation materials furnished herewith as Exhibit 99.1 and 99.2

Important Additional Information will be Filed with the SEC
This Current Report on Form 8-K does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval with respect to the proposed acquisition by Veritex of Green. No offer of securities shall be made except by means of a prospectus meeting the requirements of the Securities Act of 1933, as amended, and no offer to sell or solicitation of an offer to buy shall be made in any jurisdiction in which such offer, solicitation or sale would be unlawful.
In connection with the proposed transaction, Veritex has filed with the U.S. Securities and Exchange Commission (the “SEC”) a Registration Statement on Form S-4 (File No. 333-227161) containing a joint proxy statement of Veritex and Green and a prospectus of Veritex (the “Joint Proxy/Prospectus”), and each of Veritex and Green may file with the SEC other documents regarding the proposed transaction. The definitive Joint Proxy/Prospectus has been mailed to shareholders of Veritex and Green. SHAREHOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE JOINT PROXY/PROSPECTUS REGARDING THE TRANSACTION CAREFULLY AND IN THEIR ENTIRETY AND ANY OTHER DOCUMENTS FILED WITH THE SEC BY VERITEX AND GREEN, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors can obtain free copies of the Registration Statement and the Joint Proxy/Prospectus and other documents filed with the SEC by Veritex and Green through the website maintained by the SEC at www.sec.gov. Free copies of the Registration Statement and the Joint Proxy/Prospectus and other documents filed with the SEC can also be obtained by directing a request to Veritex Holdings, Inc., 8214 Westchester Drive, Suite 400, Dallas, Texas 75225, or by directing a request to Green Bancorp, Inc., 4000 Greenbriar Street, Houston, Texas 77098.
Participants in the Solicitation
Veritex, Green and their respective directors and certain of their executive officers and employees may be deemed to be participants in the solicitation of proxies from the shareholders of Green or Veritex in respect of the proposed transaction. Information regarding Veritex’s directors and executive officers is available in its proxy statement for its 2018 annual meeting of shareholders, which was filed with the SEC on April 3, 2018, and information regarding Green’s directors and executive officers is available in its proxy statement for its 2018 annual meeting of shareholders, which was filed with the SEC on April 13, 2018. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, is contained in the Joint Proxy/Prospectus and other relevant materials to be filed with the SEC when they become available. Free copies of this document may be obtained as described in the preceding paragraph.






Forward-Looking Statements
This Current Report on Form 8-K includes “forward-looking statements,” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are based on various facts and derived utilizing important 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 impact Veritex expects its proposed acquisition of Green to have on the combined entity’s operations, financial condition, and financial results, and Veritex’s expectations about its ability to successfully integrate the combined businesses and the amount of cost savings and overall operational efficiencies Veritex expects to realize as a result of the proposed acquisition. The forward-looking statements also include statements about 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 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 future results and cause actual results to differ materially from those expressed in the forward-looking statements include, but are not limited to, the possibility that the proposed acquisition does not close when expected or at all because required regulatory, shareholder or other approvals and other conditions to closing are not received or satisfied on a timely basis or at all, the failure to close for any other reason, changes in Veritex’s share price before closing, that the businesses of Veritex and Green will not be integrated successfully, that the cost savings and any synergies from the proposed acquisition may not be fully realized or may take longer to realize than expected, disruption from the proposed acquisition making it more difficult to maintain relationships with employees, customers or other parties with whom Veritex or Green have business relationships, diversion of management time on merger-related issues, risks relating to the potential dilutive effect of shares of Veritex common stock to be issued in the transaction, the reaction to the transaction of the companies’ customers, employees and counterparties and other factors, many of which are beyond the control of Veritex and Green. 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, 2017, the Annual Report on Form 10-K filed by Green for the year ended December 31, 2017 and any updates to those risk factors set forth in Veritex’s and Green’s Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings, which have been filed with the SEC and 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 or Green 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. Neither Veritex nor Green undertakes 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. All forward-looking statements, expressed or implied, included in this Current Report on Form 8-K are expressly qualified in their entirety by the cautionary statements contained or referred to herein.
Item 9.01 Financial Statements and Exhibits
 
(d) Exhibits. The following is furnished as an exhibit to this Current Report on Form 8-K:
 
Exhibit Number
 
Description
 
 







SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
Veritex Holdings, Inc.
 
By:
/s/ C. Malcolm Holland, III
 
 
C. Malcolm Holland, III
 
 
Chairman and Chief Executive Officer
 
Date: October 22, 2018



Exhibit
Exhibit 99.1

VERITEX HOLDINGS, INC. REPORTS THIRD QUARTER RESULTS
FOCUS ON STRONG DEPOSIT GROWTH AND PROGRESS ON PREVIOUSLY ANNOUNCED GREEN ACQUISITION

Dallas, TX — October 22, 2018 —Veritex Holdings, Inc. (“Veritex” or the “Company”) (Nasdaq: VBTX), the holding company for Veritex Community Bank, today announced the results for the quarter ended September 30, 2018. The Company reported a record level of organic deposit growth of $165.8 million, or 6.7% from June 30, 2018, resulting in ending deposits of $2.7 billion at September 30, 2018 compared to the quarter ended June 30, 2018. Net income available to common stockholders of $8.9 million, or $0.36 diluted earnings per share (“EPS”), compared to $10.2 million, or $0.42 diluted EPS, for the quarter ended June 30, 2018 and $5.1 million, or $0.25 diluted EPS, for the quarter ended September 30, 2017. Core net income available to common stockholders1 totaled $8.3 million, or $0.34 core diluted EPS1, compared to $9.9 million, or $0.40 core diluted EPS, for the quarter ended June 30, 2018 and $5.6 million, or $0.28 diluted EPS, for the quarter ended September 30, 2017.
C. Malcolm Holland, the Company’s Chairman and Chief Executive Officer, said, “I am excited about the progress we’ve made with the strategic merger with Green Bank in creating a premier Texas community banking franchise. While our employees work diligently on a seamless and successful merger, organic growth continues to be our main focus as evidenced by our nine month annualized growth rate for total loans and deposits of 12.6% and 26.7%, respectively. Our focus on deposits has begun to show real results.”
2018 Third Quarter Summary
Announced merger with Green Bancshares, Inc. (“Green”) on July 24, 2018 and filed regulatory applications and registration statement with the U.S. Securities and Exchange Commission.
Net income available to common stockholders of $8.9 million, or $0.36 diluted EPS, including $2.7 million of acquisition expense representing $0.09 diluted EPS.
Total deposits increased $165.8 million, or 6.7%, to $2.7 billion compared to the quarter ended June 30, 2018. The record level of deposits growth represented 26.7% annualized growth.
Noninterest-bearing deposits increased $50.4 million, or 8.3%, to $661.8 million compared to the quarter ended June 30, 2018.
Total loans increased $25.6 million, or 1.1%, to $2.4 billion compared to the quarter ended June 30, 2018, and average loans increased $98.8 million, or 4.2%, to $2.4 billion compared to the quarter ended June 30, 2018.
New loan commitments of $477.5 million represents the largest recorded quarterly activity life to date for the Company. Year to date new commitments exceed $1.2 billion.
Nonaccrual loans and accruing loans greater than 90 days past due increased by $17.6 million and $3.7 million, respectively, due to three acquired loans.
Tangible book value per share increased $0.79 to $14.02 at September 30, 2018 from $13.23 at September 30, 2017.
Received American Bankers’ “Best Banks to Work For” for the fifth consecutive year.





                                           
1As part of how we measure our results, we use certain non-GAAP financial measures to evaluate performance. These non-GAAP financial measures are reconciled in the section labeled “Reconciliation of Non-GAAP Financial Measures” at the end of this press release.

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Result of Operations for the Three Months Ended September 30, 2018
Net Interest Income
For the three months ended September 30, 2018, net interest income before provision for loan losses was $29.2 million and net interest margin was 4.00% compared to $27.6 million and 4.07%, respectively, for the three months ended June 30, 2018. The $1.6 million increase in net interest income was primarily due to an increase in interest income on loans, which was driven by increased volume in all loan categories resulting from continued organic loan growth. Net interest margin decreased 7 basis points from the three months ended June 30, 2018 primarily due to an increase in the average rate paid on interest-bearing liabilities during the three months ended September 30, 2018. Average interest-bearing deposits grew to $1.93 billion for the three months ended September 30, 2018 from $1.86 billion for the three months ended June 30, 2018 which was primarily due to increases in average outstanding correspondent money market and brokered deposit account balances which have interest rates above the average rate paid on our remaining interest-bearing deposits. As a result, the average interest-bearing deposit cost of funds increased to 1.59% for the three months ended September 30, 2018 from 1.39% for the three months ended June 30, 2018.
Net interest income before provision for loan losses increased $10.1 million from $19.1 million to $29.2 million and net interest margin increased 22 basis points from 3.78% to 4.00% for the three months ended September 30, 2018 as compared to the same period in 2017. The increase in net interest income before provision for loan losses was primarily driven by higher loan balances and yields resulting from loans acquired from the acquisitions of Sovereign Bancshares, Inc. (“Sovereign”) and Liberty Bancshares, Inc. (“Liberty”) and continued organic loan growth during the three months ended September 30, 2018 compared to the three months ended September 30, 2017. For the three months ended September 30, 2018, average loan balance increased by $789.0 million compared to the three months ended September 30, 2017, which resulted in a $14.4 million increase in interest income. This was partially offset by an increase in the average rate paid on interest-bearing liabilities discussed above which resulted in a $5.0 million increase in interest on deposit accounts. Net interest margin increased 22 basis points from the three months ended September 30, 2017 primarily due to increased loan balances and yields as discussed above and a change in mix of earning assets. Average loan balances represented 84.1% of average interest-earnings assets for the three months ended September 30, 2018 compared to 81.9% for the three months ended September 30, 2017.
Noninterest Income
Noninterest income for the three months ended September 30, 2018 was $2.5 million, a decrease of $82 thousand or 3.2% compared to the three months ended June 30, 2018. The decrease was primarily due to a $148 thousand decrease in the gain on sale of Small Business Administration loans for the three months ended September 30, 2018.
Compared to the three months ended September 30, 2017, noninterest income for the three months ended September 30, 2018 grew $533 thousand or 27.0%. The increase was primarily due to $414 thousand of rental income resulting from the purchase of our headquarter building on December 6, 2017 and a $140 thousand increase in service charges and fees on deposit accounts resulting from the additional income on acquired Sovereign and Liberty deposit accounts earned during the three months ended September 30, 2018.
Noninterest Expense
Noninterest expense was $18.2 million for the three months ended September 30, 2018, compared to $16.2 million for the three months ended June 30, 2018, an increase of $2.0 million or 12.8%. The increase was primarily driven by a $2.7 million increase in legal and professional fees paid in connection with the upcoming merger with Green. The increase was partially offset by a $379 thousand decrease in data processing and software expense as the Company converted Liberty’s operating systems into the Company’s information technology systems during the three months ended June 30, 2018 with no corresponding conversion expense for the three months ended September 30, 2018.
Compared to the three months ended September 30, 2017, noninterest expense for the three months ended September 30, 2018 increased $5.7 million, or 45.7%. The increase was primarily driven by a $2.7 million increase in legal and professional fees paid in connection with the upcoming merger with Green discussed above. The increase was also attributable to an increase of $1.5 million in salaries and employee benefits expense primarily related to the additional full-time equivalent employees retained in the Sovereign and Liberty acquisitions. Additionally, occupancy and equipment expense increased $1.3 million primarily due to increased lease payments, depreciation expense and property taxes incurred as a result of the Sovereign and Liberty acquisitions. Amortization of intangibles also increased $574 thousand primarily due to a $366 thousand increase in amortization of intangible in-place lease assets associated with the purchase of our headquarter building in December 2017.


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Income Taxes
Income tax expense for the three months ended September 30, 2018 totaled $1.4 million, a decrease of $902 thousand, or 38.4%, compared to the three months ended June 30, 2018. The Company’s effective tax rate was approximately 13.9% and 18.7% for the three months ended September 30, 2018 and June 30, 2018, respectively. The decrease in the effective tax rate across periods was primarily due to a net discrete tax benefit of $688 thousand resulting from the Company’s revised estimate of deferred taxes based on the preparation of our 2017 U.S. federal income tax return. The primary deferred taxes estimate change related to depreciation as the Company completed a cost segregation study in 2018 resulting in shorter tax depreciable lives than originally estimated. Excluding the net impact of discrete tax items, the Company’s effective tax rate was approximately 20.7% and 19.7% for the three months ended September 30, 2018 and June 30, 2018, respectively.
Compared to the three months ended September 30, 2017, income tax expense decreased $1.2 million, or 45.4%, to $1.4 million for the three months ended September 30, 2018. The Company’s effective tax rate was approximately 13.9% and 33.8% for the three months ended September 30, 2018 and 2017, respectively. The decrease in the effective tax rate for the period relative to the comparative period was primarily due to the enactment of the Tax Cuts and Jobs Act (the “Tax Act”) on December 22, 2017 which lowered our federal statutory tax rate, effective on January 1, 2018. The Company’s provision for the three months ended September 30, 2018 was also impacted by discrete tax benefits of $688 thousand from revising its deferred taxes estimate as discussed above.
Financial Condition
Total loans were $2.4 billion at September 30, 2018, an increase of $25.6 million, or 1.1%, compared to June 30, 2018. The net increase was the result of the continued execution and success of our loan growth strategy.
Total deposits were $2.7 billion at September 30, 2018, an increase of $165.8 million, or 6.7%, compared to June 30, 2018. The increase was primarily the result of increases of $87.4 million and $50.4 million in financial institution money market accounts and non-interest bearing demand deposits, respectively.
Asset Quality
Our allowance for loan losses as a percentage of loans was 0.73%, 0.61% and 0.55% of total loans at September 30, 2018, June 30, 2018 and September 30, 2017, respectively. The allowance for loan losses as a percentage of total loans for each of the three quarters ended was determined by the qualitative factors around the nature, volume and mix of the loan portfolio. The increase in the allowance for loan loss as a percentage of loans from June 30, 2018 and September 30, 2017 was attributable to continued execution and success of our organic growth strategy offset by payoffs of acquired loans and an increase in specific reserves on certain non-performing loans. We recorded a provision for loan losses of $3.1 million for the quarter ended September 30, 2018 compared to a provision of $1.5 million and $752 thousand for the quarter ended June 30, 2018 and September 30, 2017, respectively. The increase in provision for loan losses is primarily due to an increase in our loans as well an increase on the recorded provision on purchased credit impaired loans of $1.0 million and $1.3 million compared to the quarter ended June 30, 2018 and September 30, 2017, respectively.
Nonperforming assets totaled $26.1 million, or 0.80%, of total assets at September 30, 2018 compared to $4.9 million, or 0.16%, of total assets at June 30, 2018 and $2.6 million, or 0.11%, of total assets at September 30, 2017. The increase of $21.2 million and $23.5 million in nonperforming assets compared to June 30, 2018 and September 30, 2017, respectively, was primarily due to $17.2 million of purchased credit impaired loans placed on non-accrual status resulting from information obtained during the three months ended September 30, 2018 which precluded the Company from reasonably estimating the timing and amount of future cash flows. Excluding these purchased credit impaired loans compared to June 30, 2018, the increase of $4.0 million in nonperforming assets was a result of an increase in nonperforming loans of $4.0 million which is primarily made up of a $3.8 million loan that is 90 days past due and still accruing that we consider well-secured and in the process of collection. Excluding these purchased credit impaired loans compared to September 30, 2017, the increase of $6.3 million in nonperforming assets was a result of an increase in nonperforming loans of $7.0 million which is primarily comprised of the $3.8 million accruing loan discussed above partially offset by a decrease in other real estate owned of $738 thousand.
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 net interest income, core noninterest income, core noninterest expense, core net income from operations, core income tax expense, core net income, core net income available to common

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stockholders, core diluted earnings per share, core efficiency ratio, core net interest margin, core return on average assets, tangible common equity, tangible assets, tangible book value per common share and the ratio of tangible common equity to tangible assets. 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 host an investor conference call to review the results on Tuesday, October 23, 2018 at 8:30 a.m. Central Time. Participants may pre-register for the call by visiting https://edge.media-server.com/m6/p/zgngdw7i 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.
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 #2178309. This replay, as well as the webcast, will be available until October 30, 2018.
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 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 important 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 impact Veritex expects its proposed acquisition of Green to have on the combined entity’s operations, financial condition, and financial results, and Veritex’s expectations about its ability to successfully integrate the combined businesses and the amount of cost savings and overall operational efficiencies Veritex expects to realize as a result of the proposed acquisition. The forward-looking statements also include statements about 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 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 future results and cause actual results to differ materially from those expressed in the forward-looking statements include, but are not limited to, the possibility that the proposed acquisition does not close when expected or at all because required regulatory, shareholder or other approvals and other conditions to closing are not received or satisfied on a timely basis or at all, the failure to close for any other reason, changes in Veritex’s share price before closing, that the businesses of Veritex and Green will not be integrated successfully, that the cost savings and any synergies from the proposed acquisition may not be fully realized or may take longer to realize than expected, disruption from the proposed acquisition making it

4


more difficult to maintain relationships with employees, customers or other parties with whom Veritex or Green have business relationships, diversion of management time on merger-related issues, risks relating to the potential dilutive effect of shares of Veritex common stock to be issued in the transaction, the reaction to the transaction of the companies’ customers, employees and counterparties and other factors, many of which are beyond the control of Veritex and Green. 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, 2017, the Annual Report on Form 10-K filed by Green for the year ended December 31, 2017 and any updates to those risk factors set forth in Veritex’s and Green’s Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings, which have been filed with the SEC and 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 or Green 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. Neither Veritex nor Green undertakes 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. 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 purposes only, are not forecasts and may not reflect actual results.
Important Additional Information will be Filed with the SEC
This release does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval with respect to the proposed acquisition by Veritex of Green. No offer of securities shall be made except by means of a prospectus meeting the requirements of the Securities Act of 1933, as amended, and no offer to sell or solicitation of an offer to buy shall be made in any jurisdiction in which such offer, solicitation or sale would be unlawful.
In connection with the proposed transaction, Veritex has filed with the U.S. Securities and Exchange Commission (the “SEC”) a Registration Statement on Form S-4 (File No. 333-227161) containing a joint proxy statement of Veritex and Green and a prospectus of Veritex (the “Joint Proxy/Prospectus”), and each of Veritex and Green may file with the SEC other documents regarding the proposed transaction. The definitive Joint Proxy/Prospectus has been mailed to shareholders of Veritex and Green. SHAREHOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE JOINT PROXY/PROSPECTUS REGARDING THE TRANSACTION CAREFULLY AND IN THEIR ENTIRETY AND ANY OTHER DOCUMENTS FILED WITH THE SEC BY VERITEX AND GREEN, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors can obtain free copies of the Registration Statement and the Joint Proxy/Prospectus and other documents filed with the SEC by Veritex and Green through the website maintained by the SEC at www.sec.gov. Free copies of the Registration Statement and the Joint Proxy/Prospectus and other documents filed with the SEC can also be obtained by directing a request to Veritex Holdings, Inc., 8214 Westchester Drive, Suite 400, Dallas, Texas 75225, or by directing a request to Green Bancorp, Inc., 4000 Greenbriar Street, Houston, Texas 77098.
Participants in the Solicitation
Veritex, Green and their respective directors and certain of their executive officers and employees may be deemed to be participants in the solicitation of proxies from the shareholders of Green or Veritex in respect of the proposed transaction. Information regarding Veritex’s directors and executive officers is available in its proxy statement for its 2018 annual meeting of shareholders, which was filed with the SEC on April 3, 2018, and information regarding Green’s directors and executive officers is available in its proxy statement for its 2018 annual meeting of shareholders, which was filed with the SEC on April 13, 2018. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, is contained in the Joint Proxy/Prospectus and other relevant materials to be filed with the SEC when they become available. Free copies of this document may be obtained as described in the preceding paragraph.


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VERITEX HOLDINGS, INC. AND SUBSIDIARY
Consolidated Financial Highlights - (Unaudited)
(In thousands, except percentages)
 
 
At and For the Three Months Ended
 
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
 
December 31,
2017
 
September 30,
2017
Selected Financial Data:
 
 

 
 

 
 

 
 

 
 

Net income
 
$
8,935

 
$
10,193

 
$
10,388

 
$
3,257

 
$
5,182

Net income available to common stockholders
 
8,935

 
10,193

 
10,388

 
3,257

 
5,140

Total assets
 
3,275,846

 
3,133,627

 
3,063,319

 
2,945,583

 
2,494,861

Total loans(1)
 
2,444,515

 
2,418,908

 
2,316,089

 
2,259,831

 
1,907,509

Provision for loan losses
 
3,057

 
1,504

 
678

 
2,529

 
752

Allowance for loan losses
 
17,909

 
14,842

 
13,401

 
12,808

 
10,492

Noninterest-bearing deposits(2)
 
661,754

 
611,315

 
597,236

 
612,830

 
495,627

Total deposits(2)
 
2,656,254

 
2,490,418

 
2,493,794

 
2,278,630

 
1,985,658

Total stockholders’ equity
 
517,212

 
508,441

 
497,433

 
488,929

 
445,929

Summary Performance Ratios:
 
 
 
 

 
 

 
 

 
 

Return on average assets(3)
 
1.10
%
 
1.34
%
 
1.41
%
 
0.48
%
 
0.94
%
Return on average equity(3)
 
6.88

 
8.11

 
8.55

 
2.78

 
5.44

Net interest margin(4)
 
4.00

 
4.07

 
4.46

 
4.24

 
3.78

Efficiency ratio(5)
 
57.58

 
53.51

 
54.28

 
53.60

 
59.33

Noninterest expense to average assets(3)
 
2.24

 
2.12

 
2.35

 
2.22

 
2.26

Summary Credit Quality Data:
 
 
 
 

 
 

 
 

 
 

Nonaccrual loans
 
$
21,822

 
$
4,252

 
$
3,438

 
$
465

 
$
1,856

Accruing loans 90 or more days past due(6)
 
4,302

 
613

 
374

 
18

 
54

Other real estate owned
 

 

 
10

 
449

 
738

Nonperforming assets to total assets
 
0.80
%
 
0.16
%
 
0.12
%
 
0.03
%
 
0.11
%
Nonperforming loans to total loans
 
1.07

 
0.20

 
0.16

 
0.02

 
0.10

Allowance for loan losses to total loans
 
0.73

 
0.61

 
0.58

 
0.57

 
0.55

Net charge-offs to average loans outstanding
 

 

 

 
0.01

 

Capital Ratios:
 
 
 
 

 
 

 
 

 
 

Total stockholders’ equity to total assets
 
15.79
%
 
16.23
%
 
16.24
%
 
16.60
%
 
17.87
%
Tangible common equity to tangible assets
 
10.95

 
11.15

 
11.01

 
11.12

 
12.76

Tier 1 capital to average assets
 
11.47

 
12.08

 
11.84

 
12.92

 
15.26

Tier 1 capital to risk-weighted assets
 
12.43

 
12.60

 
12.53

 
12.48

 
14.17

Common equity tier 1 (to risk weighted assets)
 
12.02

 
12.17

 
12.09

 
12.03

 
13.65

Total capital to risk-weighted assets
 
13.22

 
13.31

 
13.22

 
13.16

 
14.87

___________________________
(1)
Total loans does not include loans held for sale and deferred fees. Loans held for sale were $1.4 million at September 30, 2018, $453 thousand at June 30, 2018, $893 thousand at March 31, 2018, $841 thousand at December 31, 2017 and $2.2 million at September 30, 2017. Deferred fees were $16 thousand at September 30, 2018, $22 thousand at June 30, 2018, $24 thousand at March 31, 2018, $28 thousand at December 31, 2017, and $28 thousand at September 30, 2017. Total loans includes $26.3 million of loans within branch assets held for sale as of December 31, 2017.
(2)
Total noninterest-bearing deposits and total deposits at December 31, 2017 include branch liabilities held for sale of $39.4 million and $64.3 million, respectively.
(3)
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.
(4)
Net interest margin represents net interest income, annualized on a fully tax equivalent basis, divided by average interest-earning assets.
(5)
Efficiency ratio represents noninterest expense divided by the sum of net interest income and noninterest income.
(6)
Accruing loans 90 or more days past due excludes $2.0 million, and $3.3 million of purchased credit impaired (“PCI”) loans as of June 30, 2018, and March 31, 2018. There were no PCI loans 90 or more days past due accruing as of September 30, 2018, December 31, 2017 and September 30, 2017.


6


VERITEX HOLDINGS, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets - (Unaudited)
(In thousands)
 
 
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
 
December 31,
2017
 
September 30,
2017
ASSETS
 
 

 
 

 
 

 
 

 
 

Cash and due from banks
 
$
31,204

 
$
30,130

 
$
26,861

 
$
38,243

 
$
21,879

Interest bearing deposits in other banks
 
230,586

 
116,610

 
168,333

 
110,801

 
129,497

Total cash and cash equivalents
 
261,790

 
146,740

 
195,194

 
149,044

 
151,376

Investment securities
 
256,237

 
252,187

 
243,164

 
228,117

 
204,788

Loans held for sale
 
1,425

 
453

 
893

 
841

 
2,179

Loans, net
 
2,426,590

 
2,404,044

 
2,302,664

 
2,220,682

 
1,896,989

Accrued interest receivable
 
8,291

 
8,137

 
7,127

 
7,676

 
6,387

Bank-owned life insurance
 
21,915

 
21,767

 
21,620

 
21,476

 
20,517

Bank premises, furniture and equipment, net
 
77,346

 
76,348

 
76,045

 
75,251

 
40,129

Non-marketable equity securities
 
27,417

 
27,086

 
20,806

 
13,732

 
10,283

Investment in unconsolidated subsidiary
 
352

 
352

 
352

 
352

 
352

Other real estate owned
 

 

 
10

 
449

 
738

Intangible assets, net
 
16,603

 
17,482

 
18,372

 
20,441

 
10,531

Goodwill
 
161,447

 
161,447

 
161,685

 
159,452

 
135,832

Other assets
 
16,433

 
15,831

 
13,634

 
14,518

 
14,760

Branch assets held for sale
 

 
1,753

 
1,753

 
33,552

 

Total assets
 
$
3,275,846

 
$
3,133,627

 
$
3,063,319

 
$
2,945,583

 
$
2,494,861

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 

 
 

 
 

 
 

 
 

Deposits:
 
 

 
 

 
 

 
 

 
 

Noninterest-bearing
 
$
661,754

 
$
611,315

 
$
597,236

 
$
612,830

 
$
495,627

Interest-bearing
 
1,994,500

 
1,879,103

 
1,896,558

 
1,665,800

 
1,490,031

Total deposits
 
2,656,254

 
2,490,418

 
2,493,794

 
2,278,630

 
1,985,658

Accounts payable and accrued expenses
 
6,875

 
4,130

 
3,862

 
5,098

 
4,017

Accrued interest payable and other liabilities
 
5,759

 
5,856

 
3,412

 
5,446

 
4,368

Advances from Federal Home Loan Bank
 
73,055

 
108,092

 
48,128

 
71,164

 
38,200

Junior subordinated debentures
 
11,702

 
11,702

 
11,702

 
11,702

 
11,702

Subordinated notes
 
4,989

 
4,988

 
4,988

 
4,987

 
4,987

Other borrowings
 

 

 

 
15,000

 

Branch liabilities held for sale
 

 

 

 
64,627

 

Total liabilities
 
2,758,634

 
2,625,186

 
2,565,886

 
2,456,654

 
2,048,932

Commitments and contingencies
 
 
 
 

 
 

 
 

 
 

Stockholders’ equity:
 
 
 
 

 
 

 
 

 
 

Common stock
 
242

 
242

 
241

 
241

 
227

Additional paid-in capital
 
448,117

 
447,234

 
445,964

 
445,517

 
404,900

Retained earnings
 
74,143

 
65,208

 
55,015

 
44,627

 
41,143

Unallocated Employee Stock Ownership Plan shares
 
(106
)
 
(106
)
 
(106
)
 
(106
)
 
(209
)
Accumulated other comprehensive loss
 
(5,114
)
 
(4,067
)
 
(3,611
)
 
(1,280
)
 
(62
)
Treasury stock
 
(70
)
 
(70
)
 
(70
)
 
(70
)
 
(70
)
Total stockholders’ equity
 
517,212

 
508,441

 
497,433

 
488,929

 
445,929

Total liabilities and stockholders’ equity
 
$
3,275,846

 
$
3,133,627

 
$
3,063,319

 
$
2,945,583

 
$
2,494,861


7


VERITEX HOLDINGS, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Income - (Unaudited)
(In thousands, except per share data)
 
 
For the Nine Months Ended
 
 
September 30,
2018
 
September 30,
2017
Interest income:
 
 

 
 
Interest and fees on loans
 
$
99,432

 
$
45,613

Interest on investment securities
 
4,697

 
2,251

Interest on deposits in other banks
 
2,316

 
1,787

Interest on other
 
15

 
4

Total interest income
 
106,460

 
49,655

Interest expense:
 
 
 
 
Interest on deposit accounts
 
18,507

 
6,201

Interest on borrowings
 
2,051

 
696

Total interest expense
 
20,558

 
6,897

Net interest income
 
85,902

 
42,758

Provision for loan losses
 
5,239

 
2,585

Net interest income after provision for loan losses
 
80,663

 
40,173

Noninterest income:
 
 
 
 
Service charges and fees on deposit accounts
 
2,588

 
1,733

(Loss) gain on sales of investment securities
 
(22
)
 
205

Gain (loss) on sales of loans and other assets owned
 
1,267

 
2,259

Bank-owned life insurance
 
575

 
561

Rental income
 
1,343

 

Other
 
2,132

 
520

Total noninterest income
 
7,883

 
5,278

Noninterest expense:
 
 
 
 
Salaries and employee benefits
 
23,225

 
13,471

Occupancy and equipment
 
8,267

 
3,622

Professional fees
 
7,803

 
3,959

Data processing and software expense
 
2,601

 
1,451

FDIC assessment fees
 
827

 
1,061

Marketing
 
1,213

 
905

Amortization of intangibles
 
2,632

 
413

Telephone and communications
 
1,076

 
438

Other
 
4,077

 
2,434

Total noninterest expense
 
51,721

 
27,754

Net income from operations
 
36,825

 
17,697

Income tax expense
 
7,309

 
5,802

Net income
 
$
29,516

 
$
11,895

Preferred stock dividends
 
$

 
$
42

Net income available to common stockholders
 
$
29,516

 
$
11,853

Basic earnings per share
 
$
1.22

 
$
0.70

Diluted earnings per share
 
$
1.20

 
$
0.69

Weighted average basic shares outstanding
 
24,151

 
16,813

Weighted average diluted shares outstanding
 
24,587

 
17,232



8


VERITEX HOLDINGS, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Income - (Unaudited)
(In thousands, except per share data)
 
 
For the Three Months Ended
 
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
 
December 31,
2017
 
September 30,
2017
Interest income:
 
 

 
 

 
 

 
 

 
 

Interest and fees on loans
 
$
35,074

 
$
32,291

 
$
32,067

 
$
28,182

 
$
20,706

Interest on investment securities
 
1,722

 
1,647

 
1,328

 
1,211

 
941

Interest on deposits in other banks
 
1,016

 
613

 
687

 
500

 
629

Interest on other
 
6

 
4

 
5

 
4

 
3

Total interest income
 
37,818

 
34,555

 
34,087

 
29,897

 
22,279

Interest expense:
 
 
 
 

 
 

 
 

 
 
Interest on deposit accounts
 
7,762

 
6,452

 
4,293

 
3,677

 
2,812

Interest on borrowings
 
880

 
479

 
692

 
470

 
338

Total interest expense
 
8,642

 
6,931

 
4,985

 
4,147

 
3,150

Net interest income
 
29,176

 
27,624

 
29,102

 
25,750

 
19,129

Provision for loan losses
 
3,057

 
1,504

 
678

 
2,529

 
752

Net interest income after provision for loan losses
 
26,119

 
26,120

 
28,424

 
23,221

 
18,377

Noninterest income:
 
 
 
 

 
 

 
 

 
 
Service charges and fees on deposit accounts
 
809

 
846

 
933

 
769

 
669

(Loss) gain on sales of investment securities
 
(34
)
 
4

 
8

 
17

 
205

Gain (loss) on sales of loans and other assets owned
 
270

 
416

 
581

 
882

 
705

Bank-owned life insurance
 
194

 
192

 
189

 
192

 
188

Rental income
 
414

 
452

 
478

 
139

 

Other
 
857

 
682

 
592

 
299

 
210

Total noninterest income
 
2,510

 
2,592

 
2,781

 
2,298

 
1,977

Noninterest expense:
 
 
 
 

 
 

 
 

 
 
Salaries and employee benefits
 
7,394

 
7,902

 
7,930

 
7,357

 
5,921

Occupancy and equipment
 
2,890

 
2,143

 
3,234

 
1,996

 
1,596

Professional fees
 
4,297

 
1,703

 
1,802

 
1,713

 
1,973

Data processing and software expense
 
697

 
1,076

 
828

 
766

 
719

FDIC assessment fees
 
288

 
236

 
302

 
116

 
410

Marketing
 
306

 
446

 
461

 
388

 
436

Amortization of intangibles
 
798

 
856

 
978

 
551

 
223

Telephone and communications
 
236

 
414

 
426

 
282

 
230

Other
 
1,340

 
1,393

 
1,345

 
1,866

 
1,014

Total noninterest expense
 
18,246

 
16,169

 
17,306

 
15,035

 
12,522

Net income from operations
 
10,383

 
12,543

 
13,899

 
10,484

 
7,832

Income tax expense
 
1,448

 
2,350

 
3,511

 
7,227

 
2,650

Net income
 
$
8,935

 
$
10,193

 
$
10,388

 
$
3,257

 
$
5,182

Preferred stock dividends
 

 

 

 

 
42

Net income available to common stockholders
 
$
8,935

 
$
10,193

 
$
10,388

 
$
3,257

 
$
5,140

Basic earnings per share
 
$
0.37

 
$
0.42

 
$
0.43

 
$
0.14

 
$
0.26

Diluted earnings per share
 
$
0.36

 
$
0.42

 
$
0.42

 
$
0.14

 
$
0.25

Weighted average basic shares outstanding
 
24,176

 
24,148

 
24,120

 
23,124

 
19,976

Weighted average diluted shares outstanding
 
24,613

 
24,546

 
24,539

 
23,524

 
20,392


9


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

The following are the non-GAAP measures used in this release:

core net interest income adjusts net interest income as determined in accordance with GAAP to exclude income recognized on acquired loans
core noninterest income adjusts noninterest income as determined in accordance with GAAP to exclude gain on sale of disposed branch assets
core noninterest expense adjusts noninterest expense as determined in accordance with GAAP to exclude corporate development costs
core net income from operations is calculated as the sum of core net interest income and core noninterest income less provision from loan losses and core noninterest expense
core income tax expense adjusts income tax expense as determined in accordance with GAAP to exclude the tax impact of the adjustments to core net interest income and core noninterest expense, the re-measurement of our deferred tax asset as a result of the Tax Act and the tax impact of other corporate development discrete items
core net income adjusts net income as determined in accordance with GAAP to exclude the impact of income recognized on acquired loans, corporate development costs and the tax impact of the adjustments to core net interest income and core noninterest expense, exclude the re-measurement of our deferred tax asset as a result of the Tax Cut and Jobs Act and exclude the tax impact of other corporate development discrete items
core net income available to common stockholders adjusts core net income to exclude preferred stock dividends
core diluted EPS divides (i) core net income by (ii) weighted average diluted shares of common stock outstanding for the applicable period
core efficiency ratio is determined by dividing core noninterest expense by the sum of core net interest income and noninterest income
core net interest margin is determined by dividing core net interest income by average interest-earning assets
core return on average assets is determined by dividing core net income by average assets
tangible common equity is defined as total stockholders’ equity less goodwill and other intangible assets
tangible assets is defined as total assets less goodwill and other intangible assets
tangible common equity to tangible assets is a ratio that is determined by dividing tangible common equity by tangible assets
tangible book value per common share is determined by dividing tangible common equity by common shares outstanding

Management believes that the non-GAAP financial measures above that are used in managing its business may provide meaningful information to investors about underlying trends in its business and management uses these non-GAAP measures to measure the Company’s performance and believes that these non-GAAP measures provide a greater understanding of ongoing operations, enhance comparability of results of operations with prior periods and show the effects of significant gains and charges in the periods presented without the impact of unusual items or events that may obscure trends in the Company’s underlying performance. These disclosures should not be viewed as a substitute for financial measures determined in accordance with GAAP. 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.
















10



VERITEX HOLDINGS, INC. AND SUBSIDIARY
Reconciliation of Non-GAAP Financial Measures - (Unaudited)
(In thousands except per share data and percentages)
The following tables reconcile, at the dates set forth below, the differences between these non-GAAP financial measures and their most directly comparable financial measures calculated in accordance with GAAP.
 
 
For the Three Months Ended
 
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
 
December 31,
2017
 
September 30,
2017
Net interest income (as reported)
 
$
29,176

 
$
27,624

 
$
29,102

 
$
25,750

 
$
19,129

Adjustment:
 
 
 
 
 
 
 
 
 
 
Income recognized on acquired loans(1)
 
2,591

 
1,664

 
4,009

 
2,955

 
637

Core net interest income
 
26,585

 
25,960

 
25,093

 
22,795

 
18,492

Provision for loan losses (as reported)
 
3,057

 
1,504

 
678

 
2,529

 
752

Noninterest income (as reported)
 
2,510

 
2,592

 
2,781

 
2,298

 
1,977

Adjustment:
 
 
 
 
 
 
 
 
 
 
Gain on sale of disposed branch assets
 

 

 
388

 

 

Core noninterest income
 
2,510

 
2,592

 
2,393

 
2,298

 
1,977

Noninterest expense (as reported)
 
18,246

 
16,169

 
17,306

 
15,035

 
12,522

Adjustment:
 
 
 
 
 
 
 
 
 
 
Lease exit costs, net(2)
 

 

 
(1,071
)
 

 

Branch closure expenses
 

 

 
(172
)
 

 

One-time issuance of shares to all employees
 

 
(421
)
 

 

 

Corporate development and other related expenses
 
(2,692
)
 
(1,043
)
 
(335
)
 
(1,018
)
 
(1,391
)
Core noninterest expense
 
15,554

 
14,705

 
15,728

 
14,017

 
11,131

Core net income from operations
 
10,484

 
12,343

 
11,080

 
8,547

 
8,586

Income tax expense (as reported)
 
1,448

 
2,350

 
3,511

 
7,227

 
2,650

Adjustments:
 
 
 
 
 
 
 
 
 
 
Tax impact of adjustments
 
20

 
(40
)
 
(579
)
 
(678
)
 
264

Tax Act re-measurement
 
688

 
127

 
(820
)
 
(3,051
)
 

Other corporate development discrete tax items
 

 

 

 
(398
)
 

Core income tax expense
 
$
2,156

 
$
2,437

 
$
2,112

 
$
3,100

 
$
2,914

Net income (as reported)
 
$
8,935

 
$
10,193

 
$
10,388

 
$
3,257

 
$
5,182

Core net income
 
$
8,328

 
$
9,906

 
$
8,968

 
$
5,447

 
$
5,672

Preferred stock dividends (as reported)
 
$

 
$

 
$


$

 
$
42

Core net income available to common stockholders
 
$
8,328

 
$
9,906

 
$
8,968

 
$
5,447

 
$
5,630

Weighted average diluted shares outstanding
 
24,613

 
24,546

 
24,539

 
23,524

 
20,392

Diluted earnings per share (as reported)
 
0.36

 
0.42

 
0.42

 
0.14

 
0.25

Core diluted earnings per share
 
0.34

 
0.40

 
0.37

 
0.23

 
0.28

 
 
 
 
 
 
 
 
 
 
 
Efficiency Ratio
 
 
 
 
 
 
 
 
 
 
Efficiency ratio (as reported)
 
57.58
%
 
53.51
%
 
54.28
%
 
53.60
%
 
59.33
%
Core efficiency ratio
 
53.46
%
 
51.50
%
 
57.22
%
 
55.86
%
 
54.38
%
Net Interest Margin
 
 
 
 
 
 
 
 
 
 
Net interest margin (as reported)
 
4.00
%
 
4.07
%
 
4.46
%
 
4.24
%
 
3.78
%
Core net interest margin
 
3.69
%
 
3.83
%
 
3.84
%
 
3.75
%
 
3.66
%
Return on average assets
 
 
 
 
 
 
 
 
 
 
Return on average assets (as reported)
 
1.10
%
 
1.34
%
 
1.41
%
 
0.48
%
 
0.94
%
Core return on average assets
 
1.03
%
 
1.30
%
 
1.22
%
 
0.80
%
 
1.02
%
(1)
Income recognized on acquired loans is calculated as the sum of accretion on purchased performing loans and cash collections in excess of expected cash flows on PCI loans.
(2)
Lease exit costs, net for the three months ended March 31, 2018 includes a $1.5 million consent fee and $240 thousand in professional services paid in January 2018 to separately assign and sublease two of our branch leases that the Company ceased using in 2017 offset by the reversal of the corresponding assigned lease cease-use liability totaling $669 thousand.



11




VERITEX HOLDINGS, INC. AND SUBSIDIARY
Reconciliation of Non-GAAP Financial Measures - (Unaudited)
(In thousands except per share data and percentages)
 
 
For the Three Months Ended
 
 
September 30,
2018
 
June 30,
2018
 
March 31,
2018
 
December 31,
2017
 
September 30,
2017
Tangible Common Equity
 
 

 
 

 
 

 
 

 
 

Total stockholders’ equity
 
$
517,212

 
$
508,441

 
$
497,433

 
$
488,929

 
$
445,929

Adjustments:
 
 

 
 

 
 

 
 

 
 

Goodwill
 
(161,447
)
 
(161,447
)
 
(161,685
)
 
(159,452
)
 
(135,832
)
Intangible assets(1)
 
(16,603
)
 
(17,482
)
 
(18,372
)
 
(22,165
)
 
(10,531
)
Total tangible common equity
 
$
339,162

 
$
329,512

 
$
317,376

 
$
307,312

 
$
299,566

Tangible Assets
 
 

 
 

 
 

 
 

 
 

Total assets
 
$
3,275,846

 
$
3,133,627

 
$
3,063,319

 
$
2,945,583

 
$
2,494,861

Adjustments:
 
 

 
 

 
 

 
 

 
 

Goodwill
 
(161,447
)
 
(161,447
)
 
(161,685
)
 
(159,452
)
 
(135,832
)
Intangible assets(1)
 
(16,603
)
 
(17,482
)
 
(18,372
)
 
(22,165
)
 
(10,531
)
Total tangible assets
 
$
3,097,796

 
$
2,954,698

 
$
2,883,262

 
$
2,763,966

 
$
2,348,498

Tangible Common Equity to Tangible Assets
 
10.95
%
 
11.15
%
 
11.01
%
 
11.12
%
 
12.76
%
Common shares outstanding
 
24,192

 
24,181

 
24,149

 
24,110

 
22,644

 
 
 
 
 
 
 
 
 
 
 
Book value per common share(2)
 
$
21.38

 
$
21.03

 
$
20.60

 
$
20.28

 
$
19.69

Tangible book value per common share
 
$
14.02

 
$
13.63

 
$
13.14

 
$
12.75

 
$
13.23

 
(1)
Intangible assets as of December 31, 2017 include branch intangible assets held for sale of $1.7 million.
(2)
We calculate book value per common share as total 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.



12


VERITEX HOLDINGS, INC. AND SUBSIDIARY
Net Interest Margin - (Unaudited)
(In thousands except percentages)
 
 
 
For the Three Months Ended
 
 
September 30, 2018
 
June 30, 2018
 
September 30, 2017
 
 
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)
 
$
2,432,095

 
$
35,074

 
5.72
%
 
$
2,333,283

 
$
32,291

 
5.55
%
 
$
1,643,077

 
$
20,706

 
5.00
%
Securities available for sale
 
254,242

 
1,722

 
2.69

 
248,670

 
1,647

 
2.66

 
191,265

 
941

 
1.95

Interest-bearing deposits in other banks
 
203,750

 
1,016

 
1.98

 
136,803

 
613

 
1.80

 
171,461

 
629

 
1.46

Investment in unconsolidated subsidiary
 
352

 
6

 
6.76

 
327

 
4

 
4.91

 
265

 
3

 
4.49

Total interest-earning assets
 
2,890,439

 
37,818

 
5.19

 
2,719,083

 
34,555

 
5.10

 
2,006,068

 
22,279

 
4.41

Allowance for loan losses
 
(16,160
)
 
 

 
 

 
(13,600
)
 
 

 
 

 
(9,910
)
 
 

 
 

Noninterest-earning assets
 
358,935

 
 

 
 

 
353,973

 
 

 
 

 
202,352

 
 

 
 

Total assets
 
$
3,233,214

 
 

 
 

 
$
3,059,456

 
 

 
 

 
$
2,198,510

 
 

 
 

Liabilities and Stockholders’ Equity
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Interest-bearing liabilities:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Interest-bearing deposits
 
$
1,933,832

 
$
7,762

 
1.59
%
 
$
1,864,940

 
$
6,452

 
1.39
%
 
$
1,294,187

 
$
2,812

 
0.86
%
Advances from FHLB
 
120,114

 
630

 
2.08

 
59,762

 
234

 
1.57

 
53,222

 
160

 
1.19

Other borrowings
 
16,690

 
250

 
5.94

 
16,690

 
245

 
5.89

 
13,793

 
178

 
5.12

Total interest-bearing liabilities
 
2,070,636

 
8,642

 
1.66

 
1,941,392

 
6,931

 
1.43

 
1,361,202

 
3,150

 
0.92

Noninterest-bearing liabilities:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Noninterest-bearing deposits
 
635,952

 
 

 
 

 
605,760

 
 

 
 

 
452,426

 
 

 
 

Other liabilities
 
11,750

 
 

 
 

 
7,976

 
 

 
 

 
6,898

 
 

 
 

Total noninterest-bearing liabilities
 
647,702

 
 

 
 

 
613,736

 
 

 
 

 
459,324

 
 

 
 

Stockholders’ equity
 
514,876

 
 

 
 

 
504,328

 
 

 
 

 
377,984

 
 

 
 

Total liabilities and stockholders’ equity
 
$
3,233,214

 
 

 
 

 
$
3,059,456

 
 

 
 

 
$
2,198,510

 
 

 
 

Net interest rate spread(2)
 
 

 
 

 
3.53
%
 
 

 
 

 
3.67
%
 
 

 
 

 
3.49
%
Net interest income
 
 

 
$
29,176

 
 

 
 

 
$
27,624

 
 

 
 

 
$
19,129

 
 

Net interest margin(3)
 
 

 
 

 
4.00
%
 
 

 
 

 
4.07
%
 
 

 
 

 
3.78
%
(1)
Includes average outstanding balances of loans held for sale of $1,091, $1,349 and $1,553 for the three months ended September 30, 2018, June 30, 2018, and September 30, 2017, 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.



13
vbtx3rdquarterearningspr
V E R I T E X Earnings Presentation Third Quarter 2018 October 23, 2018


 
Safe Harbor Statement NO OFFER OR SOLICITATION Important Additional Information will be Filed with the SEC This release does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval with respect to the proposed acquisition by Veritex of Green. No offer of securities shall be made except by means of a prospectus meeting the requirements of the Securities Act of 1933, as amended, and no offer to sell or solicitation of an offer to buy shall be made in any jurisdiction in which such offer, solicitation or sale would be unlawful. In connection with the proposed transaction, Veritex has filed with the U.S. Securities and Exchange Commission (the “SEC”) a Registration Statement on Form S-4 (File No. 333-227161) containing a joint proxy statement of Veritex and Green and a prospectus of Veritex (the “Joint Proxy/Prospectus”), and each of Veritex and Green may file with the SEC other documents regarding the proposed transaction. The definitive Joint Proxy/Prospectus has been mailed to shareholders of Veritex and Green. SHAREHOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE JOINT PROXY/PROSPECTUS REGARDING THE TRANSACTION CAREFULLY AND IN THEIR ENTIRETY AND ANY OTHER DOCUMENTS FILED WITH THE SEC BY VERITEX AND GREEN, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors can obtain free copies of the Registration Statement and the Joint Proxy/Prospectus and other documents filed with the SEC by Veritex and Green through the website maintained by the SEC at www.sec.gov. Free copies of the Registration Statement and the Joint Proxy/Prospectus and other documents filed with the SEC can also be obtained by directing a request to Veritex Holdings, Inc., 8214 Westchester Drive, Suite 400, Dallas, Texas 75225, or by directing a request to Green Bancorp, Inc., 4000 Greenbriar Street, Houston, Texas 77098. Participants in the Solicitation Veritex, Green and their respective directors and certain of their executive officers and employees may be deemed to be participants in the solicitation of proxies from the shareholders of Green or Veritex in respect of the proposed transaction. Information regarding Veritex’s directors and executive officers is available in its proxy statement for its 2018 annual meeting of shareholders, which was filed with the SEC on April 3, 2018, and information regarding Green’s directors and executive officers is available in its proxy statement for its 2018 annual meeting of shareholders, which was filed with the SEC on April 13, 2018. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, is contained in the Joint Proxy/Prospectus and other relevant materials to be filed with the SEC when they become available. Free copies of this document may be obtained as described in the preceding paragraph. 2


 
Safe Harbor Statement 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 financial measures used in managing its business may provide meaningful information to investors about underlying trends in its business and management uses these non-GAAP measures to measure the Company’s performance and believes that these non-GAAP measures provide a greater understanding of ongoing operations, enhance comparability of results of operations with prior periods and show the effects of significant gains and charges in the periods presented without the impact of unusual items or events that may obscure trends in the Company’s underlying performance. These disclosures should not be viewed as a substitute for financial measures determined in accordance with GAAP. 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. The following are the non-GAAP measures used in this presentation: • core net interest income adjusts net interest income as determined in accordance with GAAP to exclude income recognized on acquired loans • core noninterest income adjusts noninterest income as determined in accordance with GAAP to exclude gain on sale of disposed branch assets • core noninterest expense adjusts noninterest expense as determined in accordance with GAAP to exclude corporate development costs • core income tax expense adjusts income tax expense as determined in accordance with GAAP to exclude the tax impact of the adjustments to core net interest income and core noninterest expense, the re-measurement of our deferred tax asset as a result of the Tax Act and the tax impact of other corporate development discrete items • core net income adjusts net income as determined in accordance with GAAP to exclude the impact of income recognized on acquired loans, corporate development costs and the tax impact of the adjustments to core net interest income and core noninterest expense, exclude the re-measurement of our deferred tax asset as a result of the Tax Act and exclude the tax impact of other corporate development discrete items • core diluted earnings per share (EPS) divides (i) core net income by (ii) weighted average diluted shares of common stock outstanding for the applicable period • core efficiency ratio is determined by dividing core noninterest expense by the sum of core net interest income and noninterest income • core net interest margin is determined by dividing core net interest income by average interest-earning assets • core return on average assets is determined by dividing core net income by average assets • tangible common equity is defined as total stockholders’ equity less goodwill and other intangible assets • tangible assets is defined as total assets less goodwill and other intangible assets • tangible common equity to tangible assets is a ratio that is determined by dividing tangible common equity by tangible assets • tangible book value per common share is determined by dividing tangible common equity by common shares outstanding Please see Reconciliation of Non-GAAP Financial Measures at the end of this presentation for a reconciliation to the nearest GAAP financial measure. 3


 
Forward Looking Statements This presentation 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 important 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 impact Veritex expects its proposed acquisition of Green to have on the combined entity’s operations, financial condition, and financial results, and Veritex’s expectations about its ability to successfully integrate the combined businesses and the amount of cost savings and overall operational efficiencies Veritex expects to realize as a result of the proposed acquisition. The forward-looking statements also include statements about 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 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 future results and cause actual results to differ materially from those expressed in the forward-looking statements include, but are not limited to, the possibility that the proposed acquisition does not close when expected or at all because required regulatory, shareholder or other approvals and other conditions to closing are not received or satisfied on a timely basis or at all, the failure to close for any other reason, changes in Veritex’s share price before closing, that the businesses of Veritex and Green will not be integrated successfully, that the cost savings and any synergies from the proposed acquisition may not be fully realized or may take longer to realize than expected, disruption from the proposed acquisition making it more difficult to maintain relationships with employees, customers or other parties with whom Veritex or Green have business relationships, diversion of management time on merger-related issues, risks relating to the potential dilutive effect of shares of Veritex common stock to be issued in the transaction, the reaction to the transaction of the companies’ customers, employees and counterparties and other factors, many of which are beyond the control of Veritex and Green. 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, 2017, the Annual Report on Form 10-K filed by Green for the year ended December 31, 2017 and any updates to those risk factors set forth in Veritex’s and Green’s Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings, which have been filed with the SEC and 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 or Green 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. Neither Veritex nor Green undertakes 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. 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. 4


 
Third Quarter 2018 Summary  Organic deposit growth of $165.8 million, or 6.7% compared to prior quarter, STRATEGIC represents best quarterly increase in deposits life-to-date. GROWTH  Record new loan commitments for the quarter and continued strong pipeline underscore ability to execute on organic growth strategy.  Recovered $2.0 million in the quarter from non-accretable purchased loans previously discounted for credit impairment. CREDIT  Increased loan loss provision by $0.9 million primarily due to a single acquired MANAGEMENT loan that demonstrated further credit impairment.  Increase in nonperforming loans to total loans to 1.07% solely driven by three acquired loans.  Reported net income of $8.9 million or $0.36 diluted earnings per share (EPS) was impacted by costs associated with the acquisition of Green Bancorp, Inc. EARNINGS (Green).  Acquisition-related costs were $2.7 million in the quarter, representing a $0.09 impact to diluted EPS, net of taxes.  Announced the Green acquisition on July 24, 2018. ACQUISITIONS  Engaged teams in the integration and conversion planning process. 5


 
Third Quarter 2018 Financial Highlights As of and for the quarter ended Change September 30, June 30, September 30, Quarter over Year over 2018 2018 2017 Quarter Year Selected financial data Total loans $ 2,444,515 $ 2,418,908 $ 1,907,509 1.1% 28.2% Total deposits 2,656,254 2,490,418 1,985,658 6.7 33.8 Total assets 3,275,846 3,133,627 2,494,861 4.5 31.3 Total capital 517,212 508,441 445,929 1.7 16.0 Tangible common equity1 339,162 329,512 299,566 2.9 13.2 Selected profitability Net interest income $ 29,176 $ 27,624 $ 19,129 5.6% 52.5% Noninterest income 2,510 2,592 1,977 -3.2 27.0 Noninterest expense 18,246 16,169 12,522 12.8 45.7 Core noninterest expense1 15,554 14,705 11,131 5.8 39.7 Net income available to common 8,935 10,193 5,140 -12.3 73.8 Core net income available to common1 8,328 9,906 5,630 -15.9 47.9 Selected ratios Net interest margin 4.00% 4.07% 3.78% -1.7% 5.8% Core net interest margin1 3.69 3.83 3.66 -3.7 0.8 Reported diluted EPS $ 0.36 $ 0.42 $ 0.25 $ (0.06) $ 0.11 Core diluted EPS1 0.34 0.40 0.28 (0.06) 0.06 Reported efficiency ratio 57.58% 53.51% 59.33% 7.6% -2.9% Core efficiency ratio1 53.46 51.50 54.38 3.8 -1.7 Reported return on assets 1.10 1.34 0.94 -17.9 17.0 Core return on assets 1 1.03 1.30 1.02 -20.8 1.0 1 As used in this presentation, tangible common equity, core net interest margin, core noninterest expense, core net income available to common, core diluted EPS, core efficiency ratio and core return on assets are non-GAAP financial measures. For a reconciliation of these non-GAAP financial measures to their comparable GAAP measures, see slides 15 and 6 16 of this presentation.


 
Continued Growth of a Diversified Loan Portfolio For the quarter ended September 30, 2018, total loan1 balances increased $25.6 million, or 1.1%, compared to June 30, 2018. For the nine months ended September 30, 2018, total loans increased $211.0 million, or 12.6% annualized. Total Loans1 As of September 30, 2018 Ending Balances $ in millions Consumer RE $2,445 Energy 12% $2,419 2% 3 $2,316 $2,260 Commercial RE 58% C&I 28%