VBTX - Earnings call transcript Q1 2018

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Operator

Good day, and welcome to the Veritex Holdings, First Quarter 2018 Earnings Conference Call and Webcast. All participants will be in a listen-only mode. Please note, this event is being recorded. I would now like to turn the conference over to Ms. Susan Caudle, Veritex Holdings, Investor Relations Officer and Secretary to the Board.

Susan Caudle

Bridgette. you, Thank

and started, presentation get are to you no our revise any obligation cause on remind our to differ. Before include statement slide I’d time, presentation At forward-looking webcast, our slide publicly forward-looking this actual logged beginning could are including that may and statements you results statements into that to to risks two. please The undertakes we uncertainties statement. like anticipated and subject this Company if refer to Safe-Harbor those

For those during us our by are note subject please website, statement phone, Safe call on today’s Safe-Harbor and of you that available made joining that statement. to the comments are veritexbank.com. All Harbor presentation

will our operating today basis, Officer, be on Clay presentation, some we’ll and Malcolm addition, you I’m be the and that In a After CEO, Chief management the Credit underlying have. Chief core better Holland; to discussed which questions reflects performance the address of our Chairman happy joined business. Financial of the by metrics Riebe. Skelly; believes non-GAAP may Noreen Officer, financial

Mr. Holland. here’s Now

Malcolm Holland

you, Thank morning, Good everyone. Susan.

time $XX had and are access to in quarter for billion of total exceeded company We with pleased the earnings record a $X we report first in our million assets.

our our and into We have put to subsequent could has we with and now The have never relationship acquisitions quarters last in Banking team DFW conversations the now had ourselves firmly clients work integrations with are beginning hard opportunities embedded two market the in show finding and two ourselves previously. is over results. with

relating like our non-reoccurring the exceptional, to acquisitions revenues quarterly that has and progress have our would While some numbers highlight. we been to expenses still

more and and impaired recorded two the sovereign few non-reoccurring collected We quarter recorded than branch. duplicate that finalized our and additional of had finalized loans first Austin on purchase accretion assignment recorded credit sublease originally Our a branches. estimated. We the of We we items. sale a income

commitments the million, our upcoming for highest loans $XXX level quarter exceeded an of production for did greater healthy as paydown, quarter, than down $XXX on a annualized growth estate million a commercial new new commitments real payoff quarter. the were growth strong XX% at and These presented a We our of sign centered experience quarter the to the led This Looking loan average slide, our discipline. loan todate. in with new paying portfolio. of

our we high the Although projections remain our for are from pipelines loan active, year and mid-teens. to very growth full reduced teams

on sheet. focus of balance the side We liability the continue to

to attention growth although interest-bearing in annualized XX% resulted the rate, a Our deposits growth recognizing came this category. that in

in did relationship plan primarily efforts non-interest-bearing pay-off. deposits decline for the marketing deposits Austin We due sold and instituted the starting deposits. see managers to a with over deposit seasonal previous we’re and nature period, the these of Our non-interest our to branches February those

quality of class. past credit lows. top record and/or remains are dues, at Our near non-accruals or Non-performing assets,

remain new pricing true North core Texas relocating standards very constantly fundamentally to we remains market companies here. remains with and but to and and sound Our market economically The targets. continue competitive people our underwriting

summarize to for numbers our Noreen here’s Now first you. quarter

Noreen Skelly

four $X Thank period first-quarter earned of our $X you will highlights on same the $X.XX or which $X.XX quarter Malcolm, the morning million like I $XX or million net per year. share, prior million We over or focus on of and $X.XX diluted income an find level increase your to good last over record and would everyone. slide you the attention of presentation.

XX an quarter quarter. and increase assets core under increase X.XX%, prior you ratios, over will As was point note on was over our core of basis X% of efficiency an selected ratio XX% return prior

growth X.XX% loan over under X.X% slide balances was with detailed however, as loans million branches adjusting $XX in expansion the for sold prior five increased increases. annualized quarter Core yields the loan just the the X.XX% versus increased resulting seven $XX or loan million representing for point over basis rate. prior prior rate a on next our organic around Our connection quarter, Austin quarter. growth from XX% to five I to expect

loans prior to X% We book, past see pay-off, quarter over balances new a continue and charge the total as Credit with and quarter. pay-downs commitments at grow trended the very a several continue to pay-off. X.XX% loan with strong to three very while we loan unexpected hit remain minimal offs total XX% of this percentage for quarters, metrics loans X% between to non-performing

Just discussed oil call. credit an quarter’s non-performing the XX update and we gas million on on last

recall may host bank accordingly we acquired and $XX impaired, of this that lead received from purchase it when credit was a earnings accounting the we Information sovereign million reflected was part XX-K. in You dictated the loan adjustments our call facility.

deposit as market earlier, stated million. $XX X% which of grew came money highly deposits rate Austin slide increased increase Turning product, annualized. correspondent million our eight, If sold $XXX to or the the sensitive. with of Malcolm deposit deposit million is balance XX% from exclude the branches, we $XXX

X% rate in As X.XX% somewhere as result, we to XX basis XX sensitive deposit quarter. compared impact next expect and a deposits. to the continued see interest-bearing the the between prior I of cost incur points full deposits to in increases increased to quarter

expansion. NIM next the see the slide you On

included Our million than to million better and income related loans that purchase primarily million accretion $X was this accretion. reported is it expected. net $XX performed accounting $X.X interest of or loan

settling compress core to XXX quarter. margins basis XXX margin a Excluding I over purchase this to bit, the accretion, quarter points range the the the next in XXX expanded from around XXX anticipate accounting quarter. back nine may prior

we shown as deploy lower loans earning continue into to represent of capital on mix. loans half our access slide the As of nine, now XX% asset

we disposition comes Turning from result branch act the accounting as have to acquisition, purchase the adjustments. quarter, several along tax items slide remeasurement non-recurring prior XX, merger, in and that that with

for was adjusting million non-recurring items, these expense quarter non-interest million. was and under expense Our $XX core $XX reported just

stabilize will me expenses core let the closing to year. that the of Malcolm few that, remainder the a With is for for comments. turn back over call expectation Our

Malcolm Holland

are us, organic growth integrations the team behind focusing efficiencies Noreen. and to our I all conversions relative our Houston our to committed continuing and market. Thanks, remain to achieve on We scale. With

have intently we are while to on and growing, a they attempts come We disciplined strong our institution, made focused our strategy the pricing long-term finding we’ve partner, although very intact. an to merger several have unable keeping team [ph] to at terms and with accused been

would our We strategic growth, locations. the healthy their margins, and same been continued conversations capital possibly have will poised with organically, opportunities pursue the incredible acquisition best possible on teams for excess a team our continue on and to very With that strong appropriate quality XXXX. focus adding and lenders once at without in the not have grow, we and plan team again we support good of proven our the and we to doubling six are additional state. months board. efforts from have credit while time, past accomplishments They respective The

excitement has and interest never brighter. Thank for about our Our been in you future Veritex. your time

now you happy may have. to We answer questions any that are

Operator

comes with Brady question first Our Gailey Instructions] KBW. [Operator from

Your line open is

Brady Gailey

guys. morning good Hey

Malcolm Holland

morning, Brady. Good

Brady Gailey

about interest but for we So accretable to quarter, of you’ll code when going in this net had margin, of the XXX remainder big level NIM know the I yield you the the reported of but through I forward know how we think know yield you a XXX, should number of guidance look this year? at appreciate the accretion the

Noreen Skelly

the really that’s its the down of most to all the the these of at of product take Noreen. XXX a would end bit. and timing correspondent think to so deposits the deposits will – Brady, and full XXX of I money you that impact I came the market range deposit Hey quarter guide on of in and in the resulting the range end lower that I the margin spoke from

Brady Gailey

like of what the XX so yield, run $X mean points of high, of mean be that a from you forward order I quarter. next know reported had think for I good terms this about basis any accretion. rate points I was dollar over that Any said quarters? accretive have Okay, XX three abnormally benefit or the it levels so million idea it that was color two you the in for would do feels XXX, you margin basis

Noreen Skelly

think yield. accretible X.X we the closer of million PCI are related so rate onetime run you I really loan, the on if million stripped out to Yes, the $X

Brady Gailey

feels that like rate a and good going Okay forward? run

Noreen Skelly

life It’s of really like pretty those run rate, next average are it’s I purchase with good that we mean, a atleast quarter loans, through really pretty for weighted the here fast. in coming quickly the discount running

Malcolm Holland

to focus item. [ph] it was next leading running so Sovereign and the feel quick, a million several $X start $X.X million Brady, pretty portfolio accretable a and about had income wanted but really through but down, you Hey non-recurring will we range for the sure like quarters that on it’s

Brady Gailey

mean Yes, you know are then guidance know appropriate deposit mid-teen growth you that trying like or more moving think that still mid we’ve on the I is it being up loan as anticipating I growth pop past talked teens teens kind the to in okay. about well? level. to from And amount sounds are loan the range range. growth deposit higher do you to of in that high the guys low an that with the growth positive you

Malcolm Holland

have of moving. to the This in could had is this that even side. so have teens non-interest first lot nice, a the really call. back group the that were during deposit The nice the -- of on think What what the the we the moved was high is the it looked of the side. contents mid-teens at, missed quarter, beginning at year. that in saying success year. I bearing is albeit Yes, on we’ve was both for had I are some I interest-bearing we remainder very We deposit we We’ve side,

seen know April, You there. we’ve movement some good through

[ph] So growth on loan married number think at side. to be I mid-teens is deposit the the going

Brady Gailey

Thanks color. the for great. Okay,

Malcolm Holland

Brady. Thanks,

Operator

Brad Sandler Milsaps Our O'Neill. next is with question from

open. line is Your

Brad Milsaps

Hey good morning.

Malcolm Holland

morning. Good

Brad Milsaps

discount some look a it last -- reserve just you did quarter, accretion. of is the see as have Really didn’t the new left want on do but quarter maybe if dynamic the used well? a access How know just you this I follow acquired to you down. there like that to a much in and there up total back bit, I build

Noreen Skelly

half the question? second what’s Well your of

Brad Milsaps

happened sure this look the to that just the used You to was quarter, wanted it part make outsize accretion didn’t correct? that last of add like quarter reserves,

Noreen Skelly

That’s correct.

accretable and million about So yield accretable then about million XX left X in of -- left. non we million have of XX non yield

Brad Milsaps

you. Thank Okay, about ROA had can kind know kind great. you you goes, an then target. of outlined you And your profitability of past, of talk in some the term kind longer Malcolm, of

those to growth back your targets, kind it hoping to are you like today, stabilize, of loan was up, here sit achieving you pick talk As can NIM the you cooler? the sounds going kind which are around of expenses about commentary going is

Malcolm Holland

I on we’ve still over of No, little loan we the up to XXX Brad are year, to seen XXX But pressing mean get we on pricing, bit still are loan our in looking higher low depending probably the know for that. XXX maybe XXXs, a pressure growth. it decent the you

So XXX mean competitive that’s obviously really really the for side. the hanging looking But demand a year. still little a to seems cost pretty getting am side be for on the is the I a good moving, are thing I in pricing deals there little that’s the bit, cheap. The well.

Brad Milsaps

for front. to just or helpful. good is digested you make wanted at Okay, was these would look a it you this of that point? mentioned the And something appetite more I kind go year, as of into be rest get the your that loaded then past for even in that to you out XXXX everything sure final backend to on the deals What’s M&A question, know that’s

Malcolm Holland

so I are and two it but As bank, be that's sold, conversations. continue have have if certainly you and parties. of really to bought I'm to cook a right are know conversations, to open couple in am ruling it's having I not don't something I got they now, they that's anything arises hot.

core and very with our was that conversion finished have well. weekend last Liberty We went

done, the are to don't we little on and have of but a integrations just all that people year, I XXXX. love bit would plate right taking now, but are a something sense on deep be breath the going its done, our our all conversions half back So anything my to the of have

Brad Milsaps

you. Thank great. Okay,

Malcolm Holland

Brett. Thanks,

Noreen Skelly

Brett. Thanks,

Operator

next the Our Stephens line Matt with Incorporated. is of Olney from question

open. is Your line

Matt Olney

Hi. Thanks. Good morning guys.

Malcolm Holland

Good morning.

Noreen Skelly

morning. Good

Matt Olney

says flattened to from go the I on in this Liberty going out just to give cost believe expenses. by the few more you you quarters. stance imply I reinvestments to core you are said next other that offset that? be expenses back talk were want the this? operating Can operating or us business And about does the over any

Noreen Skelly

[ph] you third there related And we're two moving we'll have then into some forward, is think expenses. and continued we last other were conversion so we the that and quarter. to of cost fourth our We'll on there started base, to we this going working on resources the have suggested next moving as and I expense also you'll be see loan growth quarter but quarter. we'll from so have integration kind the that's an mean stabilize have that's Liberty and One the some But were can tracks plan. call efficiency on you that with as non-core cost. XX operations our And our integration. savings Liberty, to AC functions. time related same that non-core not employee increases in the – will integrate There's each ups was growth said We going and we'll Sure. efficiencies have significant, shares so – that plan offering distributing one to part mentioned we integration not I currently earnings XX those office to plan, offset $XX,XXX other that equity to back is on plan. volume shares of human cost we're cost at

Matt Olney

growth give Thank And maybe seeing paydowns, side, going just more the Malcolm you. That's growth payoffs kind the bit Okay, helpful, on loan Is from and down. production about loan any more what great. you us back entail to slower, of elevated moderating can little Noreen. talk you then growth, you're on that? guidance loan

Malcolm Holland

moving just on economic necessarily, lot really We're It's kind not seeing business side. of activity. of Yes. the paydown payoff, and a it activity they're

pipelines in they've million commitments the $XXX huge. are Our first full just ever quarter as was in been doing

hands that pretty do Now I $X new hard. would that's think do be we that the we'll can quite on don't Now commitments? billion running that.

it We're bunch the for that's on pulling down. But good seeing. of So what we're opportunities side. reason one really seeing a C&I

the conversations fairing construction quarter they've I opening real start been high our very that we've serious hired estate a some third These recently moment. equity being in some now see but done huge I toe-to-toe we've mentioned benefit driver some my first stuff construction some very think third into got equity and has to in that quarter business and come fourth think to them I very I'm the we're gotten it's see folks Texas in that banks. well, still capital And active. it, some the we'll area a commercial deals never We're going was strong. and And comments either fourth of and couple that with that follow from larger in. then to deals. put the we – we're and

Matt Olney

Okay. good. Very

Malcolm Holland

Matt. Thanks,

Operator

Rabatin Instructions] [Operator question with Our comes Brett next Jaffray. from Piper

Your line is open.

Brett Rabatin

maybe back Does what's to Malcolm, and this of second and your that something transpired on you evolved any some we've you're other of little about want transpired give opportunities maybe bit you on or in an to not if a your might update can or what kind do XQ? comes Houston Good will your up environment on there to a about everyone. comments post M&A talked strategy little prepared morning, before you seen the have -- year. kind changed bit thesis a given and just Hi. us for XXXX think

Malcolm Holland

think a gone. I our little here, have going of three those strong we're targets down do four Houston, strategy, of in to No, pivot Yes. really a there identified to were

of Houston in a different a it’s bit And market. so little

with of the start probably mainly pivots don't down get won't a focus the some you a of going on be We've really organic south some saying people more to in moving I'm bit little but those those success and had growth there. town one work, to not suburbs those, If you four teams. hiring hiring good

term in So we're do our continue I the old-fashioned and to in efforts these if can going way think see conversations. double the have to we short it

probably committed. about on quarter can actually second acquisition, good market. out. a right And there. bit down committed sometime it we're need organically to My certainly Houston it. I efforts more We we board now the how team a the think we'll that different and a to we our to than do I working in double present are is market. Houston little doing but a people to very It's figuring grow plan

Brett Rabatin

Okay. maybe commercial was And for linked estate the then how construction? of much versus quarter, was hoping additional C&I around maybe that I color commitment increase real

Malcolm Holland

around was not our XX plus commercial of clients deals most solid. real re-bucket estate getting super these are these to deals. in equity construction area. a and been for percent obviously it We of construction Most could We're see Yes. who did and the do obviously We XX these dealing couple with. are

those when real bucket centered making of started. through we Sovereign but was had estate group Bob it got that hired them ago plan are, which we very a those just of nice commercial year and for couple on area

Brett Rabatin

looking you Noreen, you new basis of the rise and what fed from this deposit then rates then, higher this another it your base? just is thought assuming little deposits of for XX a to that What your that of is a cost are if there the mostly on existing a XQ, to points And I heard and from is in the function existing function or deposits were some quarter maybe relative quarter hike bring increase to Okay. on correctly, XX coming. increase

Noreen Skelly

of the growth. deposits Really new support to the at this the point it’s cost

Brett Rabatin

rising betas color the XQ? Okay. second Any what from thinking And then, are you you're quarter. mouthing deposit [ph] on from them out is

Noreen Skelly

feel it fund and growth Yes. with good we really slight sheet. we're with see a betas balance the now past, on We know that deposits right depends from have deposit a to we the – in you do like in position increase

really looking the So will we Is end What towards have at increase. the that pay to so growth the off thus will be we're question? think and we're going betas of quarter. your do the to answers

Brett Rabatin

helpful. Okay. you so Thank much. Yes. That's

Operator

Thank with we a Tenner you. I'm Gary sorry, – question not do have from showing D.A. Davidson. I'm

Your line open. is

Gary Tenner

were a your apologize are guys. quarter that the if that business terms that for is function of I next maybe than the in I of from for in may couple year? had the was you think transactions the of morning, post that give off business trends you paydowns but the Good maybe shake the reminder some see out Thanks. said the and this, over gone perspective higher you of reasons what is delayed that losing a paydowns tax because the second, you not XXXX, of level any until Or sense I quarters? to might what you hop maybe a of things sense Is this just banks. over sense

Malcolm Holland

You couple know, were that of real a estate them just sold. deals

were there nice -- a then had couple had they industrial deals just deals passed, thinking business, I'm Sovereign normal replace course the industrial that we in book is of correct? that couple big a of of those. have just we And and of so

for XXX replacement of is of that So that part sold. some commitments that a stuff we've

You got make up anything get equity their loan fund commitment fully because the first. –beat they've you and then you which a paydown funded is and don't

them they are economic I what that's They they're just did doing. them and So call to trading. I sell build that commerce. mean

any trends. So don't I specific see

you. did separate been one we be lost one left but to haven't candid we that relationship customers tax and one to side, two we've side. delay deal, If lose also totally the lose the of some there certainly any could have On with and because C&I did been on

we head to one XX lose small here, I million. it's could hang that our trends no community but million that Gary on. We Now – bank about think XX relationship another

Gary Tenner

Thanks. it. Appreciate

Malcolm Holland

Gary. you, Thank

Operator

questions. call for any over showing further remarks. to now not I'm turn back Holland closing Mr. the I'll

Malcolm Holland

you And calls anybody Thank today. specific for to day all a we're day. us good all around make. wants any joining for if Have

Operator

gentlemen, and Ladies conclude the program. this does

have disconnect. day. now may great You Everyone a

Veritex (VBTX) 24 Apr 182018 Q1 Earnings call transcript