VBTX - Earnings call transcript Q1 2021

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Operator

Good day, and welcome to Veritex Holdings First Quarter 2021 Earnings Conference Call and Webcast. All participants will be in a listen-only mode. Please note, this event is being recorded. I will now turn the conference over to Ms. Susan Caudle, Investor Relations Officer and Secretary to the Board of Veritex Holdings.

Susan Caudle

you. Thank

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

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

on believes of of our release. basis, Some of our a the Please measures the non-GAAP in better operating X-K performance the filed financial management underlying the core business. discussed non-GAAP reconciliation see earnings be which all metrics reflects will discussed

Terry Chairman call over Joining me Credit the will turn today CEO; our now Riebe, and Officer. are Chief our I Chief to Malcolm and Officer; Clay Financial Earley, Holland, Malcolm. our

Malcolm Holland

morning, everyone. Good

of continue pandemic. We our shepherd backside and clients what manage we the is company through hope our to this

first quarter to performance several fronts. office. the quarter date excited After team bringing back and earnings. operating in team back and state XXX% businesses bank many My at of our many our and operating quarters are on working XX% open, Our feels we are being open, is best the vaccinated normal fully during and I challenging our was are it is first The XXXX, again. to are currently

a $XX.X better was share, $X.XX period. the Our net than income for quarter million previous or the $X.XX

ending earnings exceeding average quarter or also the operating return up at continue ROATCE $XX pre-provision on million to XX.X%. well, trend pre-tax Our assets, while X.XX% performed

continues recover, growth As continues at levels. our economy our expected to

for on second but having their mid-single-digit had scheduled that of quarter, several a We have achieved own. loan are new of like gains payoffs which annualized X. into still X% both Growth We portfolio. warehouse for loan January which is quarter, PPP told It the success They our good. small our their we and the mortgage divided started growth did year. growth building timing we builder between QX the For less loan incredible growth group, was categories. you number appears all about very equally pushed

fruits Our stayed lending and of labor team and intentional paying the is the some during focused pandemic, off. of their

remain strong Our building. and pipelines

to at We’re rate up, X.XX grow seeing competition heat to quarter. last large to deposit reduce a despite from our very especially disciplined basis Deposits continue efforts to pricing. related X.XX points costs

so ways reduce in our a Our ways. continue move and positive have to continues direction still room to deposit think lower to teams find we in going cost to forward. Credit some many

we a from For were the quarter and provide not the reduced did to for provision. assets a our second in not $XXX,XXX to quarter total loan charge-offs NPA loss row, $X.XX. $X.XX Total material

discuss our picture Our the to highlights. over and I’ll financial to encouraging. improving at our now to turn credit forward look call continues Terry be

Terry Earley

focus Thank see Page of graphs. on On want you, I couple Malcolm. to these. multiple X, you’ll a

management after increase to tangible an quarter, Growing annualized our impact an first capital million. of year-over-year the adding tangible tangible important to quarterly our generation First, share value the quarter per strong is remains This for team. and translates of $XX.XX per dividends. back basis book priority reflecting value increased XX.X% $XX.X a book in XX.X% share on increase linked

pandemic. as the capital. cost remains weathered of last average four we on equity return our remained XX.X% the operating This first the in very our and tangible has averaged common strong quarter well XX.X% quarters level Second, at above over

efficiency at the interest $XXX,XXX income million growth ratio our interest QX $XX generation. over On net loan XX% portfolio which was significantly Finally, and the by most capital rates. also pre-provision loan we’ve of This $X.X our million. day branch-light low net strong model that key deposit and accounting disciplined volume interest million count, lower to significant purchase Slide and shows and which decrease business the net our loan QX contributed pre-tax five ratio achieved earnings maintaining The lower the This under to from strong through $XXX,XXX. been X, by in efficiency drivers offset lowered million, improved quarters. $XXX,XXX income income was operating from accretion by $X.X is last $X.X pricing, decreased

basis seven declined margin X.XX%. to interest net the points from QX Next,

NIM. there provide which forward, factors, are should Looking the four support to

are points and First, of basis CD XX around remaining XXXX. XX in in million rate should maturities about there points. maturity $XXX renewed basis be This

forgiveness into the asset and of X% the Second, redeployment of PPP higher-yielding that loans classes. loan

NIM. For the on represents QX, the XX portfolio PPP point a drag basis

Third, NIM by approximately Slide impact target is hedging. And points. factor balance that, transition final was average let’s liquidity depressing had of the XX% basis to X our with than level. the higher The normal X. sheet This

asset As loan the QX Veritex of slide, sensitive, tied to portfolio you LIBOR highly see short with on end our to can XX% of especially started or this prime. the curve,

terminated accrete million. to $XXX fixed to pay income gain will starting are a interest This exposed in net at March staying XXXX. We into $XX gain To of start longer. lower mitigate or million falling that we swap of for a rates risk, XX-year

on life Additionally, years. of receipt average with $XXX of million an we put eight fixed swaps

strong XXXX. non-interest in On were increase LIBOR. received points LIBOR loan XXX basis up, QX basis On Based to six this Loan hedges, rate, income the was in government-guaranteed another these month and on of the should revenue. banking income. mortgage income add but the fees one-month current one million paid we to in and Slide significant most $XX.X quarter with X, NIM

elect we PPP accounting to at value the fair the originated quarter, GAAP Veritex loans, as option the During continued treatment. the

and fees deferred loan in of million recognize This the outlook. approximately very PPP loans the salaries XX% increases management’s given talent and to revenue Operating expenses is quote were as in and in $X to in includes the million, we employee comp but we cost. As quarter but a result, line highlighted – fees. originations in and were management QX $X.X was one, increase the broker $XXX,XXX deferred Increased from investments have using line amount now loans, value recognized loan that increased two quarters. round forgiven. expectations round in benefits, these able remaining to that due for much with is are stock-based were very much origination the including The with prior lower from

the closing four operating removing ratio is service branches help full-quarter reduction is To trailing efficiency XXXX from model. already and maintain meaningful in XX.X%. efficiency our was Our branch-light ratio, others. branch business in This a two strong bank a

We deposits. quarter as deposits strong deposit Turning grew had to another transactional on $XXX million for Slide front in the annualized. over X XX%

left $X.X certainly deposit to deposits And the again, at pricing margin. or up bps declined graph from by We sit bottom mentioned, now interest in Over the quarterly transactional to the The helping last XX%. the costs. QX. And QX deposit X discipline is our billion year, on points. shows trend net were support XX as Malcolm it basis

XXXX the Looking remainder opportunity first and deposit the time see past quarter, repricing beyond. of the you for

multifamily about discussed would growth warehouse has Moving XX.X% already balances growth at PPP. expect on generated I’ve and loans, way you XX% in the portfolio growth Average by in to when X% or portfolio. This talked portfolio our excluding loans. to the seasonal quarter. XX wonderful deposit liquidity this grew for warehouse at total been excess loan portfolio of Malcolm the and to mortgage. mortgage remains less keep the intent average Slide earlier. average average segments, the Growth quarter contraction. of sits a has first the saw absorb in We our mortgage normally except all It

Over leads line grown total an the less has especially annualized This achieve our rate to above us utilization unfunded loan we talent that can last commitments. coupled in three and X.X%. C&I our pipelines, PPP ADC believe quarters, loans peer investments when we construction at growth, execution, with factor strengthening of Veritex

on year see can you page, XX% from down is As utilization ago C&I levels. the

utilization, translates loans. X% it line in total in into increase X% growth every For

robust. XX% of Additionally, our statistics. price capital levels round started one you Round two XX the PPP in portfolio, the ratios increased unfunded XXX,XXX Those sheet per due Slide Loan quarter, by are company have the remained of million at in about forgiveness progress, declared occurs. share regular driven Slide of On shares making the construction and were about gives approximately a our overview commitments million. million by the and round we strong position revenue is four $XX round $XX.XX. including Also was $X.X still payout or quarters. good higher forgiveness in XX, flat relatively as ratios to PPP two capital dividend ratio. year have quarterly the of repurchased we realize during an $X.XX last $XXX balance an one. at deferred Absolute about holding average growth. a and deposit the XX% from We bank to

We have intend remain $XX.X on left authorization million opportunistic. and to our

Clay credit. the that, strategic repurchases. turn for on priorities deployment to With discussion lastly, capital organic current the our of growth; over the given and valuation Our are dividends, stock call growth, to I’d share like

Clay Riebe

credit you, Terry, we’re Thank to everyone. good metric show morning, and stabilize seeing our and Overall, begin improvement.

trending net in up you reserves during past in the Moody’s as would flat of additional the the forecast $X.X can not left past XX quarter. in quarter Net in top past the improved see deck, expect charge-offs the that from million chart loans during month. XX-day bank’s the recovery over X% to watermark page quarter loans a them near Without will quarter we $XXX,XXX. levels third necessary And be The at shy levels made Page the to important just remains the total from bottom chart quarter loan I reflect this bulge loan, and in non-accrual were five the originated due top as we be XXXX. specific offset past by the plus in look our the reflected by corner the portfolio due on peak of It’s bulge XXXX. This the are reflected the a quarters, for future GDP assets page. declined QX X.XX% of expect XXXX. do quarters. that $XX,XXX the the the by cured you charge-offs anywhere a at benefits the it’s third that unemployment have the of of right down SBA of down of to fourth trends from of due posted the Texas ACL to the past note Veritex in of were quarter their high Criticized resume relatively The important identified was while of XXX due. on believe for XX quarter. the As note on that our right, on of chart

Additionally, period. a we’ve in trends decline in same experienced our Overall, XX% I’m quality. by loans the over PPP asset encouraged

Page to we’re This slide on portfolios. in detail what seeing XX. our hospitality some gives and Moving office

Our hospitality results. continues improve produce trends. as do occupancy encouraging book trends to continue Revenue to

tracking hospitality the to and on book and data on revenue RevPAR. XX% relative We’re logging occupancy,

month was from XX% for was higher the RevPAR in XXXX. of XX% watermark quarter fourth high for last of the set book March the XX% up average For Occupancy October March, of the from than the of previous year.

We continue continues to up continued travel State space Texas hospitality as improvement expect metrics and of in the the improve. to open

X.X% CRE upgrade office portfolio LTV is XX%. bank’s the flow cash pandemic. consistent performance the that portfolio portfolio out of the to weighted up coming looking in loans are this book. The makes average for The demonstrating of We’re

is Our pandemic. like feel we in success positioned are office which out coming based locations, for suburban of portfolio better

cash provides protection. calls downside significant structure us office is for significant loan in the with typical portfolio XX% which suburban equity locations. or located of more, Our Dallas of XX%

over one exposures the XX well the make of this total receiving XX% portfolio There’s deferral. X.X% only watch. very to a a portfolio. of performing only the risk this book Overall, in XX rating in deferral with Malcolm. sector. portfolio classified the – during with the the back experienced has the top in only performance the encouraging and that office pandemic book in top been comprises With XX% a of of past credit one turn I’ll office up Our office the that, office of headwinds book X.X% of second are given office asset it the with in received

Malcolm Holland

Clay. Thanks,

future excited is we’re heard, more future. work you’ve As on core but competencies, this Part bank’s probably our M&A. the about continued quarter, our of of excited about the one

Thrive continued remain We discussions I disciplined to companies. as in principles, XX-year-old both continue the to to Austin, and focus increase will operated interest our talk mortgage to buy Georgetown, Thrive many release to banks add opportunities, and decided press of have growth. now public Jones effort needed about company is Mortgage. private XX% investment out underwriting we our owned with Last of just year, in to our issued that as the different and our we non-interest we concerning family. and make EPS But income. concerted non-interest north income team Texas, a would a like scale well by

with additional which strategic compelling in scale a we provides standpoint. It mortgage non-interest always at businesses our It have us identified partner. as of bank and numerous in and We very Thrive income the is have lagged potential from intensive mean market. well of Thrive peer category, an officers. a known bank provides volume group. clients many looked the The partnership to They our driver our

of results communities our some difficult communities again interest done some an family. technology provides as a Additionally, its possible. Jones the employees, giving with back And on that provide efficient and streamlined company with it excited The to forward. to focused company’s we be these and natural indication expect historical in process allows make the environment. partner results could this our going to to a Thrive and clients company return for we not about have the more days, many ever-changing the markets. The partner and it deck as rate quarter, also included strongly we mortgage so hedge us in to We during feel should

you every family any storm we match ice or questions. community to to and These Veritex of was pockets, which call little continue validate To to snowmageddon I’d family decided into to open own homes our out the quite the their the trying repairing almost donated to are fellow in out give many of our costly now employees. their bank apartments. a we the glimpse to culture Additionally, assist culture, for like day. employees of things damaged that and live line $XX,XXX

Operator

will Thank from question come Raymond of the you, James. sir. [Operator Instructions] line first Rose from Your Michael

now line please. is live, Your go ahead

Michael Rose

morning are guys. good How you? Hey,

Malcolm Holland

Mike. Good. Hey,

Michael Rose

color be Hey. some top think the you how then forward? level just fee are cycle? give first kind their might Maybe quarter just to we should through the us Thanks. income. could on be you Can this Thrive to And something as it Do I revenue potentially comfort any the end move it? going with acquisition. we contribution we any of then appreciate about And with your I how assume for have numbers. it’s the mortgage-related expenses start related come expectations buying came of there to contribution what pre-tax the year? income

Malcolm Holland

year a how wealth being a in a the Yes. I’ll of little discussed. Terry insurance an metropolitan you something having of and not last give some always been it a that’s idea an My area, do came you business We together session sat considerations And financial income for or business around strategic been planning or difficult major did. where let and we non-interest title need team business. address said, get better? to has our us

we really mortgage So SBA a looking around – a started were had and we company, pretty and we small decent business. we had

warehouses mortgage competency. And let’s a right, thought, hired somebody deal all that somewhere a so gal for big to in know. the And is run where we known said, very let’s we some And have we out us. big, we our business. had Character we go figure well

kind started looking and popped of we one so out. And this

that you a to tell is good. just They perfect what the a of tune it And are we very, technology their that actually – we I guys hey, And There’s a them son very be team business. came it run very They’re would family, so to business. you do track husband-wife to a high-quality very today. and where and to started to are high-quality in down their think? went And kind so said, match. it. very

never during nice. it’s we’ve issues really it’s and any the come negotiating had so – I whole together And think time,

business area that to forward mentioned. it helpful we for that felt I our an be would strategic the reasons like So just was going

can of really, some really the excited. And So we’re stuff. Terry address financial

Terry Earley

Michael. Yes,

accounting. Obviously, equity this the an method is on investment. First,

Other we share will disclosures. we’ll goodwill generate bit not intangibles. we think So transaction standpoint, not good a I legal. will business. able line pro to you’ll we’re have know financial mortgage It it’s From in earnings. what any We’ll see number, that, of speaking and in and call investment be really, or to but their certainly you not a come do today. not Thrive rata relatively it, a here exactly in costs, have big – They’ll pick that’s mainly we’ll don’t really a I and than growing our consolidate. done be And it, to know what has undertaking little enhanced up for company. financial advice have and pre-tax going to job fee the certainly their through banking

how volume of purchased I think year. think is how you the they’re it, to versus on of on it’s better as much important you dollars I numbers mean, come billion a XX/XX. much Slide doing couple statistics. MBA about And the purchase from typical can They’re – they last and businesses side often did note in their certainly year-end refi their see did as XX, they the – than

of they’re see I a mean the you QX the start. from in banking to so in mortgage February, great time through the and space off your that’s And slowest December year,

our that’s indicate And stretch it and I a there’s decline as already and we’re a There’s – that Banking down that’s the like. forecast imagination. with – in sense work forecast we going sense be all that about by case. to the wouldn’t volume have expectations, to Mortgage our any of certainly at the not XXXX, not And about Thrive. what XX%, forecast XX%. from XXXX we’re and is the April while their from count the expecting no expecting for Certainly, is So what MBA going through Association from into March, look that’s go them

And up. bit a on going on think gain of volume – be pressure there’s as I little dries so and sale to margins the that’s

So here. that’s It’s earnings contribution. to the really obviously, I about think there’s not the way anything would – integrate

– of our cost put cost So this there’s systems. it distraction, put no really no kind – no there’s of on to

a we strategic other you if do will, lot bandwidth, to of So leave things.

anyway, And – have biggest do because the I the thing closed be to I off of great just to and is this with by get shooting biggest grow think Obviously, I so closed that’s way be June they XX. get we’re think we great XXXX to But And that and along want a the of. to part is a lot business them, driver there’s then continue with we a XXXX, exactly a when we’re front. going to think it them to excited that work start. they’re to

Michael Rose

Maybe and I mid-single ex-PPP Just the the commentary that of quarter this low are we the regards ex that you’d be et – is warehouse outset kind Or I another in was year. expect you think there digits helpful. loan would all setting Thanks. there growth pretty cetera. appreciate you here? color any there group, single I in Is some just follow-up, positive I to hires bar pipeline, of But the at as the homebuilder just your finance expect? lender my everything prepared paydowns color. of heard think digits, said still high

Malcolm Holland

with little everybody Paydown a and the predict. is is to we’re challenged certainly bit industry, harder are as in those that something

the bar whether or utilization things Your point, piece I to low? question, builder unfunded or the hires. But your we lot direction, our reasonable. being are setting working it’s the have think in a we’re group or of we the the new C&I

lot mean a have We And momentum. I of it. great

worked were on the folks pandemic. the pandemic people. We calling they came through the During our into office,

threw So out. yes, attainable I very that think those I are numbers

Michael Rose

taking for question. thanks Okay, my

Operator

you, Thank sir.

Your KBW. of next Brady Gailey comes the from question line from

live. Your ahead, now line Go please. is

Brady Gailey

guys. morning Good you. thank Hey,

guys you mentioned hiring talked last a far? Malcolm, just this lot so year know you’re Has the in of seeing. lot continued XXXX that you that a hiring about So XXXX. I year talent in

Malcolm Holland

that that and that working in I to been can our there – Fort but It there Dallas. hires, has currently couple I in you Houston Worth not we’re couple a key in And tell are quite of on area. a especially level, have some

and So the is, arena. in is yes, everybody answer playing that

teams not hiring. Fort We’re about really Dallas, good Worth We Houston. and estate really feel in our both real commercial

all it the disjointed we pays do So some anything, they’re piece mergers most continue. really estate type the just folks. a we value yes, these deals to of And very really we’re it’s it’s – always the to just – just the or growth our don’t But do any non-commercial shareholders. talent. other we piece and situation have continues. If think And always banking will terms that most, don’t real we – And hiring in that organic us. candidly, have and in good calling with they’re is

advantage of going we’re so take to it. And

Brady Gailey

Yes. for would And it’s some but will outlook drag. income pressure margin. just good think about for be you CD comments up, will your think excess do down then, hopefully, all talk But spread less how wanted and believe margin liquidity about about there’s I I lead and PPP those you coming – so still here? to spread you some a and have to you margin, and downward of in the to go maturities do income heard spread Terry,

Terry Earley

easier I that. pressure I pricing, to get Well, better there’s don’t And the year along. downward to as think, there’s I from it’s or think think be, certainly going loan goes coming going

and were to the rates. from income, death at I’m with more net than downward offset it when we deposit loan rates able offset pressure look Now with tickled slide on to interest the you

Slide that’s X. I think

as into last seen the government yes, there’s to don’t and do there’s know the more – – the to if But be, flows you liquidity over robust continue as the going year. we’ve pumped on likely so market, And what if deposit is stimulus. there’s which

pressure from get NIM is the excess that liquidity probably to going worse. think I

mean, we be about our basis because pricing have pricing. deposit lower is I I that with headed I thrilled mean, – quarter confidence I job was March teams I the lower think meaningfully – can because XX than and deposit in still the more points total. couldn’t say done

– control, offset can So on, And we what’s income. on grow just if down. trying that continue bit going the but of side. push to fixed portfolio, out interest and we Look, too loan And on, going want NIMs we’re net our too given much The a can to go and funding market don’t crazy what’s we to of just the side. investment on the put that income that. in our

basis So and XX% – of with hedges to up, the go prime. yes, look, of your tied expansion fixed or if but If rates LIBOR – are receive I X also, look, because the from alone, that going NIM – portfolio and – said big. win income fixed to points we

that’s staying interest in to You of offset the conventional of the for lower spite is wisdom, risk go the we hedges in if see rate I interest trying rates win know that measures. the rates other way, risk big What in we’re rate a do down not way. longer. the but

staying see still – with but thought a You points we in the is quarter. NIM a $X.X down way in basis it is this table, X rates million

too. going So to help that’s we –

Brady Gailey

for finally good And it’s deal. That’s right. see then great to color. the mortgage Thrive All me,

for does M&A trying you for focus pending, understand either Just us and us on to a you a back as little there a you as really I that’s to getting quarters pursue far what it that that on kind as for? give as And it’s flare smaller target? couple you of think bank more having M&A. looking that give that you when transaction. out Are something transformational back M&A, pretty target? you’re set just color what I a as simple looking of traditional a far larger/MOE? deal looking Does bank downstream bank Are comes – like

Malcolm Holland

Yes.

unequivocally So just two? to I risk. mean, is doesn’t. out their Board take is were have question, an no system integration month. No does quarter The they There’s Brady, Operating risk. first answer personnel is there. your Terry going like this to us It investment. yesterday for it a post a attend no. their to at of once None systems transferred just our meeting close. company answer

not. no, So it does

we’re But we will In a you think talked for the $XXX terms little of what we’ve shotgun is to news we’ve all sounds $XX because approach. of optionality. doing a just And of little created on I that to down trite. banks it to It’s that bit side, million. billion the mean, M&A between a have reason. shy I great optionality conversations. a tell The Veritex it’s And just – have I important about way

in so and optionality or the them have banks of done couple two that point, bank months, a few small be we’ve last a It be banks. successfully. could public to your And could MOEs XX an it be, the mean, could smaller private of downstream MOE. done I we’re that one

but… and that that know. we’re the we Does have forward. that don’t in do we So There’s another that’s mean nothing going one? doing, the word, I intimate wrong

Terry Earley

Imminent.

Malcolm Holland

could And have those the other word opportunities conversations, continue as that’s there’s to But Imminent, sorry. going our we lot that well. income a and have non-interest help on. looking we’ll I’m for, company

we have – don’t but to And anything. do so

We story. have a really growth nice organic

And we’re that so a make in really doesn’t do anything And place. we’re sense. going to good not

Brady Gailey

color. Yes. you guys. That’s Thank good

Operator

you, Thank sir.

Gary Davidson. line of come from question D.A. Tenner Your the next from will

Go line Your is now please. ahead, live.

Gary Tenner

to morning. a Wanted back to guys, Thanks Thrive second. good for go

type operating customer? of warehouse customer. Or they’ve a just said You they customer that account mortgage been a Have Veritex? of been

Malcolm Holland

operating and warehouse operating accounts warehouse. businesses, but Mortgage as some primarily well, Yes. mortgage

Gary Tenner

Okay.

of just pure lines that just deck the the over purchase? were flow in to their partnership mortgage vis-à-vis be you the other Or in at beyond income? where is move banks? So may other any there you net Or else cash terms talk they capital, about anything from liquidity excess and will some additional – warehouse deploying utilization that that fee

Malcolm Holland

Go ahead, Terry.

Terry Earley

business I Yes. good capital it’s talking of looking is a mean, Do impact do for going out level. them, and our Sure, be obviously, Gary. to the their their bigger we’re question, certainly, warehouse mortgage And piece in look XX a we from think I not volume. they would last We’ll them. that? They think Yes, more of Yes, just investment. providers. – did got keep they team we’re – agree just with really we aspirations. minor a we a that want it’s they to primarily, current That’s lift growth Colorado pretty important on cash we’re about meaningful had the days. But to list to do.

them the Also been of size loans, So in-house XX% portfolio yes, portfolio. mortgage and chance increase to can’t we for our portfolio our we grow it. of been but our the has in other we to volume still going us, maintain We’ve buy the relationships our to commitments we’ll lot lending to they a originating too. want them, have. mortgage get

jumbo their things that with we’re to product the liquidity business excess love and five of in one partnering on deploy the and happy some with one, business So way. love two-thirds their and of that. them being We certainly seven are arms, like XX% We that Texas.

more company can there. of accrete together. their this synergies to and – that where that for work see we’ll ways just of and to we’re there’s and from takes company. then the But going we And in more think partnership look and – benefit So us from lot the the – to to a

Gary Tenner

the use That’s of to channel kind great. going question next bucket, my down to terms of are you single-family a X%. be going as Actually, in refill which that this is to to was

of level was ago. a that a there year over or so Is you’d X% single-family like I over maintain kind time? portfolio to have think it

Malcolm Holland

our issues ability portfolio. And want no give risk-weighted We’ve bucket, I is us mean, we single-family it’s definitely loan really to jumbo it. great we that’s an area add to grow to had our really a want this going that. Yes. Obviously, in to where asset. grow to the

Terry Earley

love portfolio. And we’d to as yes, get of higher get see let’s – even XX% percentage a and maybe it to to the

Malcolm Holland

Absolutely.

Terry Earley

we for rates see be appetite right are We the of product want in to the cycle, mindful our go up. as and you’ll increase where

and Over the shrunk product, mortgage almost million put XX%. last portfolio five quarters, in $XXX our it we’ve

buyer active we’re be think the So and to them to going certainly looking portfolio with on – but product. I are pretty refis a slow,

Gary Tenner

if then And Okay. question last I for can. me,

little in of I loan Do ability mean, of think upward the do over a to single-family to the you as crept that liquidity Or positive creep the could expectations growth, you given expect terms kind portfolio? elsewhere? portfolio, bucket kind it’s time. add for deployed of But the more the up investment well bit. In get

Terry Earley

Yes. That’s the $XXX much... million given question, how

Malcolm Holland

On excess Right. liquidity.

Terry Earley

excess portfolio. opportunities. Malcolm people builder. talent, got in and about today. we’ve trying the I’m liquidity We’ve room balloon in of got of in $XXX business that in the resist hired I the We’ve referenced million urge We’re lines mortgage in room the believe levers to warehouse. terms to

of we’ll We’ll for cash thankful Our premium is for yield is opportunistic But we that community doing they’ve risk and is don’t stable group the how will five so excessive, reinvestment most our than real risk us not in managed peers. be flow – the off and the balloon look really the for well, a our reinvest team I quarters. coming to It flows. portfolio mean, last there. – grow slightly. got lower up. The look and don’t lot of and cash portfolio certainly given and over I’m the it’s

but a good is. too So feel little not it let We’ll about much. grow it we where

Gary Tenner

thank you questions. my for taking Great

Operator

Thank you, sir.

Stephens. come Olney line next Your will from of the question Matt from

Your line Go ahead, is live. now please.

Matt Olney

of credit. to wanted I my been good questions about guys. addressed, Most morning but ask Great. have Thanks,

area ago, hospitality I’ll thoughts book. Clay, around So content the your a thought higher the there And could hospitality I’m It quarters updated some was Clay curious, where thoughts like curious loss loss seems content put but in around on what your portfolio. what few I’m are spot. the we updated that a be

Clay Riebe

Yes. I’m thanks Matt. Thanks – for for question sorry, the question. Gary, the Yes,

portfolio. We through first about service better feel about had it I quarter just coverage upgraded X.X a the and continue the mean, credit hospitality million to better with of the we – performed since end the ratio the for debt $XX anecdotally, because pandemic.

in that tracking So that we say just of all that we’re loss to continuing portfolio that evidence portfolio the improve don’t that that’s are now one a piece of lot right of see numbers in and exist. we would anecdotal

We that hospitality have loan recall on can I no a specific today. reserves

Matt Olney

what There’s savings you on few broadly, said technology? prepared of comments there? in Clay. cost on repeat you branches. then helpful, And Terry, the the mentioned thoughts Just thoughts what reinvested what to just of just reducing Thanks your for or That’s going following there. your kind you in Okay. that? up, And kind a be Could producers are that. are

Terry Earley

all I basis run nice. mid said expense we rates, to the – certainly – of were we’re in offices it’s have – not others. closing four we continue mean, invest impact on Look, going significant. is that It’s our and technology. certainly, annual to That an service reducing to that look, in on I two

learn some They’re excited We’re with doing from things to theirs. Thrive. amazing

recruiting, so opportunity take itself, one from it continuing budget what to you And side And matter are do personnel the we’re there’s presents thing If talent is. if on going learned Malcolm we’re and right really I’ve didn’t always is to look, the advantage. the that.

just from of actually QX. biggest I’m mean, others and – I’m this quarter, that is come that a us. they’re slowed which that and looking unfunded down not definitely originations, we kind from kicked helped I little in looking for where but But for in then So deferred down driver snowmageddon of the more to expenses bit costs were

the still to going have specifically They’re they So we’re glad are first I cost saves. to anything. overall, do from not quarter. down think earmarked the trend in to where And were costs

Matt Olney

guys. Okay, perfect. Thanks

Operator

Dick Sandler. from last Mr. Piper Graham your you, Thank for sir. we have question, And

Go Your line is please. now live. ahead,

Graham Dick

Hey, guys. morning. Good

Malcolm Holland

Good morning.

Graham Dick

more loans all’s kind just forward. of going be to might SBA appetite what your I wondering sell

pretty interested to you have Just It premiums like healthy from all been this. recently. hear seems on

Malcolm Holland

for we’re really focus loan last when business now side. you sale, or single PPP been it. the whether everybody, SBA PPP SBA take But have very very, an has to and been for we every you makes an not. it in have still it year throw Terry, up the committed on analysis I sense on the loan on does Terry mean, there the and

we’ll the And us doesn’t, market If ability gives to sell. the if sell, the so market we won’t.

And few But made is focused think we’re that We’ve We’ve so area. enhance actually sometimes new a area. that it that makes on. few sense area hired we in holding. lenders that moves an on a

very a once PPP getting thing, day the and I – we yesterday, think we to And we’re So it. said really it now. through committed two are one that get or John

close. And so a it’s coming to

do area see just that And ramping so a I bit. up

Terry Earley

hard I I ever in they’re good for on them Yes. the my seen sale PPP trying as momentum picking Look, when premiums the mean, in I’ve as It’s the to is think business deal career. with gain are up. stuff. all

in we I things will market we flow given through of everything sale. strong versus do this And And I’m to coming it’s been cash business the said. and year. continue certainly we’ve so we’ll if with as And rest agree for good enough, the be. sell. of whole discounted a the premiums, Malcolm from looking And go these

Graham Dick

All last again Thrive on the right. for Great. thanks disclosure And night. then

You their bit guys that have capabilities. or able up originators. talked more And suggested little be to they might about a mortgage down traditional than technological scale to me, scale efficiently

we’d in kind normal what the versus last So more environment today a expect months. kind or over of what you would be XX wondering I’m just of efficiency like ratio seeing

Terry Earley

Thrive with Thrive or For stand-alone? the bank for

Graham Dick

Just Thrive stand-alone. for

Terry Earley

that they how the they’re technology key right that. a and in certainly point – of mortgage – pretty running approved. think efficient in Well, from to a make maybe going the is in darn company terms efficiency mid-XXs, role in They’re I play you probably the XX%

pick it’s you. our push agree efficiency pre-tax investment, up and I it helpful then overall, a It’s going ratio. to to on us, because going picking we’re just because up So down an method it basis. very meaningfully on It’s But to for be a equity fortunately, accretive basis. with we net it

up of better their in industry. It’s the most think going ratio business model. stand-alone on efficiency and I than a their basis technology because their to hold

Graham Dick

in guys. for it me. quarter. that’s Congrats Okay, the Thanks

Malcolm Holland

Graham. Thanks,

Operator

no the go line. phone There ahead you, and time questions you remarks. from proceed with presenters, Thank are closing this your further can At sir.

Malcolm Holland

Thank you.

Terry Earley

very you Thank much.

Operator

presenters, you This for for everyone concludes participating. you that Thank today’s and again thank conference.

disconnect. lovely and may now day. Stay have a You safe

Veritex (VBTX) 1 May 212021 Q1 Earnings call transcript