VBTX - Earnings call transcript Q2 2022

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Operator

Good day and welcome to the Veritex Holdings Second Quarter 2022 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. ahead. go Please

Susan Caudle

Thank you.

that would include presentation statements forward-looking to no slide undertakes revise publicly and Safe I on to you are started, statement presentation and time, including to At webcast, please slide any risks remind actual into beginning like you're our statements uncertainties this get logged to may obligation that our we subject statement. two. 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 over to Joining me Credit call now the today CEO; our turn Riebe, and Officer. are Chief our I’ll Chief Malcolm. Malcolm and Officer; Clay Financial Earley, Holland, our

Malcolm Holland

Good morning quarter our to call. everyone and earnings welcome second

further our and deck increased a market pro-business of profile continue and and Slide Veritex. Texas resilient producing the like we a dedicated proud promoting I'm job Before aligns and the our most the focus Texas quarter and Houston scalability. markets opportunities yet provide and growth, ongoing which We're into serve DFW incredible of as serve for strongest small core thank provides markets environment another mission. to to two I'd congratulate to a to opportunities on the our team whole exceptional specifically my four we of glimpse get to statistics started, and U.S. are our which in culture

jump into for earnings let's second the the quarter. Now,

million. share. This income million the pre-provision previous The Obviously, pretax million in pretax income a the $X.X of quarter of was in $X.XX per surge million this $X.X increase an net of growth. million. $XX or operating share despite by loan income interest $XX.X outstanding income fueled net is is we had result of a or net $XX of For increase and $X.XX lower some quarter, over non-interest interest of increase income operating per a pre-provision over

I mentioned As with the quarter came of which a momentum. this growth last This great deal quarter, got only in late loan momentum during started XQ. stronger qX

annualized. annualized loans year, $XXX $X.XX quarter the For net or XX% half billion of grew a million the XX% warehouse of and the first mortgage for

talent, pandemic. how committed teams of that noted exceptional. from been and increase move many was a versus market This storm years investment of quality growth talent reducing, experience relationships. the to relationship building. two XX% to in between surpassing economic start fashioned XXXX our this quarter and XX% was now our growth look I've for our payoffs, The growth in of of lenders and It hired our saying business. should since levels share perfect was of We in quality good looking lending our these books the of we our at growth their newly candidly, hires expectations, old as increase new are as an be and

you As can efforts see these paying off. are

market. to this that for the do the a wish categories second address see notion the what weakening into level loan headed quarter. You as of I that the can many slide describe growth is of stratifies the breakdown seven on growth

June. outperform XX% produce Texas that found The results tax sales is prior economy the up continues outstanding past has Our I've only contributions. and underwriting national increased with stringent become over continued several large equity was quarters more stress best and Texas to numbers. credit analysis metric over the The

of that months is year, are rise this billion, more XX inflation. sales tax with double our than backward not a Understand XX%, of first the the which in topped in at these the point we clients revenue time. year-over-year state's distress the fiscal looking gain $XX For but seen have metrics,

seen rates projects few paused We slow due to long a half our we that or have said, range. With chain year growth to supply rising XX% to XX% to the back in expect the costs. of

of billion, the or the XX% Our been also annualized. for or XX% of first million deposit year, growth growth has $XXX year the annualized XQ $X.X exceptional and with for half

a direction. trend quarter bps, the positive XXX seventh virtually quarter fell XX prouder environment. stand stayed now a continue non-interest have to continue quarter. high XQ and deposits our from XX% NPAs consecutive bank. our the the Our $XXX,XXX range build credit this for couldn't functions to of at down Java of be the of for Relationship bearing the consistently Managers at to in were our deposit Like metrics I rate in have support in rising growth, XXXX. total for bps even Charge-offs nil at done

ACO growth $X remained our after reserve of quarter. driven strong X.XX% Our a loan by primarily at expense million,

continue selection I'll diligent the turn call now conservative credit standards in over to new will and underwriting to opportunities. and have We Terry. our be and the

Terry Earley

Thank you, Malcolm.

was loan raise get I since anticipated our given March. in in QX. was raise for pages it's growth capital important critical the our This and to first specific full Before remember results, capital QX started that quarter

six, which makes metrics talent net earnings pandemic. capital almost a beginning of interest XX% the very the been provided we've for the equity the and a since quarter challenging. linked-quarter making with per Veritex income expenses exception, page one line in on grew investments on were guidance, previously inherently basis strong with include more share raise and return on QX common was Starting However, tangible

continued Additionally, credit to metrics improve.

largely but out about our over operating discuss leverage. the our table Revenue same period in of on X.X% have will growth operating been don't spot, in a fee was Expense XXXX more which start weaker has We there. leverage, XX%. growth weak under is I commentary. my positive Our income. control QX just let's QX. even later discussion this fees has of with since been This results XX.X% in presentation

fees in QX that returns. profile operating Those significant our are impact PPP generating are which back a growth improves $X.X strong factor you indicate results then of talent, X%. during If strong our in investments to are in out million XXXX, the leverage

The over for balances four quarter. the purchase last on the average to points mentioned X.XX%. Skipping $XX.X This million the LIBOR-based slide total from timing of value portfolio are was $XX.X growth, quarter, $X.X the seven, Tangible net mortgage certainly $XXX $XXX represents reflecting growth includes per got portfolio loans. pretax the the for raising in QX SOFR from and book increased accounted averaged raise of points the for of increased stronger strengthened and biggest XX. industry. short-term Our has dividend. back of efficient represents going Fed X.XX% on almost through given operating quarter. XX.X% yields on margin what which given warehouse increased these as pre-provision basis for grown the X% has and two XX.X% Malcolm are last common June On year, Veritex's and another on the to and QX. X.XX% interest the slide average the second on quarter return one loan the have has per company. after The adding NIM eight, operating million about July return increase tangible mortgage which growing, QX XX items and equity quarters XX.X% increase share already and $X.X the averaged month interest lag loan billion due to The but common or as down we're is QX XX% of fee progressed, owner-occupied approximately advances which QX. This the rate in last for raise mid-month. loans million was QX has impact Return Average capital by equity and million assets the growth The quarters. average NIM increased on reset page a to in portfolio over to Net four further has the XX in our in in the in rates, of income ADC in month the Fed contractual X.XX% of hikes pleased income. -- the mortgages. interest the loan XX.X% On lower was basis million. tangible by with results

modeling internal move. that indicates five for of in points NIM expansion Our we bps basis should every achieve Fed XX

the As in periods, following in net interest future keep mind. to you look model income

Veritex's basis and rate QX, down since This our significant creating First, jump interest asset average of hikes QX, assets rate significantly earning off, market expectations will additional are XXXX. so assets for points earning add the above decreased to net balance income. and sensitivity the million has risk. given $XXX positive Fed slightly in XXX ending has

on for income We sheet drove have Skipping to the $X.X earlier, mitigate decline. for quarter. one government-related Revenue falling fee intentionally income to our million during point the I related slide income Veritex sale fixed Non-interest million. said declined $XX.X as on QX. putting rates million by businesses to declined Gain to $X.X balance assets the the was rate short weak in on XX, XXXX.

fees. mortgage, USDA rate equity in Additionally, the there increases our was these investment write-down $X.X servicing via declines million Partially income assets. Thrive SBA and fees, in a on interest deposit offsetting were swap investment and

QX the was fact, In income highest in Veritex's history. swap

quarter rates was bumpy Avenue a uncertainty, closed. This to for This all USDA government XX% down Capital, funding going outstrip rising Washington, allocations. XX%. as and get which in budget North economic gain impacted was resulted centralized federal sale after QX premiums XX, interest to slide to demand loan our on decisions ability Turning by the loans compounded into approximately significantly

the Additionally, resulted of assets assets the the those noted -- valuation impairment interest previously. in I rising rate servicing

their which USDA found our a getting not it's of point to the should of additional millions new QX, The program, from closed. As forward. the fiscal relates in USDA starts that for chances has our QX of funding so loans be problem a of few XXXX, B&I hundreds year that funding government for understanding dollars it improves

also and business pricing this they will short-term given right the in on under that likely the if it and also business long-term and market range strong Veritex that to portion decision a SBA SBA on the USDA sale if choose Our the sale production. pressure, going remain means was same portfolio as It in favorable we lower impacted Veritex treatment. is a forgoing USDA were loans their make capital we're servicing for premiums to gain not revenue. by will economic premiums Note impairment. even the in Rather, of sell our gain

and one XX forward. coming expenses forecasting with business states decline could to able $X been Belt Over Arlington, which volume turbulent increase Thrive. mortgage to the of for is held margins a strong what since maintain during increased Moving aggressively their Championship, to is Thrive, in to a managing in levels, has driver of approximately on country investment our funded while tournament increase in we've Thrive due the been year staffing return The costs market. Veritex Golf on Operating QX, million forecasted great biggest Sun XX% Korn purchase has marketing in high the the month Bank gain and from successfully period. of in sale reliance period is XX% volume going X% percentage a refi. NBA associated from and of the we It's same of meaningfully a teams different made QX. loan Texas April. closed on slide parts while Ferry costs that on very XX% They're hiring volumes the versus pretax origination the been investment add the time, generated between that of a

have just the expenses. in we million far under our of year. expense operating confident remain $XXX incurred to full million million So We guidance XXXX, in in $XXX $XX for

time Banking front quarter ratio. growth deposit mortgage linked at basis the from ratios in deposits to strong a basis annualized capital quarter points expanded Total points basis points increased during outflows during Fed CET-X XX, by The business, to with and $XXX million XX.X% XX million InterLink, quarter. growth XX the total by division. our of sub-XX% basis of XXX $XX the a with $X.X forward to grew being in billion. a the deposit XX, offsetting On Community our where loan-to-deposit to rest Bank have quarter points year-over-year. Correspondent growth XX costs increasing warehouse broker Moving slide driven response on is run slide the we rates

As significant capital minimums of above regulatory the conservation buffer. quarter the excess plus end, we capital add

will earnings interest Looking strengthen the rates coupled forward loan on believe rising capital capital, ratios. that we moderating with growth higher from

transfer would risk points This back XX to assets. level lower basis add to credit that, I our are warehouse should CET-X complete. our we weighted Additionally, With a Malcolm. on over the turn risk evaluating mortgage call when it's portfolio approximately to to like transaction

Malcolm Holland

on Terry. you, we by upgrade an We momentum and and quarter on scale. exciting our had focus created and have the talent Thank very focused positive

As on focus been has hiring top talent. I've our always mentioned many times, quality

XX we are For hired the the production which new of employees, quarter, side. on XX

producers of talent have full many teams Development of but that we slow with our for investment program. bit our potential hiring at undergoing now in the Veritex continue. bankers Our capacity, new will We've a added Banker pipeline Veritex will a our first-class overall of

development talent. of We internal are have that five on participants, a that part one-year and XX external future building XX program focuses

its year. in students have XX Veritex our college now also Summer We Program, is Intern in fourth which

and detailed full work as very future company. this the come. quick to talent and communicated. of continues to update expectation with well. we future continue We transaction, are of XQ continues InterLink for dialogue leaders benefit regulators the be will with bright to our banking our years us know and perform to for of on to closing have developing committed previously pipeline the A The InterLink a grow

the strongly to value. continued hand the right we firm the and building that, like and open team we up I'd a feel have have to right markets for We continue line questions. any on With that

Operator

And Rabatin Group. from first Hovde our from [Operator is Instructions] question Brett

Your line is open. now

Unidentified Analyst

and maybe about expense shooting government that. is actually think slowing we question off there stepping sort the reminder, this a that in read should A just forward? the Thanks, balance side any on that for Is of Taylor Brett, on through guaranteed going

Malcolm Holland

to business. just with investing in temporary going and anything, mean, the usual We this temporary us. now in If this and can I blip from We government, for No, we're pipelines is right and continue thing. a it's hire And with are our as strongly are talent that and that we're business full business. to building committed funding -- up D.C. and business we rates more.

building it weak, best balance purposes. if the and you -- the to stay look, so sheet us these the XX% So, are we're going waiting long-term for hold, keep economic Danielsville to economic risk got capital that And business use we're -- if going decision to much the margins hold to for assets, have doesn't given great to because is going capital.

Unidentified Analyst

marketing you benefit balance else from that. on would the attribute specific it from Also would that Great. the missed Thanks. both up? -- that expense, maybe of be that, I What sides anything the sheet ramping or

Malcolm Holland

marketing way nice a continue we'll market have to We market. budget, we the

spent We tours in despite have some now. do heavily golf to and industry that, the the of in changes right continue the

Unidentified Analyst

of specific? the just easing hires but that's you've that been as Very And Okay. anything good. -- mentioned sort or that any know general I earlier, you focus you're producers specialty been? obviously

Malcolm Holland

of our a commercial areas we we've exception folks the the with continue I across the I to with No, full areas very in of we hires few -- there have. build. somewhat we really mean, The yes, been kind team got a very, board momentum Houston of just mean, positive. to have in. is good But And we we down starting the invest feel -- recent

in we -- So, place that again, real positive. grab us, I still the for hiring, have XX, think so reiterate a always that's we're I just lot hiring. a new some open be But that share we the and on is and a of market we'll business positions, but good have

Unidentified Analyst

Okay. the Appreciate for Thank commentary. you it.

Operator

Brady from Gailey the next line KBW. And question with comes of your

open. Your is line

Brady Gailey

Good morning, guys. thanks. Hey,

Malcolm Holland

Brady. Hey

Terry Earley

Good Brady. morning

Brady Gailey

something? Is is related sign that about more of Or coming interest to the in up market So, sale rising to the you how just that that rates? Do back? is of times? forecast? on is the business? second What's to expect you that it Or premium for forecast bounce gain the think gain to kind it's hard on and quarter, the that a in on premiums the just sale

Malcolm Holland

Well, buyers economic making in their rates even the rising think that's lot is and aggressive I protection I of investors think uncertainty. a the and make bidding. And with mean, paper prepaid less space, it's USDA that by in strong it driven I in

contributing I it. think that that's And so what's to

once just that's start to greater when going the think it down, economic certainty or on I and I be? Fed be rates the are for there's key et and funds what short-term think rate I going timing Now, think rate to deep, you curve strengthen. of How we terminal moving moving recession? -- how is a know, to short, the the to is have going premiums cetera, is

the that them will XXXX. of through expect So, I balance get my view as premiums probably to strengthening remain year. into is weak the general start we

the So, side. on premium that's

to that decision because stay versus be way cash at the economic for cetera. Veritex. And just of if value et linked sell period, the -- of right the close our for we October we're just hold your and the side, to methodology on up, year, just happens, loans. present good long-term way heading its interest be The expect up that cost funding, going are so we're of gets have fiscal a and expect just closing hold that we looking to I growth, back net is we On and margin, year I for going the it the I question it think and hold now short, so it. end the that's sell has volume into it USDA to really a of capital. we we'll lined may it which discounting a breakeven flow is, to going are all when time got We're getting half implications of the too it's And portfolio, at strong in sell but the new funding really X, starting funding

Brady Gailey

just sense. Or was of quarter, I million. you there. great expectations, But closer do fees Do $X could think $X million -- XQ expect under million little mean mean, it I back better? the is rate for half kind for makes you year? that should what such $X XQ we was of the of XQ Yes, a to think be the

Terry Earley

it's I think be better, I I -- don't will will -- that would weakest. think little be a to not think I the think expect QX but I it back

I will Brady. think QX production right think great. think for true But does only be Hard to well, when on we is don't better. business will QX sell get I get to mean, But to our this hurdles it's going sale to I the back I levels? gain it the SBA premium. half now, know, meets at our look roughly

me, pretty on would the better hires it's quarter quarter the QX. the of we in best to So, But in swaps, offset be than what's rate had made pipeline that's there. and beginning at of going -- I what's we to Trust that. QX, I that that, conservative the of because -- we big terms feel thing can a be the strategic interest best in and ever going see even in

I some more going I and go have guaranteed interest quarter than fee rate gain is there's in stay especially we're QX on income to overly better getting then swaps think in optimistic I side the the because think QX. through on the improve but government QX in weak wouldn't mean, business crazy, sell the to offsets, So, I going -- that overall

Brady Gailey

going Then be makes to growth slowing me growth That is It's here. great growth for and right. slowing. sense. All your still finally is

Your the benefit rates. enjoying higher profitability is from

CRT about from warehouse little deal. the to to mortgage Sounds a like boost capital you're get

those earnings, buyback all this do times stocks thinking so the the about in at reengaging you So, at dynamics? start given point eight

Terry Earley

growth company But candidly, just in right in earnings focused. the invest investors the any that's I wouldn't And us have of future and -- No, the and not I we're no, buybacks. would rather it's where not model time.

Malcolm Holland

been definitely yes, strong would have an such where And answer not now. saying historically, attractive would that's we different, a It's The we but valuation. been before find ourselves profile. have had growth

capital up. even deploy need that generation CET-X And moving that so to back I our all down you -- X.XX%, went we'll saw

pretty neutral to I and able I needed to And to capital, that we're hire. build growth profile the so but about, with talking it's be

Terry Earley

And year-over-year. CET-X XX is bps. up year-over-year, is up It

Brady Gailey

Okay. color All right, great. Thanks guys. for the

Malcolm Holland

Brady. you, Thank

Operator

line And Inc. next Matt question with Stephens of Olney comes the your from

is open. line Your

Matt Olney

Hey thanks. Good morning, everybody.

Malcolm Holland

Hey.

Terry Earley

Matt. Hey

Matt Olney

at it the FHLB, growth InterLink quarter. So, in the like on took more XQ, loan in the core to some also I pipeline have the half third year, funding, remains you back would strong hear little Good a the growth sounds growth. plan guess deposit point closing the about you love for deal

all a kind wrote to would thoughts the back of you funding year? hear on Thanks. just growth just of So, together, half love the

Malcolm Holland

that's great a Yes, question.

participate closed pretty it with acquirer participating, have We downstream bank and the second the the their it's doing InterLink a from The us quarter. as to going started as before perspective. started even just in that had to and we compelling broker-dealers we ahead have and optics

So that's what did. we

would I we, $X.X in been expect So, that billion thought InterLink with to we'd probably we saying we've along XXXX. all fund up

over Treasury. deposit good we're expect contributor. to continues to on achieve continues opportunities there, good rate, seeing, let deposits, where space strong deposit things you those we're see us type a really the be to know, our got results community side, I emphasis a on ECR warehouse that the escrow our so big for mortgage our I in bank think great And the then to and produce also able spreads business that

different is it's a combination the going say growth So, to half. see, that I that I'm All pretty it, fund Matt, much back more we challenging of are with because it be growth not the those the I can have quarter. industry to all going -- glad be think and things, closing, would that the close I'm and to in InterLink without much,

Terry Earley

for on our from see plans some and the payoff incentive we're deposit to that. bankers side We starting redid our

community side, bank we've the expect continue that since that will into incentives move deposit focus on so some. had growth we but we'll And quarter plan unbelievable an up changed also side to that the corporate and on here the

Malcolm Holland

beginning of that We the year. changed

Terry Earley

Yes.

Malcolm Holland

going was knew get-- to funding that Just we never

Terry Earley

Right.

value deposits. Just the of greater on much emphasis

Matt Olney

deposit timing mentioned, in be good. Agree that color of Terry? on this growth participations some from on of should the Any much you were the how those XQ Yes. of

Terry Earley

all four across the it's mean, I -- Banking growth what's Correspondent you and pretty industry, and loan pulling pretty one Banking Correspondent our because out drivers, growth the the of are the of division sporadic. with the significant and can intentionally, downside see they being Fed across happening I liquidity with mentioned division, system.

we've that. steady a in it decline funds. first seen was in So, And pretty the earlier quarter, public

Matt, InterLink, significant So, they're contributors $XXX the million. big the was and Probably but quarter's this largest significant all time to rest awfully are awfully, contributors.

Matt Olney

Okay, discussion be that's should the year to future InterLink, same and a InterLink? helpful. how but much taking step do just I of in back, not thereafter, just funded expect kind we by guess growth the XQ, of loan the the how about but you with much how next the growth think of

Terry Earley

high Treasury the that operate credit Houston, through the cetera, I half, It's initiatives, deposit a range. DFW Bank, initiatives strong in -- InterLink. the these If Community never in our double-digits, the can and can growth opportunities. two a opportunities gap something is low just outstrip something funding up through would the banking et I the and to answer. to in think funding because we that probably we're sole third markets, fund come loan we but that say we a far InterLink then rest and difference in with make single, loans mid-teens, like growing we

Matt Olney

In the growth characterize pricing compare the would just DFW deposit you good how How other had quarter. lastly, other markets? some also bank's the this some words, Bank peers mentioned within you the of the to really it does within and Okay. Houston Community metro And deposit market?

Malcolm Holland

market with now. it's right line pretty It's in say would I well. the

for going I've it the early have in that of years, few and pricing a a Will My pre-pandemic, a I just QX? it like think it be career, most the sure. exactly return. is which and deposit level I will be me time geography next many incredibly view back few was my and covers of seen got combat felt year? irrational competitors. lot hand-to-hand now I'm think you Will long that called But that competition competitive. years I market you've personal say it's he too heard past I not DFW

So, Pretty current to right I think intense, be hasn't rational time. it's at that but the itself yet. pretty manifested now, going

Matt Olney

Thanks guys. Okay.

Malcolm Holland

Thanks Matt.

Operator

And your with proceed line next from your Milsaps question of the Brad Piper comes from question. Sandler. Please

Malcolm Holland

Brad?

Operator

to we'll sorry, the has question. I'm he Brad, next disconnected. go Well,

Raymond Your next Rose from from is James. Michael question

Your now open. is line

Michael Rose

Thanks my Hey, questions. good morning, guys. for taking

follow-up Just on the-- to

Malcolm Holland

morning. Good

Michael Rose

Good morning.

Just to follow-up the of InterLink obviously, pieces, funding with deposit there's a about. as on core question understand quarter good talked moving this and growth you lot

you're sounded question, is in point? might response It next growth -- guys you to -- Matt's for mid-teens of kind I to that loan-to-deposit of at this acceptable. getting to rate you'd still what somewhere think ratio a be down had Thanks. if like outlook? talked thinking And said mid I about year, that low kind a still then remember mid-XXs the I correctly, Is think we're what

Malcolm Holland

meet things look mid-teens much. here the we has can projects already to they've of those the earlier, economy very part, not still pulled off we that are for the Yes, most along no, off. There numbers. is maybe of confident that commitments, so XX, it's I or lot But you at table embedded slowed something lines. down crazy. put kind unfunded said few Like those call have but next a we're feel A a our at looking been few what XX year, is it if

apologize. first I exactly Michael. you forgot on were asking the InterLink, The what question I

Michael Rose

of targeted the around loan-to-deposit ratio. Just kind

Malcolm Holland

yes. Yes,

Michael Rose

kind mid-XXs to about talked low of you think being-- I is

Malcolm Holland

Correct.

Michael Rose

A guide--

Malcolm Holland

is in to our get Yes, the it goal mid-XXs totally

Terry Earley

Absent warehouse.

Malcolm Holland

yes, warehouse, answer absolutely the we you absent think and Yes, correctly. that is it's sheet just stout really balance remember a so

Terry Earley

going profile with CET-X -- cetera. that earnings their et tag Malcolm's range allow just growth earnings capital gave with you to Want on accrete to the us comment XXXX into coupled will he

for loan of good pretty that growth, a that earnings that that's profile, And of capital type that of type place so that's so. that's Veritex good a a is growth, -- CET-X type

Michael Rose

that And the be an as what's you appreciate in updated on the InterLink a to follow-up. beta deposits and rate the obviously us quarters? give increase, the the deck, beta found couple going next your it. sensitivity just can just maybe grow, assumptions out would Got update Thanks. then but I you is over

Terry Earley

company For InterLink? for the or whole

Michael Rose

Yes, the whole company. for

Terry Earley

cumulative, year, beta get the now we the what quarters That's we through first mid-XXs. of believe, right and in that's we For believe -- next into cumulative in the low we a factoring as to deposit starting this the InterLink. next end and few see year

think if what what we're cumulative the NIM And in a we and the the us I month. given on said, our we accrual we've seen was confidence. we've bp expansion, can in range, of gives And first the the that floors see. June why in rates our that's contractual side, loan So, increase got Fed NIM on done, loan half book that's the as our already beta in XX off in the already has X.XX

you rate pretty the interest on good. feeling we're So, And sensitivity, absolute just table that see dollar. the growth in in the

good positive So, leverage pretty forward. operating and going encouraging a

Michael Rose

hiring you're down to I Very, very little into slow, Malcolm, to are bit up just point. finally, opportunistic, here, I'm the XXXX, staffed going have teams don't because be expense to helpful. because maybe trying a trends not to me, And you're know are your going we pin It continue then gone and positive sounds at you think, at moving relatively guess, to step but the less some I hire said pretty you get just Is Thanks. you of maybe kind I that big this up, -- we costs like for see going could operating one ratio the NII would the as the who plausible the as year Terry. you efficiency leverage? think next about like seem assets and movement in that get that decelerate full a expense point. just mentioned about, this really pretty given strong to you trends guys it think down earning really are growth teams could leverage, talked you

Terry Earley

really when sitting XX.X% what's at mean see with close can you your fair ratio on. you're here think four about you out we generating that six out say meaningful do I is our I the as you mean other XXXX, the thing about PPP a but as it's in rising quarters to even amount next efficiency over five. going XX%, to growth. the whole what close long I get don't to the effect I fees I'll the generate improvement is, rates, effect Yes, think still back And a expect growth? -- expense growth, to don't year-over-year, I operating of of leverage revenue expense can if And backing asked lot in

talking going up, So, in fee the operating incredibly but expenses about for -- weak us. an and revenue driving quarter are income I'm leverage we're

working. I is think can but the model efficiency move into So, I think we year do significant improvements XXXX. you through And -- of in see as heading the this balance

Malcolm Holland

or I it all, inflation, to full. all we're some I somebody deal just million about and be We that. yesterday, million, to go flat, now. think in tap. think I said, are on I to give a keep have to like wage We But we're teams to a expense obviously, around. in a of be Google give industry, that we will there's with $XXX at going things any huge fairly inflation. our opportunistic, think don't everybody No, quite ahead When some say going be I wage the deal to I Candidly, have asked right us there's areas. our have I was especially of $XXX you raises year you're guidance. to chance couple get different XXXX. we're going going to diversity mean saw them going going to with to play are

some start looks happening. expense. good go our efficiency at live there's So, ratio be may way there's you of well, all investments, I Treasury but good. may so just when the revenue look forward side. XXXX a about see Because see By it's out And beat pretty growth expenses to that I I going gift right, and increase historically candidly, our you and be deposit that Terry we feel is can no some types start year, is quarter, pretty you pretty And that I some kind those and But we looking good. but imagination, stuff a things and giving next technology It'll things. last XX/XX rate it's of any costs, may that stretch some drive thing. on this the keeps that's the deal, the really of growth, horse, some feel but not the dead to in hate mean, good.

Terry Earley

expense just the to the mind keep in have come will side. on tagging I'm in. do we And Mike, InterLink costs

-- that-- but So, just saying that's that not get huge. I'm Don't wrong. that me

Malcolm Holland

out-strip the on Revenue InterLink that too should side.

Terry Earley

Yes.

For sure.

Michael Rose

Thank guys. appreciate all color, I you. the

Malcolm Holland

Mike. Thanks

Operator

Piper line from question Brad next Sandler. your with of And Milsaps comes the

now line open, Your Brad. is

Brad Milsaps

morning, Hey, guys. good

Malcolm Holland

to back. Good morning. Glad you have

Brad Milsaps

happened dropped Yes, something. Call what don't I there. know or

Malcolm Holland

-- wasn't you we It put back. didn't

Brad Milsaps

I [indiscernible], don't know.

if missed let the sheet growth. is of chart then that's further rate scale about rate I increases, to I assumptions the leave that million $XXX interest but sure apologize that I how of million is? I of reflect make added a up imply need when the guys would that The base think No kind growth. balance net you XX, just increases, think no slide And $XXX it's if I you on if which the what just really not just do just that kind there, some case those over good. understand move see. nothing, you there. want this where numbers? as -- I I of dropped. Let's quarter, it But Is would -- run necessarily we of to further income,

Terry Earley

Yes, Absolutely but to opposed a ramp. assuming of shock. as

bis $X million, bp about interest was, well, every and roughly that's net about the XX about versus million, So -- what is But sorry, that I'm look, in June think you -- $XX higher million. -- did what $XX income. thinking no, did we it doing margin's we in you're when

-- million So, static million sheet our a is just run and rate not and balance it's is annualized. XX $XX not $XX on

So, don't on just it's significantly $X.XX another the if million right million, will. $X misunderstand. you it's But off, -- jump

getting over getting $XXX quarterly income net So, pretty think -- in is doable yes interest pretty, million million to fast. I $XXX pretty --

that about think you growth-- So,

Brad Milsaps

Yes, right.

You right. top of got that, on growth

Malcolm Holland

some which growth that, in we've of already growth on got seen XQ. You top

Brad Milsaps

chart that And Sure. to as on assumption page cumulative beta XX% XX%, XX, of would well? your that kind include

Terry Earley

Yes. Absolutely.

Brad Milsaps

and of on Do makes follow-up, going Obviously, points. rate it it of make Okay. And forward? that obviously, it? around the time, over kind like other XX provision, other down of that for thinking then -- reserve sort new basis that factors. is would you're are upon sense adjustments offs, growth, about of think as continue the you on a looked But guys just a obviously bring kind the provisioning maybe can to depending charge way you

Terry Earley

it now. staying the where flat I'm about is reserves thinking pretty from

heading we're think a-- into I

Malcolm Holland

wise-- Percentage

Terry Earley

in Texas, about recession that of, and Percentage the as forward in And uncertainty feels to to wise, or I good is from much knowing there's Moody's. come as recession, so the in I'm yes, me. either somewhere be to range look to think that XXX, GDP I even in camp believe though economic you is forecast a going don't the because U.S.

think but have to cognizant we're for I do to provide -- think going to to So, have be so to I deteriorating forecast a of and continue we that degree.

XXX level of the So, provide that, range. the perfect. a reserve our keep can -- to is If bit best be goal to do that's so that our give kind little in more need object what we advice to is I

Brad Milsaps

appreciate really I it. guys. you Thank Perfect.

Malcolm Holland

you, Brad. Thank

Operator

of to Gary last question line comes D.A. your from Davidson. Tenner And the

is now open. Your line

Gary Tenner

Thanks. Good morning.

Malcolm Holland

Hey Gary.

Gary Tenner

come fairly the loan real categories of the the of I'd the ask talked about commercial up quarter, shift construction? single fund beyond growth the you assume of of from just percentage about a to want you this in big main want ask estate in about growth of family, continues were kind drivers year, growth, a I But pace unfunded to any might half which think commitments. construction where given to mix but what and thinking from steady the -- between kind of back basis, at

Malcolm Holland

are insurance three they're quite couple diversified. in full. more is our solid them. up. under There's going getting pipelines Their represented haven't in are a team teams really big we're of that at deals The industries looked some that deal relationship. a legs Dallas some ramping or of sea the are Houston quite mean, commercial to already There's them. close coming. We've with closed I The Yes, for that space just

of driver to So, think side I the really really be I for the it. look commercial

already payoffs, I what You're in their pipelines, but booked how can as I absolutely other the we for and we're like payoff the of -- space pretty in and the are mean, big for serial year those but embedded banks that. it look we one half I look to seen forecast. we're doing level -- know granularity don't back accurate, deals -- of are on also a ADC forecast and forecasters I've we never relates fundings so

we've slowing. stress at meet And part commercial I not I up underwriting and in But of And underwriting. couple slow mean, points. mid-Xs. every we're them looking every analysis running real our it so is we're happen and think I going rates running mid-Xs, space some now whether or were mean on it's we granularity moved we and of is happen. the a estate in week to deal is going to

those at And some as don't pencil rate. out deals nicely so

And look my So, back these hires share that's this move the commercial a kind opinion market new to be half. active, we've the of a you candidly made. for forced I that slowdown, but space again, if pretty in will, is from

Terry Earley

to expect using to protection family resi on close key four real We don't would the one that's to of one I estate, downright and -- much. been drivers getting X%. as tag do their

that looking some to a see better. estate, I expect got agree that And out fundings, we slow there. you're but there. So, real get think pricing Malcolm with good stabilized slow. starting opportunities bit ADC Term to on really little I there's

there see just really of residential year. active we the point -- but I us to you half be as the make yes, -- first won't have as about real the is estate the buying wanted been stuff So,

Gary Tenner

these the of really starting to I appreciate that okay. just so clear, kind okay, is projects convert that. of see about construction that's payoffs, line, forecasting talking -- Okay, that and And to you in were some be Malcolm come to fruition

Malcolm Holland

Yes.

Gary Tenner

kind Okay. And side, do XX of, on the rates a you deposits? the have interest on or on [indiscernible] June deposit total bearing Terry, spot

Terry Earley

the just would total? I interest talked somewhere or definitely like They bearing about in

Gary Tenner

total--. Either, interest,

Terry Earley

the be Interest XXs. going in bearing is to

Gary Tenner

XX? June At

Terry Earley

-- that June date. at At

Gary Tenner

and question, an maybe one elementary just share question. then Okay, last perfect. And

higher. the on usually think So, I more apologize, assets the rates allowance becoming asset, as servicing servicing valuable but moving of valuation

I something that? there? am the missing So, around thought What's

Terry Earley

rates par, the in as at up, space, US, from you're question the go get rates and right good SBA absolutely meaning had Ester a in back Well, servicing value up, one. all go given default as you loan longer the better. way. in the space, not the mortgage government goes streams premium extend to rate, your is you assets pay. USDA and Indian virtually and standpoint that’s floating the up, pay an the by going risk same the flow Well, us Unfortunately, I cash that at

borrowers bank the So, and of jump live out typical risk refi well, who banks look and businesses will lending to that because from goes to and have that whose up the as space and are shortened quicker grow into and have mature space. continued seize,

so think servicing down. valuation shorter to of contributes what the those both And lives I and that's drives

Gary Tenner

-- rate the third Great. curve you forward as is allowance another of in more I moves, quarter, can sort in And would well embedded that the allowance? or valuation expect

Terry Earley

off it we'll the the My -- of -- curve forward given difficulty] the has [technical see at how it to up on where late, what the -- month have September. volatile understanding of end but been we'll ends how see as

So, but expecting but see. I'm not we'll it,

Gary Tenner

Okay, great. Thanks guys.

Terry Earley

Gary. All right. Thanks

Operator

And have queue. we the don't on any questions other

participating. for you Thank call. conference today's concludes this So,

You now may disconnect.

Veritex (VBTX) 27 Jul 222022 Q2 Earnings call transcript