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VH

Veritex Holdings, Inc. (VBTX)·Q2 2025 Earnings Summary

Executive Summary

  • EPS of $0.56 rose 6% q/q and 12% y/y and beat consensus by $0.02, while “revenue” (net interest income + noninterest income) was $109.83M, slightly below consensus; NIM improved to 3.33% on lower funding costs and redeemed sub debt . EPS vs. consensus: $0.56 actual vs $0.54*; Revenue vs. consensus: $109.83M actual vs $110.59M* (6 estimates). Values retrieved from S&P Global.
  • Credit quality strengthened: NPAs fell to 0.60% of assets and net charge-offs were 0.05% annualized; ACL/LHI excluding MW was 1.28%, essentially flat q/q .
  • Deposits declined $247M q/q (noninterest-bearing down $185M; interest-bearing transaction/savings down $171M), partially offset by higher time deposits; LHI ex-MW decreased $45M q/q .
  • Corporate catalyst: definitive agreement to merge with Huntington announced July 14; expected close in Q4 2025; company canceled its Q2 earnings call due to the merger announcement .

What Went Well and What Went Wrong

  • What Went Well

    • NIM expanded to 3.33% (+2 bps q/q) on decreased funding costs for time deposits and subordinated debt (post Q1 redemption), plus positive asset mix shift .
    • Credit improved: NPAs fell to $75.2M (0.60% of assets) from $96.9M (0.77%) in Q1; net charge-offs dropped to 0.05% annualized .
    • Capital remained strong: CET1 11.05%; TBV/share up $0.35 to $22.68; continued buybacks (286K shares; $7.1M) and dividend maintained at $0.22 .

  • What Went Wrong

    • Total deposits decreased $247M q/q, driven by noninterest-bearing (-$185M) and transaction/savings (-$171M); LDR rose to 91.5% .
    • Noninterest income declined 5.5% q/q, primarily on lower government guaranteed loan income .
    • Efficiency ratio worsened to 61.15% (from 60.91%) on higher other expense, professional/regulatory fees, and marketing, despite lower payroll taxes and stock expense .

Financial Results

MetricQ2 2024Q4 2024Q1 2025Q2 2025
Net Interest Income ($USD Millions)$96.24 $96.14 $95.44 $96.34
Noninterest Income ($USD Millions)$10.58 $10.06 $14.29 $13.50
Revenue (NII + Noninterest) ($USD Millions)$106.81 $106.20 $109.73 $109.83
Net Income ($USD Millions)$27.20 $24.88 $29.07 $30.91
Diluted EPS ($USD)$0.50 $0.45 $0.53 $0.56
Net Interest Margin (%)3.29% 3.20% 3.31% 3.33%
Efficiency Ratio (%)59.11% 67.04% 60.91% 61.15%

Estimates comparison (consensus vs actual – S&P Global):

MetricConsensusActual
EPS ($USD)$0.54*$0.56
Revenue ($USD Millions)$110.59*$109.83
Values retrieved from S&P Global.

Segment (LHI) composition – Q2 2025:

SegmentBalance ($USD Millions)Mix %
Commercial & Industrial$2,692.21 30.6%
OOCRE$800.88 9.1%
NOOCRE$2,311.47 26.3%
Construction & Land$1,142.46 13.0%
1–4 Family Residential$1,086.34 12.3%
Multifamily$718.95 8.2%
Farmland$31.59 0.4%
Consumer$8.80 0.1%

KPIs and balance metrics:

KPIQ2 2024Q4 2024Q1 2025Q2 2025
Total Deposits ($USD Billions)$10.72 $10.75 $10.67 $10.42
Noninterest-bearing Deposits ($USD Billions)$2.42 $2.19 $2.32 $2.13
Certificates & Time Deposits ($USD Billions)$3.74 $2.96 $2.68 $2.79
Loans HFI ex-MW ($USD Billions)$9.21 $8.90 $8.83 $8.78
Loans-to-Deposits Ratio (%)91.8% 89.3% 88.9% 91.5%
CET1 Ratio (%)10.49% 11.09% 11.04% 11.05%
NPAs / Total Assets (%)0.65% 0.62% 0.77% 0.60%
Net Charge-offs / Avg Loans (annualized, %)0.28% 0.32% 0.17% 0.05%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per shareQ2 2025$0.22 (Q1 declared) $0.22 (Q2 declared) Maintained
ROAA targetFY 2025“Produce 2025 goals, including ROAA >1%” (CEO) Q2 ROAA 1.00% (annualized) On track
Corporate transactionClose timingN/AHuntington merger expected close Q4 2025 New timeline

Earnings Call Themes & Trends

(Note: Q2 2025 conference call was canceled due to the Huntington merger announcement) .

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
Deposit costs & NIMAvg cost total deposits 3.16% (Q4); NIM down to 3.20% . Q1 avg cost 2.91%; NIM up to 3.31% .Avg cost 2.93%; NIM 3.33% .Stabilizing with slight NIM expansion.
Credit qualityNPAs 0.62% (Q4); net charge-offs 0.32% . Q1 NPAs 0.77%; NCOs 0.17% .NPAs 0.60%; NCOs 0.05% .Improving.
CRE exposure & paydowns2024 driven by CRE paydowns; construction down y/y .LHI ex-MW decreased $44.7M q/q .Managed reduction continues.
Capital & buybacksCET1 11.09% (Q4); no buyback Q4 . Q1 CET1 11.04%; redeemed $75M sub notes; 377K shares repurchased .CET1 11.05%; 286K shares repurchased .Stable capital; ongoing buybacks.
Corporate/regulatoryN/A in prior quarters.Huntington merger announced; Q2 call canceled .New strategic direction.
Expense management / techQ4 vendor savings initiatives; operating noninterest income $14.5M; op noninterest expense $69.6M .Data processing $5.51M; marketing increased; other expense higher .Slightly higher OpEx mix.

Management Commentary

  • “We continue to strengthen our balance sheet… Key operating financial and credit performance metrics continue to improve and we remain focused on producing previously communicated 2025 goals, including a ROAA that exceeds 1%.” — C. Malcolm Holland III, Chairman & CEO (Q1 press release) .
  • Q2 highlights emphasized strong credit (NPAs 0.60%; NCOs 0.05%), stable capital (CET1 11.05%), and shareholder returns (buybacks; $0.22 dividend) .

Q&A Highlights

  • No analyst Q&A this quarter; Veritex canceled the Q2 investor call following the Huntington merger announcement .

Estimates Context

  • EPS: $0.56 actual vs $0.54* consensus; beat by $0.02.
  • Revenue: $109.83M actual vs $110.59M* consensus; slight miss.
  • Coverage: 6 estimates for both EPS and revenue in Q2. Values retrieved from S&P Global.
  • Potential estimate revisions: NIM stability and lower net charge-offs may support modest upward EPS revisions; deposit declines and lower government-guaranteed loan income q/q could temper revenue expectations .

Key Takeaways for Investors

  • Quality-led quarter: EPS beat on improved NIM and sharply lower credit costs; NPAs and NCOs declined meaningfully q/q .
  • Top-line mix: Revenue held near Q1 levels; noninterest income softened on government-guaranteed loan income; watch sustainability of swap and fee income .
  • Funding dynamics: Deposit mix shift continued (DDA down; time deposits up); LDR rose to 91.5%; monitoring deposit trends into H2 is key for margin trajectory .
  • Capital and returns: CET1 ~11.05% with ongoing buybacks and maintained dividend; tangible book per share increased to $22.68 .
  • Strategic overlay: Huntington merger (expected Q4 close) introduces integration considerations and could re-rate the stock; cancellation of the call reduces near-term transparency .
  • Near-term trading: EPS beat vs slight revenue miss suggests mixed tape; credit improvement and NIM stability are supportive; deposit declines may be a pushback .
  • Medium-term thesis: Balance sheet resilience and credit normalization position Veritex well ahead of merger close; execution on deposit franchise and cost discipline will drive pre-close performance .