Veritex Holdings, Inc.

Veritex reported net operating profit of $29 million, or $0.54 per share, and pre-tax, pre-provision earnings of $43.4 million in Q1 2025. Net interest margin increased 11 basis points to 3.31%, while net interest income was down $700,000 sequentially due to two fewer days, lower earning asset volume, and the late-2024 rate cuts. Operating non-interest income rose 2.4% to $14.8 million, and operating non-interest expense declined $2.8 million, helping the operating efficiency ratio improve to 60.4%. Loans declined $125 million in the quarter; total loans were down 1.3% sequentially and 3% year over year. Tangible book value per share was $22.33, up from $21.61 at year-end and up 13.8% year over year including dividends. Non-performing assets increased from $79 million to $97 million, past dues fell from $31 million to $11 million, and net charge-offs totaled $4 million. Management did not give quarterly EPS guidance, but said Q1 earnings were in line with internal expectations and reiterated that NIM should return to the 3.25% to 3.30% range for the remainder of 2025 absent outsized rate cuts. They also said loan growth should remain muted in 2025, with flat year-over-year loan growth implied for the full year and mid- to high-single-digit growth possible in 2026.

Malcolm Holland framed the quarter as “very good,” emphasizing a strong balance sheet, growing capital, and steady credit performance. He focused on the long-term setup from $750 million of Q1 gross production and $2.8 billion of production over the last four quarters, arguing that the pipeline should support loan growth over the next several years even though current payoffs are pressuring reported balances. His tone was confident but realistic, repeatedly noting that disciplined loan growth remains the main challenge and that uncertainty in the broader economy is still a factor.

Terry Earley highlighted a stronger balance sheet, strong liquidity, and lower wholesale funding reliance, which fell under 14% to 13.7%. He pointed to tangible book value per share of $22.33, a $0.22 quarterly dividend after a 10% increase, and the repurchase of 377,000 shares with $37 million remaining under authorization. On the risk side, he said the allowance rose to 119 basis points, or 127 basis points excluding mortgage warehouse, with 95% of the reserve in general reserves and 65% weighted to downside scenarios after shifting some weight toward the most pessimistic case. He also said total capital fell due to repayment of a $75 million sub-debt tranche and noted that a $125 million callable tranche in mid-October is being watched, with only partial paydown or a refinance both still possible.

Analysts focused on the durability of deposit gains, the path for loan growth, expense direction, and whether capital actions could include repurchasing or refinancing the $125 million sub-debt tranche. Management said deposit remixing is working, CD rates maturing over the next two quarters are currently being originated around 4.15% to 4.25% versus 4.57% on the existing book, and expenses should tick up somewhat because Veritex is still hiring commercial bankers. On loans, management said the year likely looks flat versus 2024, with back-half improvement driven by pipeline conversion and 2026 growth potentially in the mid- to high-single-digits. They also said the $125 million sub-debt decision is not final, but paying some of it off or refinancing it is under active review.