FORM |
(Exact name of registrant as specified in its charter) |
(State or other jurisdiction of | (I.R.S. employer | ||
incorporation or organization) | identification no.) | ||
(Address of principal executive offices) | (Zip code) |
(Registrant’s telephone number, including area code) |
Title of each class | Trading Symbol | Name of each exchange on which registered | ||
☒ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☐ | Smaller reporting company | |||
Emerging growth company | |||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ |
Page | ||
June 30, | December 31, | |||||||
2019 | 2018 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Cash and due from banks | $ | $ | ||||||
Interest bearing deposits in other banks | ||||||||
Total cash and cash equivalents | ||||||||
Securities available-for-sale, at fair value | ||||||||
Securities held-to-maturity (fair value of $34,551 at June 30, 2019) | ||||||||
Trust preferred securities | ||||||||
Federal Reserve Bank stock | ||||||||
Federal Home Loan Bank of Dallas stock | ||||||||
Other investments | ||||||||
Total investments | ||||||||
Loans held for sale | ||||||||
Loans held for investment, mortgage warehouse | ||||||||
Loans held for investment | ||||||||
Less: Allowance for loan losses | ( | ) | ( | ) | ||||
Loans held for investment, net | ||||||||
Bank-owned life insurance | ||||||||
Bank premises, furniture and equipment, net | ||||||||
Other real estate owned | ||||||||
Intangible assets, net of accumulated amortization of $13,121 and $7,528, at June 30, 2019 and December 31, 2018 | ||||||||
Goodwill | ||||||||
Other assets | ||||||||
Total assets | $ | $ | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Deposits: | ||||||||
Noninterest-bearing deposits | $ | $ | ||||||
Interest-bearing transaction and savings deposits | ||||||||
Certificates and other time deposits | ||||||||
Total deposits | ||||||||
Accounts payable and accrued expenses | ||||||||
Accrued interest payable | ||||||||
Advances from Federal Home Loan Bank | ||||||||
Subordinated debentures and subordinated notes | ||||||||
Securities sold under agreements to repurchase | ||||||||
Total liabilities | ||||||||
Commitments and contingencies (Note 16) | ||||||||
Stockholders’ equity: | ||||||||
Common stock, $0.01 par value; 75,000,000 shares authorized; 54,639,348 and 24,263,894 shares issued at June 30, 2019 and December 31, 2018, respectively; 53,457,486 and 24,253,894 shares outstanding at June 30, 2019 and December 31, 2018, respectively | ||||||||
Additional paid-in capital | ||||||||
Retained earnings | ||||||||
Accumulated other comprehensive income (loss) | ( | ) | ||||||
Treasury stock, 1,181,862 and 10,000 shares at cost at June 30, 2019 and December 31, 2018, respectively | ( | ) | ( | ) | ||||
Total stockholders’ equity | ||||||||
Total liabilities and stockholders’ equity | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Interest and dividend income: | ||||||||||||||||
Loans, including fees | $ | $ | $ | $ | ||||||||||||
Securities | ||||||||||||||||
Deposits in financial institutions and Fed Funds sold | ||||||||||||||||
Other investments | ||||||||||||||||
Total interest and dividend income | ||||||||||||||||
Interest expense: | ||||||||||||||||
Transaction and savings deposits | ||||||||||||||||
Certificates and other time deposits | ||||||||||||||||
Advances from FHLB | ||||||||||||||||
Subordinated debentures and subordinated notes | ||||||||||||||||
Total interest expense | ||||||||||||||||
Net interest income | ||||||||||||||||
Provision for loan losses | ||||||||||||||||
Net interest income after provision for loan losses | ||||||||||||||||
Noninterest income: | ||||||||||||||||
Service charges and fees on deposit accounts | ||||||||||||||||
Loan fees | ||||||||||||||||
(Loss) gain on sales of investment securities | ( | ) | ( | ) | ||||||||||||
Net gain on sales of loans and other assets owned | ||||||||||||||||
Rental income | ||||||||||||||||
Other | ( | ) | ||||||||||||||
Total noninterest income | ||||||||||||||||
Noninterest expense: | ||||||||||||||||
Salaries and employee benefits | ||||||||||||||||
Occupancy and equipment | ||||||||||||||||
Professional and regulatory fees | ||||||||||||||||
Data processing and software expense | ||||||||||||||||
Marketing | ||||||||||||||||
Amortization of intangibles | ||||||||||||||||
Telephone and communications | ||||||||||||||||
Merger and acquisition expense | ||||||||||||||||
Other | ||||||||||||||||
Total noninterest expense | ||||||||||||||||
Net income from operations | ||||||||||||||||
Income tax expense | ||||||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||
Basic earnings per share | $ | $ | $ | $ | ||||||||||||
Diluted earnings per share | $ | $ | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||
Other comprehensive income (loss): | ||||||||||||||||
Net unrealized gains (losses) on securities available for sale: | ||||||||||||||||
Change in net unrealized gains (losses) on securities available for sale during the period, net | ( | ) | ( | ) | ||||||||||||
Reclassification adjustment for net losses (gains) included in net income | ( | ) | ( | ) | ||||||||||||
Net unrealized gains (losses) on securities available for sale | ( | ) | ( | ) | ||||||||||||
Net unrealized gains on derivative instruments designated as cash flow hedges | ||||||||||||||||
Other comprehensive income (loss), before tax | ( | ) | ( | ) | ||||||||||||
Income tax expense (benefit) | ( | ) | ( | ) | ||||||||||||
Other comprehensive income (loss), net of tax | ( | ) | ( | ) | ||||||||||||
Comprehensive income | $ | $ | $ | $ |
Three Months Ended June 30, 2019 | ||||||||||||||||||||||||||||||
Common Stock | Treasury Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income | Total | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||
Balance at March 31, 2019 | $ | $ | ( | ) | $ | $ | $ | $ | ||||||||||||||||||||||
Restricted stock units vested, net of 866 shares for taxes | — | — | — | ( | ) | — | — | ( | ) | |||||||||||||||||||||
Exercise of employee stock options, net of 3,763 shares for taxes | — | — | — | — | ||||||||||||||||||||||||||
Stock buyback | ( | ) | ( | ) | ( | ) | — | — | — | ( | ) | |||||||||||||||||||
Stock based compensation | — | — | — | — | — | — | ||||||||||||||||||||||||
Reclassification of liability-classified awards to equity awards | — | — | — | — | — | — | ||||||||||||||||||||||||
Net income | — | — | — | — | — | — | ||||||||||||||||||||||||
Dividends paid | — | — | — | — | — | ( | ) | — | ( | ) | ||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | ||||||||||||||||||||||||
Balance at June 30, 2019 | $ | $ | ( | ) | $ | $ | $ | $ |
Three Months Ended June 30, 2018 | ||||||||||||||||||||||||||||||||||
Common Stock | Treasury Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Unallocated Employee Stock Ownership Plan Shares | |||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Total | ||||||||||||||||||||||||||||||
Balance at March 31, 2018 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||
Restricted stock units vested, net of 3,859 shares withheld to cover tax withholdings | — | — | ( | ) | — | — | — | ( | ) | |||||||||||||||||||||||||
Exercise of employee stock options | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Stock based compensation | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Other comprehensive (loss) | — | — | — | — | — | — | ( | ) | — | ( | ) | |||||||||||||||||||||||
Balance at June 30, 2018 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ( | ) | $ |
Six Months Ended June 30, 2019 | ||||||||||||||||||||||||||||||
Common Stock | Treasury Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive (Loss) Income | ||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Total | ||||||||||||||||||||||||||
Balance at December 31, 2018 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||
Issuance of common shares in connection with the acquisition of Green Bancorp, Inc. ("Green"), net of offering costs of $788 | — | — | — | — | ||||||||||||||||||||||||||
Issuance of common stock in connection with the acquisition of Green for vested restricted stock units, net of 25,872 shares for taxes | — | — | — | — | ||||||||||||||||||||||||||
Restricted stock units vested, net of 53,586 shares for taxes | — | — | ( | ) | — | — | ( | ) | ||||||||||||||||||||||
Exercise of employee stock options, net of 13,709 shares for taxes | — | — | — | — | ||||||||||||||||||||||||||
Stock buyback | ( | ) | ( | ) | ( | ) | — | — | — | ( | ) | |||||||||||||||||||
Stock based compensation | — | — | — | — | — | — | ||||||||||||||||||||||||
Reclassification of liability-classified awards to equity awards | — | — | — | — | — | — | ||||||||||||||||||||||||
Net income | — | — | — | — | — | — | ||||||||||||||||||||||||
Dividends paid | — | — | — | — | — | ( | ) | — | ( | ) | ||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | ||||||||||||||||||||||||
Balance at June 30, 2019 | $ | $ | ( | ) | $ | $ | $ | $ |
Six Months Ended June 30, 2018 | ||||||||||||||||||||||||||||||||||
Common Stock | Treasury Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Unallocated Employee Stock Ownership Plan Shares | |||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Total | ||||||||||||||||||||||||||||||
Balance at December 31, 2017 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||
Restricted stock units vested, net of 13,599 shares withheld to cover tax withholdings | — | — | ( | ) | — | — | — | ( | ) | |||||||||||||||||||||||||
Exercise of employee stock options, net of 4,391 shares for cashless exercise and net of 1,691 shares for taxes | — | — | — | ( | ) | — | — | — | ( | ) | ||||||||||||||||||||||||
Stock based compensation | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | — | ( | ) | — | ( | ) | |||||||||||||||||||||||
Balance at June 30, 2018 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ( | ) | $ |
For the Six Months Ended June 30, | ||||||||
2019 | 2018 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | $ | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | ||||||||
Net accretion of time deposit and debt premium | ( | ) | ||||||
Provision for loan losses | ||||||||
Accretion of loan purchase discount | ( | ) | ( | ) | ||||
Stock-based compensation expense | ||||||||
Compensation expense - liability-classified awards | ||||||||
Excess tax benefit from stock compensation | ( | ) | ( | ) | ||||
Net amortization of premiums on investment securities | ||||||||
Change in cash surrender value of bank-owned life insurance | ( | ) | ( | ) | ||||
Net loss (gain) on sales of investment securities | ( | ) | ||||||
Change in fair value of held for sale Small Business Administration ("SBA") loans using fair value option | ( | ) | ||||||
Gain on sales of loans held for sale | ( | ) | ( | ) | ||||
Gain on sales of SBA loans | ( | ) | ( | ) | ||||
Net originations of loans held for sale | ( | ) | ( | ) | ||||
Proceeds from sales of loans held for sale | ||||||||
Write down on other real estate owned | ||||||||
Net loss (gain) on sale of branches | ( | ) | ||||||
Change in fair value of other investments | ||||||||
(Increase) decrease in accrued interest receivable and other assets | ( | ) | ||||||
Decrease in accounts payable, accrued expenses and accrued interest payable | ( | ) | ( | ) | ||||
Net cash provided by operating activities | ||||||||
Cash flows from investing activities: | ||||||||
Cash received in excess of cash paid for the acquisition of Green | ||||||||
Cash settlement for sale of held for sale branches | ( | ) | ||||||
Purchases of securities available for sale | ( | ) | ( | ) | ||||
Sales of securities available for sale | ||||||||
Proceeds from maturities, calls and pay downs of investment securities | ||||||||
Purchases of securities held to maturity | ( | ) | ||||||
Maturity, calls and paydowns of securities held to maturity | ||||||||
Purchases of non-marketable equity securities, net | ( | ) | ( | ) | ||||
Net loans originated | ( | ) | ( | ) | ||||
Proceeds from sale of SBA loans | ||||||||
Net additions to bank premises and equipment | ( | ) | ( | ) | ||||
Proceeds from sales of other real estate owned | ||||||||
Net cash used in investing activities | ( | ) | ( | ) | ||||
Cash flows from financing activities: | ||||||||
Net change in deposits | ||||||||
Net change in advances from Federal Home Loan Bank | ||||||||
Net change in other borrowings | ( | ) | ||||||
Net change in securities sold under agreement to repurchase | ( | ) | ||||||
Payments to tax authorities for stock-based compensation | ( | ) | ( | ) | ||||
Proceeds from exercise of employee stock options | ||||||||
Purchase of treasury stock | ( | ) | ||||||
Dividends paid | ( | ) | ||||||
Net cash provided by financing activities | ||||||||
Net increase (decrease) in cash and cash equivalents | ( | ) | ||||||
Cash and cash equivalents at beginning of period | ||||||||
Cash and cash equivalents at end of period | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Earnings (numerator) | ||||||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||
Shares (denominator) in thousands | ||||||||||||||||
Weighted average shares outstanding for basic EPS | ||||||||||||||||
Dilutive effect of employee stock-based awards | ||||||||||||||||
Adjusted weighted average shares outstanding | ||||||||||||||||
EPS: | ||||||||||||||||
Basic | $ | $ | $ | $ | ||||||||||||
Diluted | $ | $ | $ | $ |
Six Months Ended June 30, | ||||||||
2019 | 2018 | |||||||
Supplemental Disclosures of Cash Flow Information: | ||||||||
Cash paid for interest | $ | $ | ||||||
Cash paid for income taxes | ||||||||
Supplemental Disclosures of Non-Cash Flow Information: | ||||||||
Setup of ROU asset and lease liability upon adoption of ASC 842 | $ | $ | — | |||||
Reclassification of lease intangibles, cease-use liability and deferred rent liability to ROU asset upon adoption of ASC 842 | ( | ) | — | |||||
Reclassification of deferred offering costs paid in 2018 from other assets to additional paid-in-capital | ||||||||
Net foreclosure of other real estate owned and repossessed assets | ||||||||
Reclassification of branch assets held for sale to loans held for investment | ||||||||
Reclassification of branch liabilities held for sale to interest-bearing transaction and savings deposits | ||||||||
Non-cash assets acquired in business combination | ||||||||
Investment securities | $ | $ | ||||||
Non-marketable equity securities | ||||||||
Loans held for sale | ||||||||
Loans held for investment | ( | ) | ||||||
Accrued interest receivable | ||||||||
Bank-owned life insurance | ||||||||
Bank premises, furniture and equipment | ||||||||
Investment in unconsolidated subsidiaries | ||||||||
Intangible assets, net | ( | ) | ||||||
Goodwill | ||||||||
Other assets | ||||||||
Right of use asset | — | |||||||
Deferred taxes | ||||||||
Current taxes | ||||||||
Assets held for sale | ||||||||
Total assets | $ | $ | ( | ) | ||||
Non-cash liabilities assumed in business combination | ||||||||
Non-interest-bearing deposits | $ | $ | ||||||
Interest-bearing deposits | ||||||||
Certificates and other time deposits | ||||||||
Accounts payable and accrued expenses | ||||||||
Lease liability | — | |||||||
Accrued interest payable and other liabilities | ( | ) | ||||||
Securities sold under agreements to repurchase | ||||||||
Advances from Federal Home Loan Bank | ||||||||
Subordinated debentures and subordinated notes | ||||||||
Liabilities held for sale | ||||||||
Total liabilities | $ | $ |
June 30, 2019 | ||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
Available for sale | ||||||||||||||||
Corporate bonds | $ | $ | $ | $ | ||||||||||||
Municipal securities | ||||||||||||||||
Mortgage-backed securities | ||||||||||||||||
Collateralized mortgage obligations | ||||||||||||||||
Small Business Administration ("SBA") guaranteed securities | ||||||||||||||||
$ | $ | $ | $ | |||||||||||||
Held to maturity | ||||||||||||||||
Mortgage-backed securities | $ | $ | $ | $ | ||||||||||||
Municipal securities | ||||||||||||||||
$ | $ | $ | $ |
December 31, 2018 | ||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
Available for sale | ||||||||||||||||
U.S. government agencies | $ | $ | $ | $ | ||||||||||||
Corporate bonds | ||||||||||||||||
Municipal securities | ||||||||||||||||
Mortgage-backed securities | ||||||||||||||||
Collateralized mortgage obligations | ||||||||||||||||
Asset-backed securities | ||||||||||||||||
$ | $ | $ | $ |
June 30, 2019 | ||||||||||||||||||||||||
Less Than 12 Months | 12 Months or More | Totals | ||||||||||||||||||||||
Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | |||||||||||||||||||
Available for sale | ||||||||||||||||||||||||
Corporate bonds | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Municipal securities | ||||||||||||||||||||||||
Mortgage-backed securities | ||||||||||||||||||||||||
Collateralized mortgage obligations | ||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||||
Held to maturity | ||||||||||||||||||||||||
Mortgage-backed securities | ||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ |
December 31, 2018 | ||||||||||||||||||||||||
Less Than 12 Months | 12 Months or More | Totals | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
Value | Loss | Value | Loss | Value | Loss | |||||||||||||||||||
Available for sale | ||||||||||||||||||||||||
U.S. government agencies | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Municipal securities | ||||||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||||||
Mortgage-backed securities | ||||||||||||||||||||||||
Collateralized mortgage obligations | ||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ |
June 30, 2019 | ||||||||||||||||
Available for Sale | Held to Maturity | |||||||||||||||
Amortized Cost | Fair Value | Amortized Cost | Fair Value | |||||||||||||
Due in one year or less | $ | $ | $ | $ | ||||||||||||
Due from one year to five years | ||||||||||||||||
Due from five years to ten years | ||||||||||||||||
Due after ten years | ||||||||||||||||
Mortgage-backed securities and collateralized mortgage obligations | ||||||||||||||||
SBA guaranteed securities | ||||||||||||||||
$ | $ | $ | $ |
December 31, 2018 | ||||||||
Available for Sale | ||||||||
Amortized Cost | Fair Value | |||||||
Due in one year or less | $ | $ | ||||||
Due from one year to five years | ||||||||
Due from five years to ten years | ||||||||
Due after ten years | ||||||||
Mortgage-backed securities and collateralized mortgage obligations | ||||||||
Asset-backed securities | ||||||||
$ | $ |
Six Months Ended June 30, | ||||||||
2019 | 2018 | |||||||
Proceeds from sales | $ | $ | ||||||
Gross realized gains | ||||||||
Gross realized losses |
June 30, 2019 | December 31, 2018 | ||||||
Loans held for investment: | |||||||
Real estate: | |||||||
Construction and land | $ | $ | |||||
Farmland | |||||||
1 - 4 family residential | |||||||
Multi-family residential | |||||||
Commercial real estate | |||||||
Commercial | |||||||
Mortgage warehouse | |||||||
Consumer | |||||||
Deferred loan fees | ( | ) | ( | ) | |||
Allowance for loan losses | ( | ) | ( | ) | |||
Total loans held for investment | $ | $ |
Non-Accrual Loans | |||||||
June 30, 2019 | December 31, 2018 | ||||||
Real estate: | |||||||
Construction and land | $ | $ | |||||
Farmland | |||||||
1 - 4 family residential | |||||||
Multi-family residential | |||||||
Commercial real estate | |||||||
Commercial | |||||||
Mortgage warehouse | |||||||
Consumer | |||||||
Total | $ | $ |
June 30, 2019 | |||||||||||||||||||||||||||||||
30 to 59 Days | 60 to 89 Days | 90 Days or Greater | Total Past Due | Total Current | PCI | Total Loans | Total 90 Days Past Due and Still Accruing(1) | ||||||||||||||||||||||||
Real estate: | |||||||||||||||||||||||||||||||
Construction and land | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
Farmland | |||||||||||||||||||||||||||||||
1 - 4 family residential | |||||||||||||||||||||||||||||||
Multi-family residential | |||||||||||||||||||||||||||||||
Commercial real estate | |||||||||||||||||||||||||||||||
Commercial | |||||||||||||||||||||||||||||||
Mortgage warehouse | |||||||||||||||||||||||||||||||
Consumer | |||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | $ |
December 31, 2018 | |||||||||||||||||||||||||||||||
30 to 59 Days | 60 to 89 Days | 90 Days or Greater | Total Past Due | Total Current | PCI | Total Loans | Total 90 Days Past Due and Still Accruing(1) | ||||||||||||||||||||||||
Real estate: | |||||||||||||||||||||||||||||||
Construction and land | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
Farmland | |||||||||||||||||||||||||||||||
1 - 4 family residential | |||||||||||||||||||||||||||||||
Multi-family residential | |||||||||||||||||||||||||||||||
Commercial real estate | |||||||||||||||||||||||||||||||
Commercial | |||||||||||||||||||||||||||||||
Consumer | |||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | $ |
June 30, 2019(1) | |||||||||||||||||||||||
Unpaid Contractual Principal Balance | Recorded Investment with No Allowance | Recorded Investment with Allowance | Total Recorded Investment | Related Allowance | Average Recorded Investment YTD | ||||||||||||||||||
Real estate: | |||||||||||||||||||||||
Construction and land | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Farmland | |||||||||||||||||||||||
1 - 4 family residential | |||||||||||||||||||||||
Multi-family residential | |||||||||||||||||||||||
Commercial real estate | |||||||||||||||||||||||
Commercial | |||||||||||||||||||||||
Consumer | |||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
December 31, 2018(1) | |||||||||||||||||||||||
Unpaid Contractual Principal Balance | Recorded Investment with No Allowance | Recorded Investment with Allowance | Total Recorded Investment | Related Allowance | Average Recorded Investment YTD | ||||||||||||||||||
Real estate: | |||||||||||||||||||||||
Construction and land | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Farmland | |||||||||||||||||||||||
1 - 4 family residential | |||||||||||||||||||||||
Multi-family residential | |||||||||||||||||||||||
Commercial real estate | |||||||||||||||||||||||
Commercial | |||||||||||||||||||||||
Consumer | |||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
June 30, 2019 | ||||||||||||||||||||||||
Pass | Special Mention | Substandard | Doubtful | PCI | Total | |||||||||||||||||||
Real estate: | ||||||||||||||||||||||||
Construction and land | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Farmland | ||||||||||||||||||||||||
1 - 4 family residential | ||||||||||||||||||||||||
Multi-family residential | ||||||||||||||||||||||||
Commercial real estate | ||||||||||||||||||||||||
Commercial | ||||||||||||||||||||||||
Mortgage warehouse | ||||||||||||||||||||||||
Consumer | ||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
December 31, 2018 | ||||||||||||||||||||||||
Pass | Special Mention | Substandard | Doubtful | PCI | Total | |||||||||||||||||||
Real estate: | ||||||||||||||||||||||||
Construction and land | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Farmland | ||||||||||||||||||||||||
1 - 4 family residential | ||||||||||||||||||||||||
Multi-family residential | ||||||||||||||||||||||||
Commercial real estate | ||||||||||||||||||||||||
Commercial | ||||||||||||||||||||||||
Consumer | ||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
Six Months Ended June 30, 2019 | Year Ended December 31, 2018 | Six Months Ended June 30, 2018 | ||||||||||
Balance at beginning of period | $ | $ | $ | |||||||||
Provision charged to earnings | ||||||||||||
Charge-offs | ( | ) | ( | ) | ( | ) | ||||||
Recoveries | ||||||||||||
Net charge-offs | ( | ) | ( | ) | ( | ) | ||||||
Balance at end of period | $ | $ | $ |
Six Months Ended June 30, 2019 | ||||||||||||||||||||||||
Real Estate | ||||||||||||||||||||||||
Construction, Land and Farmland | Residential | Commercial Real Estate | Commercial | Consumer | Total | |||||||||||||||||||
Balance at beginning of period | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Provision (recapture) charged to earnings | ||||||||||||||||||||||||
Charge-offs | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
Recoveries | ||||||||||||||||||||||||
Net charge-offs | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
Balance at end of period | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Period-end amount allocated to: | ||||||||||||||||||||||||
Specific reserves | ||||||||||||||||||||||||
PCI reserves | ||||||||||||||||||||||||
General reserves | ||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
For the Year Ended December 31, 2018 | ||||||||||||||||||||||||
Real Estate | ||||||||||||||||||||||||
Construction, Land and Farmland | Residential | Commercial Real Estate | Commercial | Consumer | Total | |||||||||||||||||||
Balance at beginning of period | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Provision (recapture) charged to earnings | ||||||||||||||||||||||||
Charge-offs | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
Recoveries | ||||||||||||||||||||||||
Net charge-offs (recoveries) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
Balance at end of period | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Period-end amount allocated to: | ||||||||||||||||||||||||
Specific reserves | ||||||||||||||||||||||||
PCI reserves | ||||||||||||||||||||||||
General reserves | ||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
For the Six Months Ended June 30, 2018 | ||||||||||||||||||||||||
Real Estate | ||||||||||||||||||||||||
Construction, Land and Farmland | Residential | Commercial Real Estate | Commercial | Consumer | Total | |||||||||||||||||||
Balance at beginning of year | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Provision (recapture) charged to earnings | ||||||||||||||||||||||||
Charge-offs | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
Recoveries | ||||||||||||||||||||||||
Net charge-offs (recoveries) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
Balance at end of period | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Period-end amount allocated to: | ||||||||||||||||||||||||
Specific reserves | ||||||||||||||||||||||||
General reserves | ||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
June 30, 2019 | ||||||||||||||||||||||||
Real Estate | ||||||||||||||||||||||||
Construction, Land and Farmland | Residential | Commercial Real Estate | Commercial | Consumer | Total | |||||||||||||||||||
Loans individually evaluated for impairment | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Loans collectively evaluated for impairment | ||||||||||||||||||||||||
PCI loans | ||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
December 31, 2018 | ||||||||||||||||||||||||
Real Estate | ||||||||||||||||||||||||
Construction, Land and Farmland | Residential | Commercial Real Estate | Commercial | Consumer | Total | |||||||||||||||||||
Loans individually evaluated for impairment | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Loans collectively evaluated for impairment | ||||||||||||||||||||||||
PCI loans | ||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
June 30, 2019 | December 31, 2018 | ||||||
Carrying amount | $ | $ | |||||
Outstanding balance |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, 2019 | June 30, 2018 | June 30, 2019 | June 30, 2018 | |||||||||||||
Balance at beginning of period | $ | $ | $ | $ | ||||||||||||
Additions | ||||||||||||||||
Reclassifications (to) from nonaccretable | ||||||||||||||||
Accretion | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Balance at end of period | $ | $ | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Balance at beginning of period | $ | $ | $ | $ | ||||||||||||
Servicing asset acquired through acquisition | ||||||||||||||||
Increase from loan sales | ||||||||||||||||
Amortization charged to income | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Balance at end of period | $ | $ | $ | $ |
June 30, 2019 | ||||||||||||||||
Level 1 Inputs | Level 2 Inputs | Level 3 Inputs | Total Fair Value | |||||||||||||
Financial Assets: | ||||||||||||||||
Available for sale securities | $ | $ | $ | $ | ||||||||||||
Loans held for sale(1) | ||||||||||||||||
Correspondent interest rate swaps | ||||||||||||||||
Customer interest rate swaps | ||||||||||||||||
Correspondent interest rate caps and collars | ||||||||||||||||
Commercial loan interest rate floor | ||||||||||||||||
Financial Liabilities: | ||||||||||||||||
Correspondent interest rate swaps | ||||||||||||||||
Customer interest rate swaps | ||||||||||||||||
Customer interest rate caps and collars |
December 31, 2018 | ||||||||||||||||
Level 1 Inputs | Level 2 Inputs | Level 3 Inputs | Total Fair Value | |||||||||||||
Financial Assets: | ||||||||||||||||
Available for sale securities | $ | $ | $ | $ |
Fair Value Measurements Using | ||||||||||||||||
Level 1 Inputs | Level 2 Inputs | Level 3 Inputs | Total Fair Value | |||||||||||||
As of June 30, 2019 | ||||||||||||||||
Assets: | ||||||||||||||||
Impaired loans | $ | $ | $ | $ | ||||||||||||
Other real estate owned | ||||||||||||||||
As of December 31, 2018 | ||||||||||||||||
Assets: | ||||||||||||||||
Impaired loans |
Fair Value | ||||||||||||||||
Carrying Amount | Level 1 | Level 2 | Level 3 | |||||||||||||
June 30, 2019 | ||||||||||||||||
Financial assets: | ||||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | ||||||||||||
Held to maturity investments | ||||||||||||||||
Loans held for sale | ||||||||||||||||
Loans held for investment, mortgage warehouse | ||||||||||||||||
Loans held for investment | ||||||||||||||||
Accrued interest receivable | ||||||||||||||||
Bank-owned life insurance | ||||||||||||||||
Servicing asset | ||||||||||||||||
Other investments | ||||||||||||||||
Financial liabilities: | ||||||||||||||||
Deposits | $ | $ | $ | $ | ||||||||||||
Advances from FHLB | ||||||||||||||||
Accrued interest payable | ||||||||||||||||
Subordinated debentures and subordinated notes | ||||||||||||||||
Securities sold under agreement to repurchase | ||||||||||||||||
December 31, 2018 | ||||||||||||||||
Financial assets: | ||||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | ||||||||||||
Loans held for sale | ||||||||||||||||
Loans held for investment | ||||||||||||||||
Accrued interest receivable | ||||||||||||||||
Bank-owned life insurance | ||||||||||||||||
Servicing asset | ||||||||||||||||
Other investments | ||||||||||||||||
Financial liabilities: | ||||||||||||||||
Deposits | $ | $ | $ | $ | ||||||||||||
Advances from FHLB | ||||||||||||||||
Accrued interest payable | ||||||||||||||||
Subordinated debentures and subordinated notes |
June 30, 2019 | |||||||||||
Estimated Fair Value | |||||||||||
Notional Amount | Asset Derivative | Liability Derivative | |||||||||
Derivatives designated as hedging instruments (cash flow hedges): | |||||||||||
Commercial loan interest rate floor | $ | $ | $ | ||||||||
Total derivatives designated as hedging instruments | |||||||||||
Derivatives not designated as hedging instruments: | |||||||||||
Financial institution counterparty: | |||||||||||
Interest rate swaps | |||||||||||
Interest rate caps and collars | |||||||||||
Commercial customer counterparty: | |||||||||||
Interest rate swaps | |||||||||||
Interest rate caps and collars | |||||||||||
Total derivatives not designated as hedging instruments | |||||||||||
Offsetting derivative assets/liabilities | |||||||||||
Total derivatives | $ | $ | $ |
For the Three Months Ended | For the Six Months Ended | ||||||||||||||||||||||
June 30, 2019 | June 30, 2019 | ||||||||||||||||||||||
Gain recognized in other comprehensive income on cash flow derivative | Loss recognized in interest income on cash flow derivative (amount excluded from effectiveness testing) | Loss recognized in noninterest income | Gain recognized in other comprehensive income on cash flow derivative | Loss recognized in interest income on cash flow derivative (amount excluded from effectiveness testing) | Gain recognized in noninterest income | ||||||||||||||||||
Derivatives designated as hedging instruments (cash flow hedges): | |||||||||||||||||||||||
Commercial loan interest rate floors | $ | $ | ( | ) | $ | — | $ | $ | ( | ) | $ | — | |||||||||||
Derivatives not designated as hedging instruments: | |||||||||||||||||||||||
Interest rate swaps, caps and collars | $ | — | $ | — | $ | ( | ) | $ | — | $ | — | $ |
June 30, 2019 | |||||||||||||
Notional Amount | Fixed Rate | Floating Rate | Maturity | Fair Value | |||||||||
Non-hedging derivative instruments: | |||||||||||||
Customer interest rate derivatives: | |||||||||||||
Interest rate swaps - receive fixed/pay floating | $ | 2.944 - 8.470% | LIBOR 1 month + 0% - 5.00% | Wtd. Avg. 3.4 years | $ | ( | ) | ||||||
Interest rate caps and collars | $ | 2.500% / 5.800% | LIBOR 1 month + 0% - 3.75% | Wtd. Avg. 1.3 years | $ | ||||||||
Correspondent interest rate derivatives: | |||||||||||||
Interest rate swaps - pay fixed/receive floating | $ | 2.944 - 8.470% | LIBOR 1 month + 0% - 5.00% | Wtd. Avg. 3.4 years | $ | ||||||||
Interest rate caps and collars | $ | 3.100% / 5.800% | LIBOR 1 month + 0% - 3.75% | Wtd. Avg. 1.3 years | $ | ( | ) |
June 30, | December 31, | |||||||
2019 | 2018 | |||||||
Commitments to extend credit | $ | $ | ||||||
Standby and commercial letters of credit | ||||||||
Total | $ | $ |
Three Months Ended June 30, 2019 | Six Months Ended June 30, 2019 | |||||||
Operating lease cost | $ | $ | ||||||
Variable lease cost | ||||||||
Net lease cost | $ | $ |
Six Months Ended June 30, 2019 | ||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||
Operating cash flows from operating leases | $ | |||
Weighted average remaining lease term - operating leases, in years | ||||
Weighted average discount rate - operating leases | % |
June 30, 2019 | ||||
Lease payments due: | ||||
Within one year | $ | |||
After one but within two years | ||||
After two but within three years | ||||
After three but within four years | ||||
After four but within five years | ||||
After five years | ||||
Total undiscounted cash flows | ||||
Less: Discount on cash flows | ( | ) | ||
Total lease liability | $ |
As of June 30, 2019 | ||||||||||||||
Weighted | Gross | Net | ||||||||||||
Amortization | Intangible | Accumulated | Intangible | |||||||||||
Period | Assets | Amortization | Assets | |||||||||||
Core deposit intangibles | $ | $ | $ | |||||||||||
Servicing asset | ||||||||||||||
Intangible lease assets | — | |||||||||||||
$ | $ | $ |
As of December 31, 2018 | |||||||||||||
Weighted | Gross | Net | |||||||||||
Amortization | Intangible | Accumulated | Intangible | ||||||||||
Period | Assets | Amortization | Assets | ||||||||||
Core deposit intangibles | $ | $ | $ | ||||||||||
Servicing asset | |||||||||||||
Intangible lease assets | |||||||||||||
$ | $ | $ |
June 30, 2019 | |||
Balance as of December 31, 2018 | $ | ||
Effect of Green acquisition | |||
Balance as of June 30, 2019 | $ |
June 30, 2019 | December 31, 2018 | ||||||
Noninterest-bearing demand accounts | $ | $ | |||||
Interest-bearing demand accounts | |||||||
Savings accounts | |||||||
Limited access money market accounts | |||||||
Certificates of deposit, greater than $100 | |||||||
Certificates of deposit, less than $100 | |||||||
Total | $ | $ |
Year | Amount | |||
2019 | $ | |||
2020 | ||||
2021 | ||||
2022 | ||||
2023 and beyond | ||||
Total | $ |
2019 | $ | ||
2020 | |||
2021 | |||
2022 | |||
Total | $ |
June 30, 2019 | December 31, 2018 | ||||||
Subordinated notes | $ | $ | |||||
Unamortized debt premium (discount) | ( | ) | |||||
Total subordinated notes | $ | $ |
June 30, 2019 | December 31, 2018 | ||||||
Subordinated debentures | $ | $ | |||||
Debt discount | ( | ) | |||||
Total subordinated debentures | $ | $ |
Description | Subordinated Debt Owed to Trusts | Interest Rate(1) | Maturity Date | |||||
Patriot Bancshares Capital Trust I | $ | 3-month LIBOR +1.85%, not to exceed 11.90% | April 7, 2036 | |||||
Patriot Bancshares Capital Trust II | $ | 3-month LIBOR +1.80%, not to exceed 11.90% | September 15, 2037 |
2010 Incentive Plan | |||||||||||||
Non-Performance Based Stock Options | |||||||||||||
Shares Underlying Options | Weighted Exercise Price | Weighted Average Contractual Term | Aggregate Intrinsic Value | ||||||||||
Outstanding at January 1, 2018 | $ | ||||||||||||
Exercised | ( | ) | |||||||||||
Outstanding at June 30, 2018 | $ | ||||||||||||
Options exercisable at June 30, 2018 | $ | ||||||||||||
Outstanding at January 1, 2019 | $ | $ | |||||||||||
Exercised | ( | ) | |||||||||||
Outstanding and exercisable at June 30, 2019 | $ | $ |
2010 Incentive Plan | |||||||
Nonperformance-based restricted stock units | |||||||
Units | Weighted Average Grant Date Fair Value | ||||||
Outstanding at January 1, 2018 | $ | ||||||
Vested into shares | ( | ) | |||||
Forfeited | ( | ) | |||||
Outstanding at June 30, 2018 | $ |
Fair Value of Options Exercised or Restricted Stock Units Vested as of June 30, | ||||||
2019 | 2018 | |||||
Non-performance based stock options exercised | ||||||
Non-performance based restricted stock units vested |
Vesting % | |
Below the 24.9th percentile of Peer Group TSR | |
Within the 25th to 49.9th percentile of Peer Group TSR | |
Within the 50th the 74.9th percentile of Peer Group TSR | |
At or above the 75th percentile of Peer Group TSR |
Six Months Ended June 30, 2019 | ||||
2019 | 2018 | |||
Dividend yield | 1.87% to 2.01% | |||
Expected life | 5 to 7.51 years | 6.5 to 7.5 years | ||
Expected volatility | 29.36% to 29.65% | 27.87% to 30.36% | ||
Risk-free interest rate | 2.31% to 2.51% | 2.30% to 2.94% |
2014 Omnibus Plan | ||||||||||||||||||||||||||
Non-performance Based Stock Options | ||||||||||||||||||||||||||
Equity Awards | Liability Awards | |||||||||||||||||||||||||
Shares Underlying Options | Weighted Exercise Price | Weighted Average Contractual Term | Aggregate Intrinsic Value | Shares Underlying Options | Weighted Exercise Price | Weighted Average Contractual Term | Aggregate Intrinsic Value | |||||||||||||||||||
Outstanding at January 1, 2018 | $ | $ | ||||||||||||||||||||||||
Granted | ||||||||||||||||||||||||||
Exercised | ( | ) | ||||||||||||||||||||||||
Outstanding at June 30, 2018 | $ | $ | ||||||||||||||||||||||||
Options exercisable at June 30, 2018 | $ | $ | ||||||||||||||||||||||||
Outstanding at January 1, 2019 | $ | $ | ||||||||||||||||||||||||
Granted | ||||||||||||||||||||||||||
Conversion to equity awards | ( | ) | ||||||||||||||||||||||||
Forfeited | ( | ) | ||||||||||||||||||||||||
Exercised | ( | ) | ||||||||||||||||||||||||
Outstanding at June 30, 2019 | $ | $ | $ | $ | ||||||||||||||||||||||
Options exercisable at June 30, 2019 | $ | $ | $ | |||||||||||||||||||||||
Weighted average fair value of options granted during the period | $ | $ |
2014 Omnibus Plan | ||||||||||||||
Non-performance Based | ||||||||||||||
Restricted Stock Units | ||||||||||||||
Equity Awards | Liability Awards | |||||||||||||
Units | Weighted Average Grant Date Fair Value | Units | Weighted Average Grant Date Fair Value | |||||||||||
Outstanding at January 1, 2018 | $ | $ | ||||||||||||
Granted | ||||||||||||||
Vested into shares | ( | ) | ||||||||||||
Forfeited | ( | ) | ||||||||||||
Outstanding at June 30, 2018 | $ | $ | ||||||||||||
Outstanding at January 1, 2019 | $ | $ | ||||||||||||
Granted | ||||||||||||||
Conversion to equity awards | ( | ) | ||||||||||||
Vested into shares | ( | ) | ||||||||||||
Outstanding at June 30, 2019 | $ | $ |
2014 Omnibus Plan | ||||||||||||||
Performance Based | ||||||||||||||
Restricted Stock Units | ||||||||||||||
Equity Awards | Liability Awards | |||||||||||||
Units | Weighted Average Grant Date Fair Value | Units | Weighted Average Grant Date Fair Value | |||||||||||
Outstanding at January 1, 2018 | $ | $ | ||||||||||||
Granted | ||||||||||||||
Vested into shares | ( | ) | ||||||||||||
Outstanding at June 30, 2018 | $ | $ | ||||||||||||
Outstanding at January 1, 2019 | $ | $ | ||||||||||||
Granted | ||||||||||||||
Conversion to equity award | ( | ) | ||||||||||||
Vested into shares | ( | ) | ||||||||||||
Forfeited | ( | ) | ||||||||||||
Outstanding at June 30, 2019 | $ | $ |
Fair Value of Options Exercised or Restricted Stock Units Vested as of June 30, | ||||||
2019 | 2018 | |||||
Non-performance-based stock options exercised | ||||||
Non-performance-based restricted stock units vested | ||||||
Performance-based restricted stock units vested |
Veritex (Green) 2014 Plan | |||||||||||||
Non-performance Based Stock Options | |||||||||||||
Shares Underlying Options | Weighted Exercise Price | Weighted Average Contractual Term | Aggregate Intrinsic Value | ||||||||||
Outstanding at January 1, 2019 | $ | ||||||||||||
Converted in acquisition of Green | |||||||||||||
Granted | |||||||||||||
Forfeited | ( | ) | |||||||||||
Exercised | ( | ) | — | ||||||||||
Outstanding at June 30, 2019 | $ | $ | |||||||||||
Options exercisable at June 30, 2019 | $ | $ | |||||||||||
Weighted average fair value of options granted during the period | $ |
Veritex (Green) 2014 Plan | |||||||
Non-performance Based | |||||||
Restricted Stock Units | |||||||
Units | Weighted Average Grant Date Fair Value | ||||||
Outstanding at January 1, 2019 | $ | ||||||
Granted | |||||||
Outstanding at June 30, 2019 | $ |
Veritex (Green) 2014 Plan | |||||||
Performance Based | |||||||
Restricted Stock Units | |||||||
Units | Weighted Average Grant Date Fair Value | ||||||
Outstanding at January 1, 2019 | $ | ||||||
Granted | |||||||
Forfeited | ( | ) | |||||
Outstanding at June 30, 2019 | $ |
Fair Value of Options Exercised or Restricted Stock Units Vested as of June 30, | ||||
2019 | ||||
Non-performance-based stock options exercised | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Income tax expense for the period | $ | $ | $ | $ | |||||||||||
Effective tax rate | % | % | % | % |
Actual | For Capital Adequacy Purposes | To Be Well Capitalized Under Prompt Corrective Action Provisions | |||||||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||||||||||
As of June 30, 2019 | |||||||||||||||||||||||||||||
Total capital (to risk-weighted assets) | |||||||||||||||||||||||||||||
Company | $ | % | $ | % | n/a | n/a | |||||||||||||||||||||||
Bank | % | % | $ | % | |||||||||||||||||||||||||
Tier 1 capital (to risk-weighted assets) | |||||||||||||||||||||||||||||
Company | % | % | n/a | n/a | |||||||||||||||||||||||||
Bank | % | % | % | ||||||||||||||||||||||||||
Common equity tier 1 to risk-weighted assets | |||||||||||||||||||||||||||||
Company | % | % | n/a | n/a | |||||||||||||||||||||||||
Bank | % | % | % | ||||||||||||||||||||||||||
Tier 1 capital (to average assets) | |||||||||||||||||||||||||||||
Company | % | % | n/a | n/a | |||||||||||||||||||||||||
Bank | % | % | % | ||||||||||||||||||||||||||
As of December 31, 2018 | |||||||||||||||||||||||||||||
Total capital (to risk-weighted assets) | |||||||||||||||||||||||||||||
Company | $ | % | $ | % | n/a | n/a | |||||||||||||||||||||||
Bank | % | % | $ | % | |||||||||||||||||||||||||
Tier 1 capital (to risk-weighted assets) | |||||||||||||||||||||||||||||
Company | % | % | n/a | n/a | |||||||||||||||||||||||||
Bank | % | % | % | ||||||||||||||||||||||||||
Common equity tier 1 to risk-weighted assets | |||||||||||||||||||||||||||||
Company | % | % | n/a | n/a | |||||||||||||||||||||||||
Bank | % | % | % | ||||||||||||||||||||||||||
Tier 1 capital (to average assets) | |||||||||||||||||||||||||||||
Company | % | % | n/a | n/a | |||||||||||||||||||||||||
Bank | % | % | % |
Equivalent shares of Veritex common stock issued in exchange for Green outstanding shares | |||
Veritex common stock price per share as of close date | $ | ||
Fair value of Veritex common stock issued in exchange for Green outstanding shares | $ | ||
Fair value of Green equity-based awards attributed to pre-combination service | |||
Cash consideration to Green shareholders | |||
Total consideration transferred | $ |
Estimate at January 1, 2019 | Measurement Period Adjustments | Revised Fair Value | |||||||||
Assets | |||||||||||
Cash and cash equivalents | $ | $ | — | $ | |||||||
Investment securities | ( | ) | |||||||||
Other securities | — | ||||||||||
Loans held for sale | — | ||||||||||
Loans held for investment | ( | ) | |||||||||
Accrued interest receivable | ( | ) | |||||||||
Bank owned life insurance | — | ||||||||||
Bank premises, furniture and equipment | ( | ) | |||||||||
Investment in unconsolidated subsidiaries | — | ||||||||||
Intangible assets | — | ||||||||||
Goodwill | |||||||||||
Other assets | |||||||||||
Right of use asset | — | ||||||||||
Deferred Taxes | |||||||||||
Current taxes | |||||||||||
Branch assets held for sale | — | ||||||||||
Total assets | $ | $ | ( | ) | $ | ||||||
Liabilities | |||||||||||
Non-interest-bearing deposits | $ | $ | — | $ | |||||||
Interest-bearing deposits | — | ||||||||||
Certificates and other time deposits | — | ||||||||||
Accounts payable and other accrued expenses | ( | ) | |||||||||
Lease liability | — | ||||||||||
Accrued interest payable | — | ||||||||||
Securities sold under agreements to repurchase | — | ||||||||||
Advances from Federal Home Loan Bank | — | ||||||||||
Subordinated debentures and subordinated notes | — | ||||||||||
Branch liabilities held for sale | — | ||||||||||
Total liabilities | $ | $ | ( | ) | $ |
PCI loans | Other acquired loans | Total Acquired Loans | |||||||||
Real Estate | $ | $ | $ | ||||||||
Commercial | |||||||||||
Mortgage warehouse | |||||||||||
Consumer | |||||||||||
Total fair value | |||||||||||
Contractual principal balance | $ | $ | $ |
PCI Loans | |||
Contractually required principal and interest | $ | ||
Non-accretable difference | |||
Cash flows expected to be collected | $ | ||
Accretable difference | |||
Fair value of PCI loans | $ |
January 1, 2019 | ||||
Assets | ||||
Cash and cash equivalents | $ | |||
Loans | ||||
Bank premises, furniture and equipment | ||||
Intangible assets | ||||
Other assets | ||||
Total assets | $ | |||
Liabilities | ||||
Noninterest-bearing deposits | $ | |||
Accounts payable and accrued expenses | ||||
Accrued interest payable and other liabilities1 | ||||
Total liabilities | $ |
Net Interest Income | $ | ||
Net Income | |||
Basic earnings per share | $ | ||
Diluted earnings per share |
For the Six Months Ended June 30, | ||||||||||||||||||||||
2019 | 2018 | |||||||||||||||||||||
Interest | Interest | |||||||||||||||||||||
Average | Earned/ | Average | Average | Earned/ | Average | |||||||||||||||||
Outstanding | Interest | Yield/ | Outstanding | Interest | Yield/ | |||||||||||||||||
Balance | Paid | Rate | Balance | Paid | Rate | |||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Assets | ||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||
Loans1, 2 | $ | 5,746,746 | $ | 169,224 | 5.94 | % | $ | 2,297,407 | $ | 64,358 | 5.65 | % | ||||||||||
Loans held for investment, mortgage warehouse | 137,280 | 3,309 | 4.86 | — | — | — | ||||||||||||||||
Securities | 941,336 | 14,629 | 3.13 | 235,422 | 2,975 | 2.55 | ||||||||||||||||
Interest-bearing deposits in other banks | 246,201 | 2,926 | 2.40 | 150,324 | 1,300 | 1.74 | ||||||||||||||||
Other investments3 | 48,578 | 1,313 | 5.45 | 14,532 | 334 | 4.63 | ||||||||||||||||
Total interest-earning assets | 7,120,141 | 191,401 | 5.42 | 2,697,685 | 68,967 | 5.16 | ||||||||||||||||
Allowance for loan losses | (21,988 | ) | (13,367 | ) | ||||||||||||||||||
Noninterest-earning assets2 | 789,890 | 340,560 | ||||||||||||||||||||
Total assets | $ | 7,888,043 | $ | 3,024,878 | ||||||||||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||
Interest-bearing demand and savings deposits2 | $ | 2,675,237 | $ | 21,771 | 1.64 | % | $ | 1,245,506 | $ | 7,493 | 1.21 | % | ||||||||||
Certificates and other time deposits2 | 2,124,951 | 18,937 | 1.80 | 559,891 | 3,252 | 1.17 | ||||||||||||||||
Advances from FHLB | 322,879 | 4,242 | 2.65 | 88,475 | 694 | 1.58 | ||||||||||||||||
Subordinated debentures and subordinated notes | 75,515 | 2,092 | 5.59 | 16,772 | 477 | 5.74 | ||||||||||||||||
Total interest-bearing liabilities | 5,198,582 | 47,042 | 1.82 | 1,910,644 | 11,916 | 1.26 | ||||||||||||||||
Noninterest-bearing liabilities: | ||||||||||||||||||||||
Noninterest-bearing deposits2 | 1,456,086 | 603,003 | ||||||||||||||||||||
Other liabilities2 | 39,385 | 12,595 | ||||||||||||||||||||
Total liabilities | 6,694,053 | 2,526,242 | ||||||||||||||||||||
Stockholders’ equity | 1,193,990 | 498,636 | ||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 7,888,043 | $ | 3,024,878 | ||||||||||||||||||
Net interest rate spread4 | 3.60 | % | 3.90 | % | ||||||||||||||||||
Net interest income | $ | 144,359 | $ | 57,051 | ||||||||||||||||||
Net interest margin5 | 4.09 | % | 4.26 | % |
For the Six Months Ended | ||||||||||||
June 30, 2019 vs. 2018 | ||||||||||||
Increase (Decrease) | ||||||||||||
Due to Change in | ||||||||||||
Volume | Rate | Total | ||||||||||
(Dollars in thousands) | ||||||||||||
Interest-earning assets: | ||||||||||||
Loans | $ | 96,627 | $ | 8,239 | $ | 104,866 | ||||||
Loans held for investment, mortgage warehouse | — | 3,309 | 3,309 | |||||||||
Securities | 8,921 | 2,733 | 11,654 | |||||||||
Interest-bearing deposits in other banks | 827 | 799 | 1,626 | |||||||||
Other investments | 782 | 197 | 979 | |||||||||
Total increase in interest income | 107,157 | 15,277 | 122,434 | |||||||||
Interest-bearing liabilities: | ||||||||||||
Interest-bearing demand and savings deposits | 8,601 | 5,677 | 14,278 | |||||||||
Certificates and other time deposits | 9,080 | 6,605 | 15,685 | |||||||||
Advances from FHLB | 1,839 | 1,709 | 3,548 | |||||||||
Subordinated debentures and subordinated notes | 1,671 | (56 | ) | 1,615 | ||||||||
Total increase in interest expense | 21,191 | 13,935 | 35,126 | |||||||||
Increase in net interest income | $ | 85,966 | $ | 1,342 | $ | 87,308 |
For the | ||||||||||||
Six Months Ended | ||||||||||||
June 30, | Increase | |||||||||||
2019 | 2018 | (Decrease) | ||||||||||
(Dollars in thousands) | ||||||||||||
Noninterest income: | ||||||||||||
Service charges and fees on deposit accounts | $ | 6,939 | $ | 1,779 | $ | 5,160 | ||||||
Loan fees | 3,609 | 535 | 3,074 | |||||||||
(Loss) gain on sales of investment securities | (1,414 | ) | 12 | (1,426 | ) | |||||||
Gain on sales of loans | 3,474 | 997 | 2,477 | |||||||||
Rental income | 741 | 930 | (189 | ) | ||||||||
Other1 | 1,169 | 795 | 374 | |||||||||
Total noninterest income | $ | 14,518 | $ | 5,048 | $ | 9,470 |
For the Six Months Ended | Increase | |||||||||||
June 30, | (Decrease) | |||||||||||
2019 | 2018 | 2019 vs. 2018 | ||||||||||
(Dollars in thousands) | ||||||||||||
Salaries and employee benefits | $ | 36,344 | $ | 15,587 | $ | 20,757 | ||||||
Non-staff expenses: | ||||||||||||
Occupancy and equipment | 8,143 | 5,377 | 2,766 | |||||||||
Professional and regulatory fees | 6,232 | 3,632 | 2,600 | |||||||||
Data processing and software expense | 4,233 | 1,517 | 2,716 | |||||||||
Marketing | 1,580 | 907 | 673 | |||||||||
Amortization of intangibles | 5,479 | 1,834 | 3,645 | |||||||||
Telephone and communications | 1,020 | 840 | 180 | |||||||||
Merger and acquisition expense | 37,007 | 1,378 | 35,629 | |||||||||
Other | 6,851 | 2,403 | 4,448 | |||||||||
Total noninterest expense | $ | 106,889 | $ | 33,475 | $ | 73,414 |
For the Three Months Ended June 30, | ||||||||||||||||||||||
2019 | 2018 | |||||||||||||||||||||
Interest | Interest | |||||||||||||||||||||
Average | Earned/ | Average | Average | Earned/ | Average | |||||||||||||||||
Outstanding | Interest | Yield/ | Outstanding | Interest | Yield/ | |||||||||||||||||
Balance | Paid | Rate | Balance | Paid | Rate | |||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Assets | ||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||
Loans(1) | $ | 5,762,257 | $ | 85,030 | 5.92 | % | $ | 2,333,283 | $ | 32,291 | 5.55 | % | ||||||||||
Loans held for investment, mortgage warehouse | 154,586 | 1,756 | 4.56 | — | — | — | ||||||||||||||||
Securities | 956,160 | 7,397 | 3.10 | 248,670 | 1,647 | 2.66 | ||||||||||||||||
Interest-earning deposits in other banks | 228,461 | 1,372 | 2.41 | 136,803 | 613 | 1.80 | ||||||||||||||||
Other investments(2) | 59,508 | 622 | 4.19 | 22,486 | 306 | 5.46 | ||||||||||||||||
Total interest-earning assets | 7,160,972 | 96,177 | 5.39 | 2,741,242 | 34,857 | 5.10 | ||||||||||||||||
Allowance for loan losses | (23,891 | ) | (13,600 | ) | ||||||||||||||||||
Noninterest-earning assets | 800,238 | 331,814 | ||||||||||||||||||||
Total assets | $ | 7,937,319 | $ | 3,059,456 | ||||||||||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||
Interest-bearing demand and savings deposits | $ | 2,713,735 | $ | 11,405 | 1.69 | % | $ | 1,272,569 | $ | 4,204 | 1.33 | % | ||||||||||
Certificates and other time deposits | 2,107,567 | 10,145 | 1.93 | 592,371 | 2,248 | 1.52 | ||||||||||||||||
Advances from FHLB | 334,926 | 2,187 | 2.62 | 59,762 | 234 | 1.57 | ||||||||||||||||
Subordinated debentures and subordinated debt | 75,252 | 998 | 5.32 | 16,690 | 245 | 5.89 | ||||||||||||||||
Total interest-bearing liabilities | 5,231,480 | 24,735 | 1.90 | 1,941,392 | 6,931 | 1.43 | ||||||||||||||||
Noninterest-bearing liabilities: | ||||||||||||||||||||||
Noninterest-bearing deposits | 1,456,538 | 605,760 | ||||||||||||||||||||
Other liabilities | 48,669 | 7,976 | ||||||||||||||||||||
Total liabilities | 6,736,687 | 2,555,128 | ||||||||||||||||||||
Stockholders’ equity | 1,200,632 | 504,328 | ||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 7,937,319 | $ | 3,059,456 | ||||||||||||||||||
Net interest rate spread(3) | 3.49 | % | 3.67 | % | ||||||||||||||||||
Net interest income | $ | 71,442 | $ | 27,926 | ||||||||||||||||||
Net interest margin(4) | 4.00 | % | 4.09 | % |
For the Three Months Ended June 30, | ||||||||||||
2019 vs. 2018 | ||||||||||||
Increase (Decrease) | ||||||||||||
Due to Change in | ||||||||||||
Volume | Rate | Total | ||||||||||
(Dollars in thousands) | ||||||||||||
Interest-earning assets: | ||||||||||||
Loans | $ | 47,455 | $ | 5,284 | $ | 52,739 | ||||||
Loans held for investments, mortgage warehouse | — | 1,756 | 1,756 | |||||||||
Securities | 4,686 | 1,064 | 5,750 | |||||||||
Other investments | 504 | (188 | ) | 316 | ||||||||
Interest-bearing deposits in other banks | 411 | 348 | 759 | |||||||||
Total increase in interest income | 53,056 | 8,264 | 61,320 | |||||||||
Interest-bearing liabilities: | ||||||||||||
Interest-bearing demand and savings deposits | 4,761 | 2,440 | 7,201 | |||||||||
Certificates and other time deposits | 5,742 | 2,155 | 7,897 | |||||||||
Advances from FHLB | 1,077 | 876 | 1,953 | |||||||||
Subordinated debentures and subordinated notes | 860 | (107 | ) | 753 | ||||||||
Total increase in interest expense | 12,440 | 5,364 | 17,804 | |||||||||
Increase in net interest income | $ | 40,616 | $ | 2,900 | $ | 43,516 |
For the | ||||||||||||
Three Months Ended June 30, | Increase | |||||||||||
2019 | 2018 | (Decrease) | ||||||||||
(Dollars in thousands) | ||||||||||||
Noninterest income: | ||||||||||||
Service charges and fees on deposit accounts | $ | 3,422 | $ | 846 | $ | 2,576 | ||||||
Loan fees | 1,932 | 261 | 1,671 | |||||||||
(Loss) gain on sales of investment securities | (642 | ) | 4 | (646 | ) | |||||||
Gain on sales of loans | 1,104 | 416 | 688 | |||||||||
Rental income | 373 | 452 | (79 | ) | ||||||||
Other(1) | (155 | ) | 311 | (466 | ) | |||||||
Total noninterest income | $ | 6,034 | $ | 2,290 | $ | 3,744 |
For the Three Months Ended June 30, | Increase (Decrease) | |||||||||||
2019 | 2018 | 2019 vs. 2018 | ||||||||||
(Dollars in thousands) | ||||||||||||
Salaries and employee benefits | $ | 17,459 | $ | 7,657 | $ | 9,802 | ||||||
Non-staff expenses: | ||||||||||||
Occupancy and equipment | 4,014 | 2,143 | 1,871 | |||||||||
Professional and regulatory fees | 2,814 | 1,528 | 1,286 | |||||||||
Data processing and software expense | 2,309 | 689 | 1,620 | |||||||||
Marketing | 961 | 446 | 515 | |||||||||
Amortization of intangibles | 2,719 | 856 | 1,863 | |||||||||
Telephone and communications | 625 | 414 | 211 | |||||||||
Merger and acquisition expense | 5,790 | 1,043 | 4,747 | |||||||||
Other | 3,205 | 1,393 | 1,812 | |||||||||
Total noninterest expense | $ | 39,896 | $ | 16,169 | $ | 23,727 |
As of June 30, | As of December 31, | |||||||||||||
2019 | 2018 | |||||||||||||
Total | Percent | Total | Percent | |||||||||||
(Dollars in thousands) | ||||||||||||||
Commercial | $ | 1,796,012 | 30.3 | % | $ | 760,772 | 29.8 | % | ||||||
Mortgage warehouse | 200,017 | 3.4 | % | — | — | % | ||||||||
Real estate: | ||||||||||||||
Owner occupied commercial real estate | 739,390 | 12.5 | % | 321,478 | 12.6 | % | ||||||||
Commercial real estate | 1,726,627 | 29.1 | % | 781,554 | 30.6 | % | ||||||||
Construction and land | 543,797 | 9.1 | % | 324,863 | 12.7 | % | ||||||||
Farmland | 17,467 | 0.3 | % | 10,528 | 0.4 | % | ||||||||
1-4 family residential | 556,941 | 9.4 | % | 297,917 | 11.7 | % | ||||||||
Multifamily | 330,865 | 5.6 | % | 51,285 | 2.0 | % | ||||||||
Consumer | 21,055 | 0.3 | % | 7,112 | 0.3 | % | ||||||||
Total loans held for investment | $ | 5,932,171 | 100.0 | % | $ | 2,555,509 | 100.0 | % | ||||||
Total loans held for sale | $ | 7,524 | 100.0 | % | $ | 1,258 | 100.0 | % |
As of June 30, | As of December 31, | ||||||||
2019 | 2018 | ||||||||
(Dollars in thousands) | |||||||||
Non-accrual loans(1) | $ | 15,733 | $ | 24,745 | |||||
Accruing loans 90 or more days past due | 25,774 | — | |||||||
Total nonperforming loans | 41,507 | 24,745 | |||||||
Other real estate owned: | |||||||||
Commercial | 1,748 | — | |||||||
Total other real estate owned | 1,748 | — | |||||||
Total nonperforming assets | $ | 43,255 | $ | 24,745 | |||||
Restructured loans—non-accrual | 217 | 227 | |||||||
Restructured loans—accruing | 934 | 944 | |||||||
Ratio of nonperforming loans to total loans | 0.70 | % | 0.97 | % | |||||
Ratio of nonperforming assets to total assets | 0.54 | % | 0.77 | % |
As of June 30, | As of December 31, | |||||||
2019 | 2018 | |||||||
(Dollars in thousands) | ||||||||
Commercial | $ | 10,819 | $ | 19,769 | ||||
Mortgage warehouse | — | — | ||||||
Real estate: | ||||||||
Owner occupied commercial real estate | 2,958 | 2,575 | ||||||
Construction and land | 1,884 | 2,399 | ||||||
Farmland | — | — | ||||||
1-4 family residential | 11 | — | ||||||
Multifamily | — | — | ||||||
Consumer | 61 | 2 | ||||||
Total | $ | 15,733 | $ | 24,745 |
June 30, 2019 | ||||||||||||||||||||||||
Pass | Special Mention | Substandard | Doubtful | PCI | Total | |||||||||||||||||||
Real estate: | ||||||||||||||||||||||||
Construction and land | $ | 517,958 | $ | 17,795 | $ | 3,060 | $ | — | $ | 4,984 | $ | 543,797 | ||||||||||||
Farmland | 17,467 | — | — | — | — | 17,467 | ||||||||||||||||||
1 - 4 family residential | 550,635 | 500 | 1,259 | — | 4,547 | 556,941 | ||||||||||||||||||
Multi-family residential | 330,865 | — | — | — | — | 330,865 | ||||||||||||||||||
Nonfarm nonresidential | 2,308,092 | 28,068 | 14,132 | — | 115,725 | 2,466,017 | ||||||||||||||||||
Commercial | 1,688,197 | 38,358 | 21,917 | — | 47,540 | 1,796,012 | ||||||||||||||||||
Mortgage warehouse | 200,017 | — | — | — | — | 200,017 | ||||||||||||||||||
Consumer | 20,712 | — | 196 | — | 147 | 21,055 | ||||||||||||||||||
Total | $ | 5,633,943 | $ | 84,721 | $ | 40,564 | $ | — | $ | 172,943 | $ | 5,932,171 |
December 31, 2018 | ||||||||||||||||||||||||
Pass | Special Mention | Substandard | Doubtful | PCI | Total | |||||||||||||||||||
Real estate: | ||||||||||||||||||||||||
Construction and land | $ | 320,987 | $ | 1,860 | $ | 2,016 | $ | — | $ | — | $ | 324,863 | ||||||||||||
Farmland | 10,528 | — | — | — | — | 10,528 | ||||||||||||||||||
1 - 4 family residential | 296,870 | 236 | 726 | — | 85 | 297,917 | ||||||||||||||||||
Multi-family residential | 51,285 | — | — | — | — | 51,285 | ||||||||||||||||||
Nonfarm nonresidential | 1,065,982 | 7,056 | 12,986 | — | 17,008 | 1,103,032 | ||||||||||||||||||
Commercial | 720,583 | 8,900 | 7,552 | — | 23,737 | 760,772 | ||||||||||||||||||
Consumer | 6,950 | — | 162 | — | — | 7,112 | ||||||||||||||||||
Total | $ | 2,473,185 | $ | 18,052 | $ | 23,442 | $ | — | $ | 40,830 | $ | 2,555,509 |
Six Months Ended | Six Months Ended | |||||||
June 30, 2019 | June 30, 2018 | |||||||
(Dollars in thousands) | ||||||||
Average loans outstanding(1) | $ | 5,884,026 | $ | 2,296,089 | ||||
Gross loans outstanding at end of period(1) | $ | 5,932,171 | $ | 2,418,909 | ||||
Allowance for loan losses at beginning of period | $ | 19,255 | $ | 12,808 | ||||
Provision for loan losses | 8,347 | 2,182 | ||||||
Charge-offs: | ||||||||
Real estate: | ||||||||
Commercial | (2,954 | ) | (150 | ) | ||||
Consumer | (104 | ) | (21 | ) | ||||
Total charge-offs | (3,058 | ) | (171 | ) | ||||
Recoveries: | ||||||||
Real estate: | ||||||||
Residential | 62 | — | ||||||
Commercial | 20 | 23 | ||||||
Consumer | 86 | — | ||||||
Total recoveries | 168 | 23 | ||||||
Net charge-offs | (2,890 | ) | (148 | ) | ||||
Allowance for loan losses at end of period | $ | 24,712 | $ | 14,842 | ||||
Ratio of allowance to end of period loans | 0.42 | % | 0.61 | % | ||||
Ratio of net charge-offs to average loans | 0.05 | % | 0.02 | % |
(1) | Excludes loans held for sale and deferred loan fees. |
As of | As of | |||||||||||||
June 30, 2019 | December 31, 2018 | |||||||||||||
Percent | Percent | |||||||||||||
Amount | of Total | Amount | of Total | |||||||||||
(Dollars in thousands) | ||||||||||||||
Real estate: | ||||||||||||||
Construction and land | $ | 3,096 | 12.5 | % | $ | 2,186 | 11.4 | % | ||||||
Farmland | 54 | 0.2 | 58 | 0.3 | ||||||||||
1 - 4 family residential | 1,843 | 7.5 | 1,613 | 8.4 | ||||||||||
Multi-family residential | 682 | 2.8 | 362 | 1.9 | ||||||||||
Commercial real estate | 8,030 | 32.5 | 6,463 | 33.6 | ||||||||||
Total real estate | $ | 13,705 | 55.5 | % | $ | 10,682 | 55.6 | % | ||||||
Commercial | 10,952 | 44.3 | 8,554 | 44.3 | ||||||||||
Consumer | 55 | 0.2 | 19 | 0.1 | ||||||||||
Total allowance for loan losses | $ | 24,712 | 100.0 | % | $ | 19,255 | 100.0 | % |
June 30, 2019 | December 31, 2018 | ||||||
(Dollars in thousands) | |||||||
Intangible assets | $ | 78,347 | $ | 15,896 | |||
Goodwill | 370,221 | 161,447 |
June 30, 2019 | December 31, 2018 | ||||||
(Dollars in thousands) | |||||||
Subordinated notes | $ | 40,000 | $ | 5,000 | |||
Unamortized debt premium (discount) | 2,575 | (11 | ) | ||||
Total subordinated notes | $ | 42,575 | $ | 4,989 |
June 30, 2019 | December 31, 2018 | ||||||
(Dollars in thousands) | |||||||
Subordinated debentures | $ | 33,868 | $ | 11,702 | |||
Debt discount | (3,957 | ) | — | ||||
Total subordinated debentures | $ | 29,911 | $ | 11,702 |
Description | Subordinated Debt Owed to Trusts | Interest Rate(1) | Maturity Date | |||||
(Dollars in thousands) | ||||||||
Parkway National Capital Trust I | $ | 3,093 | 3-month LIBOR +1.85% | December 2036 | ||||
SovDallas Capital Trust I | $ | 8,609 | 3-month LIBOR +4.0% | July 2038 | ||||
Patriot Bancshares Capital Trust I | $ | 5,155 | 3-month LIBOR +1.85%, not to exceed 11.90% | April 7, 2036 | ||||
Patriot Bancshares Capital Trust II | $ | 17,011 | 3-month LIBOR +1.80%, not to exceed 11.90% | September 15, 2037 |
For the | For the | |||||
Six Months Ended | Year Ended | |||||
June 30, 2019 | December 31, 2018 | |||||
Sources of Funds: | ||||||
Deposits: | ||||||
Noninterest-bearing | 18.5 | % | 19.8 | % | ||
Interest-bearing | 33.9 | 40.8 | ||||
Certificates and other time deposits | 26.9 | 19.4 | ||||
Advances from FHLB | 4.1 | 2.8 | ||||
Other borrowings | 1.0 | 0.5 | ||||
Other liabilities | 0.5 | 0.4 | ||||
Stockholders’ equity | 15.1 | 16.3 | ||||
Total | 100.0 | % | 100.0 | % | ||
Uses of Funds: | ||||||
Loans | 74.3 | % | 75.6 | % | ||
Securities available-for-sale | 12.0 | 7.9 | ||||
Interest-bearing deposits in other banks | 3.1 | — | ||||
Other noninterest-earning assets | 10.6 | 16.5 | ||||
Total | 100.0 | % | 100.0 | % | ||
Average noninterest-bearing deposits to average deposits | 23.3 | % | 24.8 | % | ||
Average loans to average deposits | 93.7 | % | 94.4 | % |
For the | For the | |||||||
Six Months Ended | Six Months Ended | |||||||
June 30, 2019 | June 30, 2018 | |||||||
Net cash provided by operating activities | $ | 40,032 | $ | 26,795 | ||||
Net cash provided (used) in investing activities | (72,893 | ) | (262,700 | ) | ||||
Net cash provided by financing activities | 214,234 | 233,601 | ||||||
Net change in cash and cash equivalents | $ | 181,373 | $ | (2,304 | ) |
As of June 30, | As of December 31, | |||||||||||||
2019 | 2018 | |||||||||||||
Amount | Ratio | Amount | Ratio | |||||||||||
(Dollars in thousands) | ||||||||||||||
Veritex Holdings, Inc. | ||||||||||||||
Total capital (to risk-weighted assets) | $ | 853,046 | 12.80 | % | $ | 394,419 | 12.98 | % | ||||||
Tier 1 capital (to risk-weighted assets) | 784,880 | 11.77 | 370,175 | 12.18 | ||||||||||
Common equity tier 1 (to risk-weighted assets) | 754,968 | 11.32 | 358,473 | 11.80 | ||||||||||
Tier 1 capital (to average assets) | 784,880 | 10.47 | 370,175 | 12.04 | ||||||||||
Veritex Community Bank | ||||||||||||||
Total capital (to risk-weighted assets) | $ | 836,479 | 12.54 | % | $ | 353,640 | 11.64 | % | ||||||
Tier 1 capital (to risk-weighted assets) | 810,888 | 12.16 | 334,385 | 11.01 | ||||||||||
Common equity tier 1 (to risk-weighted assets) | 810,888 | 12.16 | 334,385 | 11.01 | ||||||||||
Tier 1 capital (to average assets) | 810,888 | 10.80 | 334,385 | 10.87 |
• | risks related to the concentration of our business in Texas, and specifically within the Dallas-Fort Worth metroplex and the Houston metropolitan area, including risks associated with any downturn in the real estate sector and risks associated with a decline in the values of single family homes in the Dallas-Fort Worth metroplex and the Houston metropolitan area; |
• | uncertain market conditions and economic trends nationally, regionally and particularly in the Dallas-Fort Worth metroplex and Texas; |
• | changes in market interest rates that affect the pricing of our loans and deposits and our net interest income; |
• | risks related to our strategic focus on lending to small to medium-sized businesses; |
• | the sufficiency of the assumptions and estimates we make in establishing reserves for potential loan losses; |
• | our ability to implement our growth strategy, including identifying and consummating suitable acquisitions; |
• | risks related to the integration of Green and any other acquired businesses, including exposure to potential asset quality and credit quality risks and unknown or contingent liabilities, the time and costs associated with integrating systems, technology platforms, procedures and personnel, the need for additional capital to finance such transactions, and possible failures in realizing the anticipated benefits from acquisitions; |
• | our ability to recruit and retain successful bankers that meet our expectations in terms of customer relationships and profitability; |
• | our ability to retain executive officers and key employees and their customer and community relationships; |
• | risks associated with our limited operating history and the relatively unseasoned nature of a significant portion of our loan portfolio; |
• | risks associated with our commercial real estate and construction loan portfolios, including the risks inherent in the valuation of the collateral securing such loans; |
• | risks associated with our commercial loan portfolio, including the risk for deterioration in value of the general business assets that generally secure such loans; |
• | potential changes in the prices, values and sales volumes of commercial and residential real estate securing our real estate loans; |
• | risks related to the significant amount of credit that we have extended to a limited number of borrowers and in a limited geographic area; |
• | our ability to maintain adequate liquidity and to raise necessary capital to fund our acquisition strategy and operations or to meet increased minimum regulatory capital levels; |
• | potential fluctuations in the market value and liquidity of our investment securities; |
• | the effects of competition from a wide variety of local, regional, national and other providers of financial, investment and insurance services; |
• | our ability to maintain an effective system of disclosure controls and procedures and internal controls over financial reporting; |
• | risks associated with fraudulent and negligent acts by our customers, employees or vendors; |
• | our ability to keep pace with technological change or difficulties when implementing new technologies; |
• | risks associated with difficulties and/or terminations with third-party service providers and the services they provide; |
• | risks associated with unauthorized access, cyber-crime and other threats to data security; |
• | our actual cost savings resulting from the acquisition of Green may be less than expected, we may be unable to realize those cost savings as soon as expected or we incur additional or unexpected costs; |
• | our revenues after the Green acquisition may be less than we expected; |
• | potential impairment on the goodwill we have recorded or may record in connection with business acquisitions; |
• | our ability to comply with various governmental and regulatory requirements applicable to financial institutions; |
• | the impact of recent and future legislative and regulatory changes, including changes in banking, securities and tax laws and regulations and their application by our regulators, such as the Dodd-Frank Act; |
• | uncertainty regarding the future of LIBOR and any replacement alternatives on our business; |
• | governmental monetary and fiscal policies, including the policies of the Federal Reserve; |
• | our ability to comply with supervisory actions by federal and state banking agencies; |
• | changes in the scope and cost of FDIC, insurance and other coverage; and |
• | systemic risks associated with the soundness of other financial institutions |
As of June 30, 2019 | As of December 31, 2018 | |||||||||||
Percent Change | Percent Change | Percent Change | Percent Change | |||||||||
Change in Interest | in Net Interest | in Fair Value | in Net Interest | in Fair Value | ||||||||
Rates (Basis Points) | Income | of Equity | Income | of Equity | ||||||||
+ 300 | 15.23 | % | 9.23 | % | 8.30 | % | (4.60 | )% | ||||
+ 200 | 10.35 | % | 7.24 | % | 5.76 | % | (1.56 | )% | ||||
+ 100 | 5.18 | % | 4.38 | % | 3.00 | % | 0.13 | % | ||||
Base | — | % | — | % | 0.05 | % | — | % | ||||
−100 | (4.99 | )% | (6.08 | )% | (4.08 | )% | (3.99 | )% |
(a) | (b) | (c) | (d) | |||||||||||
Period | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs | Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs | ||||||||||
January 1, 2019 - January 31, 2019 | — | $ | — | — | $ | 50,000,000 | ||||||||
February 1, 2019 - February 28, 2019 | — | — | — | 50,000,000 | ||||||||||
March 1, 2019 - March 31, 2019 | 316,600 | 24.42 | 316,600 | 42,268,000 | ||||||||||
April 1, 2019 - April 30, 2019 | 1,721 | 25.80 | 1,721 | 42,223,000 | ||||||||||
May 1, 2019 - May 31, 2019 | 524,450 | 25.89 | 524,450 | 28,646,000 | ||||||||||
June 1, 2019 - June 30, 2019 | 329,091 | 25.71 | 329,091 | 20,185,000 | ||||||||||
1,171,862 | $ | 25.82 | 1,171,862 | $ | 20,185,000 |
Exhibit Number | Description of Exhibit | |
101* | The following materials from Veritex Holdings’ Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, formatted in Inline XBRL (Extensible Business Reporting Language), furnished herewith: (i) Cover Page, (ii) Condensed Consolidated Balance Sheets, (iii) Condensed Consolidated Statements of Operations, (iv) Condensed Consolidated Statements of Comprehensive Income (Loss), (v) Condensed Consolidated Statements of Changes in Shareholders’ Equity, (vi) Condensed Consolidated Statements of Cash Flows, and (vii) Notes to Condensed Consolidated Financial Statements. |
VERITEX HOLDINGS, INC. | ||
(Registrant) | ||
Date: August 1, 2019 | /s/ C. Malcolm Holland, III | |
C. Malcolm Holland, III | ||
Chairman and Chief Executive Officer | ||
(Principal Executive Officer) | ||
Date: August 1, 2019 | /s/ Terry S. Earley | |
Terry S. Earley | ||
Chief Financial Officer | ||
(Principal Financial and Accounting Officer) | ||
1. | I have reviewed this Quarterly Report on Form 10-Q of Veritex Holdings, Inc. for the quarter ended June 30, 2019; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
1. | I have reviewed this Quarterly Report on Form 10-Q of Veritex Holdings, Inc. for the quarter ended June 30, 2019; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
1. | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
1. | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Held to maturity investments | $ 34,551 | |
Intangible assets, accumulated amortization | $ 13,121 | $ 7,528 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 75,000,000 | 75,000,000 |
Common stock, shares issued (in shares) | 54,639,348 | 24,263,894 |
Common stock, shares outstanding (in shares) | 53,457,486 | 24,253,894 |
Treasury stock, shares (in shares) | 1,181,862 | 10,000 |
Condensed Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Interest and dividend income: | ||||
Loans, including fees | $ 86,786 | $ 32,291 | $ 172,533 | $ 64,358 |
Securities | 7,397 | 1,647 | 14,629 | 2,975 |
Deposits in financial institutions and Fed Funds sold | 1,372 | 613 | 2,926 | 1,300 |
Other investments | 622 | 306 | 1,313 | 334 |
Total interest and dividend income | 96,177 | 34,857 | 191,401 | 68,967 |
Interest expense: | ||||
Transaction and savings deposits | 11,405 | 4,204 | 21,771 | 7,493 |
Certificates and other time deposits | 10,145 | 2,248 | 18,937 | 3,252 |
Advances from FHLB | 2,187 | 234 | 4,242 | 694 |
Subordinated debentures and subordinated notes | 998 | 245 | 2,092 | 477 |
Total interest expense | 24,735 | 6,931 | 47,042 | 11,916 |
Net interest income | 71,442 | 27,926 | 144,359 | 57,051 |
Provision for loan losses | 3,335 | 1,504 | 8,347 | 2,182 |
Net interest income after provision for loan losses | 68,107 | 26,422 | 136,012 | 54,869 |
Noninterest income: | ||||
Service charges and fees on deposit accounts | 3,422 | 846 | 6,939 | 1,779 |
Loan fees | 1,932 | 261 | 3,609 | 535 |
(Loss) gain on sales of investment securities | (642) | 4 | (1,414) | 12 |
Net gain on sales of loans and other assets owned | 1,104 | 416 | 3,474 | 997 |
Rental income | 373 | 452 | 741 | 930 |
Other | (155) | 311 | 1,169 | 795 |
Total noninterest income | 6,034 | 2,290 | 14,518 | 5,048 |
Noninterest expense: | ||||
Salaries and employee benefits | 17,459 | 7,657 | 36,344 | 15,587 |
Occupancy and equipment | 4,014 | 2,143 | 8,143 | 5,377 |
Professional and regulatory fees | 2,814 | 1,528 | 6,232 | 3,632 |
Data processing and software expense | 2,309 | 689 | 4,233 | 1,517 |
Marketing | 961 | 446 | 1,580 | 907 |
Amortization of intangibles | 2,719 | 856 | 5,479 | 1,834 |
Telephone and communications | 625 | 414 | 1,020 | 840 |
Merger and acquisition expense | 5,790 | 1,043 | 37,007 | 1,378 |
Other | 3,205 | 1,393 | 6,851 | 2,403 |
Total noninterest expense | 39,896 | 16,169 | 106,889 | 33,475 |
Net income from operations | 34,245 | 12,543 | 43,641 | 26,442 |
Income tax expense | 7,369 | 2,350 | 9,358 | 5,861 |
Net income | $ 26,876 | $ 10,193 | $ 34,283 | $ 20,581 |
Basic earnings per share (in dollars per share) | $ 0.50 | $ 0.42 | $ 0.63 | $ 0.85 |
Diluted earnings per share (in dollars per share) | $ 0.49 | $ 0.42 | $ 0.62 | $ 0.84 |
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Offering costs | $ 788 | |||
Restricted Stock Units | ||||
Shares withheld to cover tax withholdings (in shares) | 866 | 3,859 | 53,586 | 13,599 |
Employee Stock Options | ||||
Shares withheld to cover tax withholdings (in shares) | 3,763 | 13,709 | 1,691 | |
Shares paid for cashless exercise (in shares) | 4,391 | |||
Green Bancorp, Inc. | Restricted Stock Units | ||||
Shares withheld to cover tax withholdings (in shares) | 25,872 |
Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Nature of Organization Veritex Holdings, Inc. (“Veritex” or the “Company”), a Texas corporation and bank holding company, was incorporated in July 2009 and was formed for the purpose of acquiring one or more financial institutions located in Dallas, Texas and surrounding areas. Veritex, through its wholly-owned subsidiary, Veritex Community Bank (the “Bank”), is a Texas state banking organization, with corporate offices in Dallas, Texas, and currently operates 26 branches and one mortgage office located in the Dallas-Fort Worth metroplex, twelve branches in the Houston metropolitan area and one branch in Louisville, Kentucky. The Bank provides a full range of banking services to individual and corporate customers, which include commercial and retail lending, and the acceptance of checking and savings deposits. The Texas Department of Banking and the Board of Governors of the Federal Reserve System are the primary regulators of the Company and the Bank, and perform periodic examinations to ensure regulatory compliance. On January 1, 2019 (“close date”), the Company completed its acquisition of Green Bancorp, Inc. (“Green”), the parent holding company of Green Bank, N.A, a nationally chartered commercial bank headquartered in Houston, Texas. See additional information on the acquisition in Note 19 - Business Combinations. Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of Veritex and the Bank, its wholly-owned subsidiary. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”), but do not include all of the information and footnotes required for complete financial statements. Intercompany transactions and balances are eliminated in consolidation. In management’s opinion, these interim unaudited condensed consolidated financial statements include all adjustments of a normal recurring nature necessary for a fair statement of the Company’s condensed consolidated financial position at June 30, 2019 and December 31, 2018, condensed consolidated results of operations for the three and six months ended June 30, 2019 and 2018, condensed consolidated stockholders’ equity for the three and six months ended June 30, 2019 and 2018 and condensed consolidated cash flows for the six months ended June 30, 2019 and 2018. Accounting measurements at interim dates inherently involve greater reliance on estimates than at year end and the results for the interim periods shown herein are not necessarily indicative of results to be expected for the full year due in part to global economic and financial market conditions, interest rates, access to sources of liquidity, market competition and interruptions of business processes. These interim unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2018 included within the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the Securities and Exchange Commission on February 27, 2019. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. These estimates and assumptions may also affect disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Segment Reporting The Company has one reportable segment. All of the Company’s activities are interrelated, and each activity is dependent and assessed based on how each activity of the Company supports the others. For example, lending is dependent upon the ability of the Company to fund itself with deposits and borrowings while managing the interest rate and credit risk. Accordingly, all significant operating decisions are based upon analysis of the Bank as one segment or unit. The Company’s chief operating decision-maker, the Chief Executive Officer, uses the consolidated results to make operating and strategic decisions. Reclassifications Some items in the Company’s prior year financial statements were reclassified to conform to the current presentation, including (i) the reclassification of dividend income from other noninterest income into interest on other investments of $302 and $325 for the three and six months ended June 30, 2018, respectively, in order to align with industry peers for comparability purposes and (ii) the reclassification of $1,043 and $1,378 from professional and regulatory fees to merger and acquisition expense on the condensed consolidated statements of income for the three and six months ended June 30, 2018, respectively. Earnings Per Share Earnings per share (“EPS”) are based upon the weighted-average shares outstanding. The table below sets forth the reconciliation between weighted average shares used for calculating basic and diluted EPS for the three and six months ended June 30, 2019 and 2018:
For the three and six months ended June 30, 2019 and 2018, there were no antidilutive shares excluded from the diluted EPS weighted average shares outstanding. Certain Purchased Loans The Company purchases individual loans and groups of loans, through both acquisitions of other banks and the normal course of its operations, some of which have shown evidence of credit deterioration since origination. These purchased credit impaired (“PCI”) loans are recorded at fair value at acquisition in a business combination, such that there is no carryover of the seller’s allowance for loan losses. After consummation of the acquisition, losses are recognized by an increase in the provision for loan losses. These PCI loans are accounted for individually or aggregated into pools of loans based on common risk characteristics such as credit grade, loan type, and date of origination. On the date of acquisition, the Company estimates the amount and timing of expected cash flows for each purchased loan or pool, and the expected cash flows in excess of carrying value are recorded as interest income over the estimated life of the loan or pool (accretable yield). The excess of the loan’s or pool’s contractual principal and interest over expected cash flows is not recorded (nonaccretable difference). Over the life of the loan or pool, expected cash flows continue to be estimated. If the present value of expected cash flows is less than the carrying amount, except for present value changes solely due to changes in timing of cash flows, an impairment loss is recorded through the allowance for loan losses. If the present value of expected cash flows is greater than the carrying amount, any related allowance for loan loss is reversed, with the remaining yield being recognized prospectively through interest income. Derivative Financial Instruments The Company has certain derivative instruments that are entered into pursuant to a customer accommodation program under which the Company enters into an interest rate swap, floor, cap agreement or an interest rate collar with a commercial customer and an agreement with offsetting terms with a correspondent bank. These derivative instruments are not designated as accounting hedges and the changes in net fair value are recognized in noninterest income or expense and the fair value amounts are included in other assets and other liabilities. Interest Rate Swap, Floor, Cap, and Collar Agreements Designated as Cash Flow Hedges Cash flow hedge relationships mitigate exposure to the variability of future cash flows or other forecasted transactions. The Company uses interest rate swaps, floors, caps and collars to manage overall cash flow changes related to interest rate risk exposure on benchmark interest rate loans. The entire change in the fair value related to the derivative instrument is recognized as a component of other comprehensive income and subsequently reclassified into interest income when the forecasted transaction affects income. The Company assesses the “effectiveness” of hedging derivatives on the date an arrangement was entered into and on a prospective basis at least quarterly. Hedge “effectiveness” is determined by the extent to which changes in the fair value of a derivative instrument offset changes in the fair value, cash flows, or carrying value attributable to the risk being hedged. If the relationship between the change in the fair value of the derivative instrument and the change in the hedged item falls within a range considered to be the industry norm, the hedge is considered “highly effective” and qualifies for hedge accounting. A hedge is “ineffective” if the relationship between the changes falls outside the acceptable range. In that case, hedge accounting is discontinued on a prospective basis. The time value of the option is excluded from the assessment of effectiveness and is recognized in earnings using a straight-line amortization method over the life of the hedge arrangement. Loans Held for Sale Loans are classified as held-for-sale when management has positively determined that the loans will be sold in the foreseeable future and the Company has the ability to do so. The Company’s held for sale loans typically consist of certain government guaranteed loans or mortgage loans. The classification may be made upon origination or subsequent to origination or purchase. Once a decision has been made to sell loans not previously classified as held-for-sale, such loans are transferred into the held-for-sale classification and carried at the lower of cost or estimated fair value on an individual loan basis, except for those held for sale loans for which the Company elects to use the fair value option. The fair value of loans held for sale is based on commitments from investors or prevailing market prices, For the Company’s accounting policy on loans held-for-sale for which the fair value option is not elected, refer to Note 1 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. Fair Value Option On a specific identification basis, the Company may elect the fair value option for certain financial instruments in the period the financial instrument was originated or acquired. Changes in fair value for instruments using the fair value option are recorded in noninterest income. Gain on Sale of Guaranteed Portion of Loans, Net The Company originates loans to customers under government guaranteed programs that generally provide for guarantees of 50% to 90% of each loan, subject to a maximum guaranteed amount. The Company can sell the guaranteed portion of the loan in an active secondary market and retains the unguaranteed portion in its portfolio. All sales of government guaranteed loans are executed on a servicing retained basis, and the Company retains the rights and obligations to service the loans. The standard sale structure provides for the Company to retain a portion of the cash flow from the interest payment received on the loan. When a loan sale involves the transfer of an interest less than the entire loan, the controlling accounting method under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 860, Transfers and Servicing, requires the seller to reallocate the carrying basis between the assets transferred and the assets retained based on the relative fair value of the respective assets as of the date of sale. The maximum gain on sale that can be recognized is the difference between the fair value of the assets sold and the reallocated basis of the assets sold. The gain on sale, which is recognized in income, is the sum of the cash premium on the guaranteed loan and the fair value of the servicing assets recognized, less the discount recorded on the unguaranteed portion of the loan retained by the Company. Gain on Sale of Mortgage Loans Held for Sale Mortgage loans held for sale are sold with servicing released. Gains and losses on sales of mortgage loans held for sale are based on the difference between the selling price and the carrying value of the related loan sold. Securities Sold Under Agreements to Repurchase Securities sold under agreements to repurchase represent the purchase of interests in securities by the Company’s customers. Securities sold under agreements to repurchase are stated at the amount of cash received in connection with the transaction. The Company does not account for any of its repurchase agreements as sales for accounting purposes in its financial statements. Repurchase agreements are settled on the following business day. All securities sold under agreements to repurchase are collateralized by pledged securities. The securities underlying the repurchase agreements are held in safekeeping by the Bank’s safekeeping agent. Securities Held-to-Maturity Securities classified as held-to-maturity are carried at cost, adjusted for the amortization of premiums and the accretion of discounts. The Company has the positive intent, and the ability, to hold these assets until their respective maturities. Goodwill The Company evaluates goodwill for impairment on an annual basis or on an interim basis if an event occurs or circumstances change that would more likely than not reduce the fair value of the goodwill below its carrying amount, in accordance with ASC 350-20. During the first quarter of 2019, the Company changed its annual goodwill impairment testing date from December 31 to October 31. The Company believes that the new date is preferable as it provides additional time prior to the Company’s fiscal year end to complete the annual goodwill impairment test, especially in the event the Company pursues potential future acquisitions and experiences growth. This change does not accelerate, delay, avoid or cause an impairment charge, nor does this change result in adjustments to the Company’s previously issued financial statements. There were no impairments of goodwill recorded during the six months ended June 30, 2019 and 2018. Liability-Classified Awards The fair value of a liability award is determined on a quarterly basis beginning at the grant date until final vesting. Changes in the fair value of liability awards are recorded over the vesting period of the award. Changes in the fair value of liability awards that occur during the requisite service period are recognized as compensation cost over that period. The percentage of the fair value that is accrued as compensation cost at the end of each period equals the percentage of the requisite service that has been rendered at that date. Changes in the fair value of a liability award that occur after the end of the requisite service period are recognized as compensation cost in the period in which the changes occur. Any difference between the amount for which a liability award is settled and its fair value at the settlement date is an adjustment of compensation cost in the period of settlement. Compensation cost for liability awards is recorded in salaries and employee benefits and the associated liability is recorded in accounts payable and accrued expenses. For liability to equity award modifications, the aggregate amount of compensation cost recognized is the fair value based measure of the award on the modification date. On the modification date, the Company reclassifies the previously recorded share-based compensation liability to additional paid-in capital. Adoption of New Accounting Standards FASB Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) (“ASU 2016-02”) requires that lessees and lessors recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU 2018-11, Targeted Improvements. ASU 2016-02 provides for a modified retrospective transition approach requiring lessees to recognize and measure leases on the balance sheet at the beginning of either the earliest period presented or as of the beginning of the period of adoption. The Company elected to apply ASU 2016-02 as of the beginning of the period of adoption (January 1, 2019) and will not restate comparative periods. The Company has no material leasing arrangements for which it is the lessor of property or equipment. The Company has made an accounting policy election not to apply the recognition requirements in the new standard to short-term leases. The Company has elected to apply the package of practical expedients as both the lessor and lessee allowed by the new standard under which the Company need not reassess whether any expired or existing contracts are or contain leases, the Company need not reassess the lease classification for any expired or existing lease, and the Company need not reassess initial direct costs for any existing leases. The Company has also elected to use the practical expedient to make an accounting policy election for leases of certain underlying assets to include both lease and nonlease components as a single component and account for that single component as a lease. The Company’s operating leases relate primarily to office space and bank branches. Right-of-use (“ROU”) assets and operating lease liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents the Company’s incremental borrowing rate at the lease commencement date. ROU assets are further adjusted for lease incentives, deferred rent and prepaid rent. Operating lease expense, which is comprised of amortization of the ROU asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term, and is recorded in occupancy and equipment expense in the consolidated statements of income. As a result of implementing ASU 2016-02, the Company recognized an operating lease ROU asset of $18,705 and an operating lease liability of $18,753 on January 1, 2019, with no impact on the consolidated statement of income or consolidated statement of cash flows compared to the prior lease accounting model. The ROU asset and operating lease liability amounts recorded upon implementing ASU 2016-02 include the ROU asset and lease liability acquired/assumed from Green. Refer to Note 19 - Business Combinations for additional information. The ROU asset and operating lease liability are recorded in other assets and other liabilities, respectively, in the condensed consolidated balance sheets. See Note 9 - Leases for additional information. Recent Accounting Pronouncements ASU 2017-04 “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”) eliminates Step 2 from the goodwill impairment test. In addition, the amendment eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. For public companies, ASU 2017-04 is effective for fiscal years beginning after December 15, 2019 with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is in the process of evaluating the impact of this pronouncement, which is not expected to have a significant impact on the consolidated financial statements. ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost basis, ASU 2016-13 eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available for sale debt securities, credit losses should be measured in a manner similar to current GAAP, however ASU 2016-13 will require that credit losses be presented as an allowance rather than as a write-down. ASU 2016-13 affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The amendments affect loans, debt securities, trade receivables, net investments in leases, off-balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. For public business entities, ASU 2016-13 is effective for financial statements issued for fiscal years beginning after December 15, 2019 and interim periods therein, with early adoption permitted. The Company expects ASU 2016-13 to have a significant impact on the Company’s accounting policies, internal control over financial reporting and footnote disclosures. As part of the Company’s evaluation process, the Company has established a working group that includes individuals from various functional areas to implement this new accounting standard. Early implementation activities focused on system needs, designing financial models to estimate expected credit losses in accordance with the standard and assessing data, including the data acquired in connection with the Company’s acquisition of Green. The Company is currently finalizing and documenting new processes and controls, challenging estimated credit loss model assumptions and outputs, refining the qualitative framework, as well as drafting relating policies and disclosures. Additionally, parallel runs will be enhanced throughout 2019 as processes, controls and policies are finalized by the Company.
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Supplemental Statement of Cash Flows |
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Supplemental Cash Flow Elements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Statement of Cash Flows | Supplemental Statement of Cash Flows Other supplemental cash flow information is presented below:
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Share Transactions |
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Jun. 30, 2019 | |
Equity [Abstract] | |
Share Transactions | Share Transactions On January 28, 2019, the Company's Board of Directors (the “Board”) authorized a stock buyback program (the "Stock Buyback Program") pursuant to which the Company may, from time to time, purchase up to $50,000 of its outstanding common stock. The shares may be repurchased in the open market or in privately negotiated transactions from time to time, depending upon market conditions and other factors, and in accordance with applicable regulations of the Securities and Exchange Commission (“SEC”). The Stock Buyback Program expires on December 31, 2019 and does not obligate the Company to purchase any shares. The Stock Buyback Program may be terminated or amended by the Board at any time prior to its expiration. During the three and six months ended June 30, 2019, 855,262 and 1,171,862 shares were repurchased and held as treasury stock at an average price of $25.82 and $25.44, respectively.
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Debt Securities |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Securities | Securities Debt securities have been classified in the condensed consolidated balance sheets according to management’s intent. The amortized cost, related gross unrealized gains and losses, and the fair value of available for sale and held to maturity securities are as follows:
The Company reassessed the classification of certain investments and effective January 1, 2019, the Company transferred $4,758 of municipal securities and $3,045 of mortgage-backed securities from available for sale to held to maturity at fair value. The related unrealized gain was nominal. No gain or loss was recorded at the time of the transfer.
The following tables disclose the Company’s investment securities that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for 12 months or more:
The number of investment positions in an unrealized loss position totaled 24 and 142 at June 30, 2019 and December 31, 2018, respectively. The Company does not believe these unrealized losses are “other than temporary.” In estimating other than temporary impairment losses, management considers, among other things, the length of time and the extent to which the fair value has been less than cost and the Company’s financial condition and near-term prospects. Additionally, (i) the Company does not have the intent to sell investment securities prior to recovery and/or maturity, (ii) it is more likely than not that the Company will not have to sell these securities prior to recovery and/or maturity and (iii) the length of time and extent that fair value has been less than cost is not indicative of recoverability. The unrealized losses noted are interest rate-related due to the level of interest rates at June 30, 2019 compared to the rates time of purchase. The Company has reviewed the ratings of the issuers and has not identified any issues related to the ultimate repayment of principal as a result of credit concerns regarding these securities. The Company from time to time may dispose of an impaired security in response to asset/liability management decisions, future market movements or business plan changes, or if the net proceeds can be reinvested at a rate of return that is expected to recover the loss within a reasonable period of time. In 2019, the Company sold 142 fixed maturity securities from its available for sale portfolio as part of a repositioning strategy recommended by the Company’s asset manager. The amortized costs and estimated fair values of securities available for sale, by contractual maturity, as of the dates indicated, are shown in the table below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Mortgage-backed securities, collateralized mortgage obligations and asset-backed securities typically are issued with stated principal amounts, and the securities are backed by pools of mortgage loans and other loans that have varying maturities. The terms of mortgage-backed securities, collateralized mortgage obligations and asset-backed securities thus approximates the terms of the underlying mortgages and loans and can vary significantly due to prepayments. Therefore, these securities are not included in the maturity categories below. .
Proceeds from sales of investment securities available for sale and gross gains and losses for the six months ended June 30, 2019 and 2018 were as follows:
There was a blanket floating lien on all securities held by the Company to secure Federal Home Loan Bank (“FHLB”) advances as of June 30, 2019 and December 31, 2018.
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Loans and Allowance for Loan Losses |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans and Allowance for Loan Losses | Loans and Allowance for Loan Losses Loans held for investment in the accompanying condensed consolidated balance sheets are summarized as follows:
Included in the net loan portfolio as of June 30, 2019 and December 31, 2018 was an accretable discount related to purchased performing and purchased credit impaired (“PCI”) loans acquired within a business combination in the approximate amounts of $59,688 and $22,309, respectively. The discount is being accreted into income on a level-yield basis over the life of the loans. In addition, included in the net loan portfolio as of June 30, 2019 and December 31, 2018 is a discount on retained loans from sale of originated SBA loans of $3,005 and $2,398, respectively. The majority of the Company’s loan portfolio consists of loans to businesses and individuals in the Dallas-Fort Worth metroplex and the Houston metropolitan area. This geographic concentration subjects the loan portfolio to the general economic conditions within these areas. The risks created by this concentration have been considered by management in the determination of the adequacy of the allowance for loan losses. Management believes the allowance for loan losses was adequate to cover estimated losses on loans as of June 30, 2019 and December 31, 2018. Non-Accrual and Past Due Loans Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on non-accrual status when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. Loans may be placed on non-accrual status regardless of whether or not such loans are considered past due. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Non-accrual loans aggregated by class of loans, as of June 30, 2019 and December 31, 2018, were as follows:
At June 30, 2019 and December 31, 2018, non-accrual loans included PCI loans of $7,824 and $16,902, respectively, for which discount accretion has been suspended because the extent and timing of cash flows from these PCI loans can no longer be reasonably estimated. During the three and six months ended June 30, 2019, interest income not recognized on non-accrual loans, excluding PCI loans, was $137 and $288, respectively. During the three and six months ended June 30, 2018, interest income not recognized on non-accrual loans, excluding PCI loans, was $7 and $33, respectively. An age analysis of past due loans, aggregated by class of loans, as of June 30, 2019 and December 31, 2018 is as follows:
(1) Loans 90 days past due and still accruing excludes $27,821 of PCI loans as of June 30, 2019.
(1) Loans 90 days past due and still accruing excludes $527 of PCI loans as of December 31, 2018. Loans past due 90 days and still accruing increased to $25,774 as of June 30, 2019. These loans are also considered well-secured, and are in the process of collection with plans in place for the borrowers to bring the notes fully current or to subsequently be renewed. The Company believes that it will collect all principal and interest due on each of the loans past due 90 days and still accruing. Impaired Loans Impaired loans are those loans for which it is probable the Company will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement, including scheduled principal and interest payments. All troubled debt restructurings (“TDRs”) are considered impaired loans. Impaired loans are measured based on either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent. Substantially all of the Company’s impaired loans are measured at the fair value of the collateral. Impaired loans, or portions thereof, are charged off when deemed uncollectible. Impaired loans and TDRs at June 30, 2019 and December 31, 2018 are summarized in the following tables.
(1) Loans reported exclude PCI loans.
(1) Loans reported exclude PCI loans. Interest payments on impaired loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis. Troubled Debt Restructuring Modifications of terms for the Company’s loans and their inclusion as TDRs are based on individual facts and circumstances. Loan modifications that are included as TDRs may involve a reduction of the stated interest rate of the loan, an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk, or deferral of principal payments, regardless of the period of the modification. The recorded investment in TDRs was $1,150 and $1,171 as of June 30, 2019 and December 31, 2018, respectively. There were no new TDRs during the six months ended June 30, 2019 and 2018. There were no loans modified as TDR loans within the previous 12 months and for which there was a payment default during the three and six months ended June 30, 2019 and 2018. A default for purposes of this disclosure is a TDR loan in which the borrower is 90 days past due or results in the foreclosure and repossession of the applicable collateral. Interest income recorded during the three and six months ended June 30, 2019 and 2018 on TDR loans and interest income that would have been recorded had the terms of the loans not been modified was minimal. The Company has not committed to lend additional amounts to customers with outstanding loans classified as TDRs as of June 30, 2019 or December 31, 2018. Credit Quality Indicators From a credit risk standpoint, the Company classifies its loans in one of the following categories: (i) pass, (ii) special mention, (iii) substandard or (iv) doubtful. Loans classified as loss are charged-off. Loans not rated special mention, substandard, doubtful or loss are classified as pass loans. The classifications of loans reflect a judgment about the risks of default and loss associated with the loan. The Company reviews the ratings on criticized credits monthly. Ratings are adjusted to reflect the degree of risk and loss that is felt to be inherent in each credit as of each monthly reporting period. All classified credits are evaluated for impairment. If impairment is determined to exist, a specific reserve is established. The Company’s methodology is structured so that specific reserves are increased in accordance with deterioration in credit quality (and a corresponding increase in risk and loss) or decreased in accordance with improvement in credit quality (and a corresponding decrease in risk and loss). Credits rated special mention show clear signs of financial weaknesses or deterioration in credit worthiness, however, such concerns are generally not so pronounced that the Company expects to experience significant loss within the short-term. Such credits typically maintain the ability to perform within standard credit terms and credit exposure is not as prominent as credits with a lower rating. Credits rated substandard are those in which the normal repayment of principal and interest may be, or has been, jeopardized by reason of adverse trends or developments of a financial, managerial, economic or political nature, or important weaknesses which exist in collateral. A protracted workout on these credits is a distinct possibility. Prompt corrective action is therefore required to strengthen the Company’s position, and/or to reduce exposure and to assure that adequate remedial measures are taken by the borrower. Credit exposure becomes more likely in such credits and a serious evaluation of the secondary support to the credit is performed. Credits rated doubtful are those in which full collection of principal appears highly questionable, and in which some degree of loss is anticipated, even though the ultimate amount of loss may not yet be certain and/or other factors exist which could affect collection of debt. Based upon available information, positive action by the Company is required to avert or minimize loss. Credits rated doubtful are generally also placed on non-accrual. Credits classified as PCI are those that, at acquisition date, had the characteristics of substandard loans and it was probable, at acquisition, that all contractually required principal and interest payments would not be collected. The Company evaluates these loans quarterly on a projected cash flow basis. The following tables summarize the Company’s internal ratings of its loans, including PCI loans, as of June 30, 2019 and December 31, 2018:
An analysis of the allowance for loan losses for the six months ended June 30, 2019 and 2018 and year ended December 31, 2018 is as follows:
The allowance for loan losses as a percentage of total loans was 0.42%, 0.75% and 0.61% as of June 30, 2019, December 31, 2018 and June 30, 2018, respectively. The following tables summarize the activity in the allowance for loan losses by portfolio segment for the periods indicated.
The Company’s recorded investment in loans as of June 30, 2019 and December 31, 2018 related to the balance in the allowance for loan losses on the basis of the Company’s impairment methodology is as follows:
Loans acquired with evidence of credit quality deterioration at acquisition, for which it was probable that the Company would not be able to collect all contractual amounts due, were accounted for as PCI loans. The carrying amount of PCI loans included in the condensed consolidated balance sheets and the related outstanding balances at June 30, 2019 and December 31, 2018 are set forth in the table below. The outstanding balance represents the total amount owed, including accrued but unpaid interest, and any amounts previously charged off.
Changes in the accretable yield for PCI loans for the three and six months ended June 30, 2019 and 2018 are included in table below.
During the three and six months ended June 30, 2019, the Company received cash collections in excess of expected cash flows on PCI loans of $23 and $413, respectively. During the three and six months ended June 30, 2018, the Company received cash collections in excess of expected cash flows on PCI loans of $1,760 and $1,760, respectively. Servicing Assets The Company was servicing loans of approximately $273,301 and $74,615 as of June 30, 2019 and 2018, respectively. A summary of the changes in the related servicing assets are as follows:
The estimated fair value of the servicing assets approximated the carrying amount at June 30, 2019, December 31, 2018 and June 30, 2018. Fair value is estimated by discounting estimated future cash flows from the servicing assets using discount rates that approximate current market rates over the expected lives of the loans being serviced. A valuation allowance is recorded when the fair value is below the carrying amount of the asset. As of June 30, 2019 and 2018, there was no valuation allowance recorded. The Company may also receive a portion of subsequent interest collections on loans sold that exceed the contractual servicing fees. In that case, the Company records an interest-only strip based on its relative fair market value and the other components of the loans. There was no interest-only strip receivable recorded at June 30, 2019 and December 31, 2018.
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | Fair Value The following table summarizes assets measured at fair value on a recurring basis as of June 30, 2019 and December 31, 2018, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:
(1) Represents loans held for sale elected to be carried at fair value upon origination or acquisition.
There were no liabilities measured at fair value on a recurring basis as of December 31, 2018. There were no transfers between Level 2 and Level 3 during the six months ended June 30, 2019 and 2018. The following table summarizes assets measured at fair value on a non-recurring basis as of June 30, 2019 and December 31, 2018, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:
At June 30, 2019, impaired loans had a carrying value of $5,755, with $2,669 specific allowance for loan loss allocated. At December 31, 2018, impaired loans had a carrying value of $2,584, with $368 specific allowance for loan loss allocated. Other real estate owned consisted of one property recorded with a fair value of approximately $1,748 at June 30, 2019. There were no real estate owned properties recorded at fair value at December 31, 2018. There were no liabilities measured at fair value on a non-recurring basis as of June 30, 2019 or December 31, 2018. Fair Value of Financial Instruments The Company’s methods of determining fair value of financial instruments in this Note are consistent with its methodologies disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, with the exception of securities sold under agreements to repurchase. Please refer to Note 16 in the Company’s Annual Report on Form 10-K for information on these methods. Securities sold under agreements to repurchase: The carrying amount of securities sold under agreements to repurchase is a reasonable estimate of fair value because these borrowings reprice at market rates generally daily. The estimated fair values and carrying values of all financial instruments under current authoritative guidance as of June 30, 2019 and December 31, 2018 were as follows:
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Derivative Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | Derivative Financial Instruments The Company primarily uses derivatives to manage exposure to market risk, including interest rate risk and credit risk and to assist customers with their risk management objectives. Management will designate certain derivatives as hedging instruments in a qualifying hedge accounting relationship. The Company’s remaining derivatives consist of derivatives held for customer accommodation or other purposes. The fair value of derivative positions outstanding is included in “other assets” and “accounts payable and accrued expenses” on the accompanying condensed consolidated balance sheets and in the net change in each of these financial statement line items in the accompanying condensed consolidated statements of cash flows. For derivatives not designated as hedging instruments, gains and losses due to changes in fair value are included in noninterest income and the operating section of the consolidated statement of cash flows. For derivatives designated as hedging instruments, the entire change in the fair value related to the derivative instrument is recognized as a component of other comprehensive income and subsequently reclassified into interest income when the forecasted transaction affects income. The notional amounts and estimated fair values as of June 30, 2019 were as shown in the table below. The Company did not have hedging or non-hedging derivative instruments as of December 31, 2018.
Pre-tax gain (loss) included in the condensed consolidated statements of income and related to derivative instruments for the three and six months ended June 30, 2019 was as follows:
Cash Flow Hedges Cash flow hedge relationships mitigate exposure to the variability of future cash flows or other forecasted transactions. The Company uses interest rate swaps, floors, caps and collars to manage overall cash flow changes related to interest rate risk exposure on benchmark interest rate loans (one-month LIBOR). In May 2019, the Company entered into a $275,000 notional interest rate floor with a two-year term. The interest rate floor has a purchased floor strike of 2.43%. The purchased option price was $2,665, which is reflected within “accrued interest receivable and other assets“ in the condensed consolidated statements of cash flows. Interest Rate Swap, Floor, Cap and Collar Agreements Not Designated as Hedging Derivatives In order to accommodate the borrowing needs of certain commercial customers, the Company has entered into interest rate swap or cap agreements with those customers. These interest rate derivative contracts effectively allow the Company’s customers to convert a variable rate loan into a fixed rate loan. In order to offset the exposure and manage interest rate risk, at the time an agreement was entered into with a customer, the Company entered into an interest rate swap or cap with a correspondent bank counterparty with offsetting terms. These derivative instruments are not designated as accounting hedges and changes in the net fair value are recognized in noninterest income or expense. Because the Company acts as an intermediary for its customers, changes in the fair value of the underlying derivative contracts substantially offset each other and do not have a material impact on the Company’s results of operations. The fair value amounts are included in other assets and other liabilities. The following is a summary of the interest rate swaps outstanding as of June 30, 2019. The Company did not have interest rate swaps as of December 31, 2018.
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Financial Instruments with Off-Balance Sheet Risk |
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Jun. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments with Off-Balance Sheet Risk | Financial Instruments with Off-Balance Sheet Risk The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the condensed consolidated balance sheets. The Company’s exposure to credit loss in the event of nonperformance by the other party to a financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. The following table sets forth the approximate amounts of these financial instruments as of June 30, 2019 and December 31, 2018:
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Management evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary upon extension of credit, is based on management’s credit evaluation of the borrower. Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Standby letters of credit generally have fixed expiration dates or other termination clauses and may require payment of a fee. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Company’s policy for obtaining collateral and the nature of such collateral is essentially the same as that involved in making commitments to extend credit. Although the maximum exposure to loss is the amount of such commitments, management currently anticipates no material losses from such activities.
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Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases Operating leases in which the Company is the lessee are recorded as operating lease ROU assets and operating lease liabilities, included in other assets and accounts payable and accrued expenses, respectively, on the Company’s condensed consolidated balance sheets. The Company does not currently have finance leases in which it is the lessee. Operating lease ROU assets represent the Company’s right to use an underlying asset during the lease term and operating liabilities represent its obligation to make lease payments arising from the lease. ROU assets and operating lease liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents the Company’s incremental borrowing rate at the lease commencement date. ROU assets are further adjusted for lease incentives. Operating lease expense, which is comprised of amortization of the ROU asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term, and is recorded in net occupancy expense in the condensed consolidated statements of income and other comprehensive income. The Company’s leases related primarily to office space and bank branches with remaining lease terms generally ranging from one to 8 years. Certain lease arrangements contain extension options which typically range from 5 to 10 years at the then fair market rental rates. As these extension options are not generally considered reasonably certain of exercise, they are not included in the lease term. As of June 30, 2019, operating lease ROU assets and liabilities were $15,712 and $16,294, respectively. The table below summarizes the Company’s net lease cost:
The table below summarized other information related to the Company’s operating leases:
A maturity analysis of operating lease liabilities and reconciliation of the undiscounted cash flows to the total operating lease liability is as follows:
There were no sale and leaseback transactions, leveraged leases or lease transactions with related parties during the six months ended June 30, 2019. As of June 30, 2019, the Company does not have additional operating leases for office space that are anticipated to commence during the third quarter of 2019.
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Intangible Assets and Goodwill |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets and Goodwill | Intangible Assets and Goodwill Intangible assets in the accompanying condensed consolidated balance sheets are summarized as follows:
For the six months ended June 30, 2019 and June 30, 2018, amortization expense related to intangible assets of approximately $5,593 and $2,180, respectively, was included within amortization of intangibles and other income within the condensed consolidated statements of income. Changes in the carrying amount of goodwill are summarized as follows for the three months ended June 30, 2019:
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Deposits |
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Banking and Thrift [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deposits | Deposits Deposits in the accompanying condensed consolidated balance sheets are summarized as follows:
As of June 30, 2019, the scheduled maturities of certificates of deposit were as follows:
The aggregate amount of demand deposit overdrafts that have been reclassified as loans were $488 and $153 as of June 30, 2019 and December 31, 2018, respectively. Brokered deposits at June 30, 2019 and December 31, 2018 totaled approximately $597,056 and $234,190, respectively.
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Advances from the Federal Home Loan Bank ("FHLB") |
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Banking and Thrift [Abstract] | |||||||||||||||||||||||||||||
Advances from the Federal Home Loan Bank (FHLB) | Advances from the Federal Home Loan Bank Advances from the FHLB totaled $512,945 and $28,019 at June 30, 2019 and December 31, 2018, respectively. As of June 30, 2019, the advances were collateralized by a blanket floating lien on certain securities and loans, had a weighted average rate of 2.50% and mature on various dates from 2019 to 2022. The Company had the availability to borrow additional funds of approximately $1,036,260 as of June 30, 2019. Contractual maturities of FHLB advances at June 30, 2019 were as follows:
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Subordinated Debentures and Subordinated Notes |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Subordinated Debentures and Subordinated Notes | Subordinated Debentures and Subordinated Notes Subordinated Notes Total subordinated notes as of June 30, 2019 and December 31, 2018 were as follows:
In connection with the Company’s acquisition of Green, the Company assumed $35,000 of 8.50% Fixed-to-Floating Rate Subordinated Notes (the “Notes”) that mature on December 15, 2026. The Notes, which qualify as Tier 2 capital under the Federal Reserve’s capital guidelines, have an interest rate of 8.50% per annum during the fixed-rate period from date of issuance through December 15, 2021. Interest is payable semi-annually on each June 15 and December 15 through December 15, 2021. During the floating rate period from December 15, 2021, but excluding the maturity date or date of earlier redemption, the Notes will bear interest at a rate per annum equal to three-month LIBOR for the related interest period plus 6.685%, payable quarterly on each March 15, June 15, September 15 and December 15. The Notes are subordinated in right of payment to all of the Company's senior indebtedness and effectively subordinated to all existing and future debt and all other liabilities of the Bank. The Company may elect to redeem the Notes (subject to regulatory approval), in whole or in part, on any early redemption date which is any interest payment date on or after December 15, 2021 at a redemption price equal to 100% of the principal amount plus any accrued and unpaid interest. Other than on an early redemption date, the Notes cannot be accelerated except in the event of bankruptcy or the occurrence of certain other events of bankruptcy, insolvency or reorganization. Subordinated Debentures Trust Preferred Securities Total subordinated debentures as of June 30, 2019 and December 31, 2018 were as follows:
In connection with the Company’s acquisition of Green, the Company assumed obligations related to the subordinated debentures issued to Patriot Bancshares Capital Trust I and Patriot Bancshares Capital Trust II. A summary of information related to these two issues of subordinated debentures is set forth in the table below:
Each of the trusts is a capital trust organized for the sole purpose of issuing trust securities and investing the proceeds in the Company’s junior subordinated debentures. The trust preferred securities of each trust represent preferred beneficial interests in the assets of the respective trusts and are subject to mandatory redemption upon payment of the junior subordinated debentures held by the trust. The common securities of each trust are owned by the Company. Each trust’s ability to pay amounts due on the trust preferred securities is solely dependent upon the Company making payment on the related subordinated debentures. The debentures, which are the only assets of each trust, are subordinate and junior in right of payment to all of the Company’s present and future senior indebtedness. The Company has fully and unconditionally guaranteed each trust’s obligations under the trust securities issued by such trust to the extent not paid or made by each trust, provided such trust has funds available for such obligations. The trust preferred securities issued by each of the trusts as of June 30, 2019, may be redeemed at the Company’s option. Under the provisions of each issue of the debentures, the Company has the right to defer payment of interest on the debentures at any time, or from time to time, for periods not exceeding five years. If interest payments on either issue of the debentures are deferred, the distributions on the applicable trust preferred securities and common securities will also be deferred.
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Stock-Based and Liability-Classified Awards |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based and Liability-Classified Awards | Stock-Based and Liability-Classified Awards Veritex 2010 Stock Option and Equity Incentive Plan (“2010 Incentive Plan”) The closing of the Green acquisition on January 1, 2019 constituted a change-in-control under the 2010 Incentive Plan. As a result, all unvested awards as of December 31, 2018 were accelerated to fully vest on the close date in accordance with the 2010 Incentive Plan. The Company recognized no stock compensation expense related to the 2010 Incentive Plan three months ended June 30, 2019. The Company recognized stock compensation expense related to the 2010 Incentive Plan of $2 for the six months ended June 30, 2019. The Company recognized stock compensation expense related to the 2010 Incentive Plan of $6 and $11, respectively, for the three and six months ended June 30, 2018. A summary of option activity under the 2010 Incentive Plan for the six months ended June 30, 2019 and 2018, and changes during the periods then ended is presented below:
As of June 30, 2019, there was no unrecognized stock compensation expense related to non-performance based stock options. As of December 31, 2018 and June 30, 2018, there was approximately $2 and $5, respectively, of unrecognized compensation expense related to non-performance based stock options. No restricted stock units were granted or forfeited under the 2010 Incentive Plan during 2019 and no restricted stock units were outstanding as of June 30, 2019. A summary of the status of the Company’s restricted stock units under the 2010 Incentive Plan as of June 30, 2018, and changes during the six months then ended is as follows:
As of June 30, 2019 and December 31, 2018, there was no remaining unrecognized compensation expense related to non-vested restricted stock units. As of June 30, 2018, there was $8 of total unrecognized compensation expense related to unvested restricted stock units. A summary of the fair value of the Company’s stock options exercised and restricted stock units vested under the 2010 Incentive Plan as of June 30, 2019 and 2018 is presented below:
Veritex 2014 Omnibus Incentive Plan (“2014 Omnibus Plan”) and Green Acquired Omnibus Plans Accelerated Vesting of 2014 Omnibus Plan Awards In connection with the acquisition of Green, which closed on January 1, 2019, the Company approved the full acceleration of vesting of all unvested 2014 Omnibus Plan awards on the close date. The consummation of the acquisition constituted a change in control of the Company under the 2014 Omnibus Plan. Under its terms, accelerated vesting upon a change in control is permissible, and the Board approved that all unvested equity awards issued under the 2014 Omnibus Plan would fully vest as of the consummation of the acquisition on January 1, 2019. The Company accounted for the discretionary vesting of awards as a modification of the original awards. This modification resulted in the accelerated vesting of 133,455 non-performance based restricted stock units, 51,284 performance based restricted stock units and 320,405 non-performance based stock options on January 1, 2019, the modification date. The incremental compensation cost resulting from these modifications was nominal for the three and six months ended June 30, 2019. The accelerated vesting of awards on January 1, 2019 resulted in the immediate recognition of $5,535 of stock compensation expense for the three and six months ended June 30, 2019. This stock compensation expense is included in merger and acquisition expenses in the condensed consolidated statements of income. Post-combination Expense of Green Awards In connection with the acquisition of Green and pursuant to the terms of the related definitive agreement, all of Green’s outstanding and unvested equity awards prior to the close date, including stock options and restricted stock units, became fully vested as of the close date. The acceleration of vesting of Green’s restricted stock units according to the terms of the acquisition consisted of a modification of the original awards, with exception of certain awards that had original accelerated vesting terms. The accounting treatment for the outstanding Green awards in the context of the business combination was to allocate the fair market value of Green’s stock options and restricted stock units at the close date attributable to pre-combination service to the aggregate merger consideration. The difference between the fair market value of the replacement options as well as the fully vested restricted stock units and the amount allocable to pre-combination service was considered a post-combination expense to the Company after the close date. The estimated post combination expense to the Company as a result of the business combination was $10,129, which was immediately expensed in the post-combination financial statements for the three and six months ended June 30, 2019, as there were no further service conditions. This compensation expense is included in merger and acquisition expenses in the condensed consolidated statements of income. 2018 Performance-Based Restricted Stock Units The Company determined in January 2019 that 67% of the performance-based restricted stock units granted during the year ended December 31, 2018, or 12,704 units, should be forfeited in January 2019 based on the performance results of the Company’s total shareholder return (“TSR”) relative to the SNL Micro Cap US Bank Index for the performance period starting on December 31, 2017 and ending on December 31, 2018. 2019 Grants of Restricted Stock Units In January 2019, the Company granted non-performance-based and performance based restricted stock units under the 2014 Omnibus Plan and the Veritex (Green) 2014 Omnibus Equity Incentive Plan (“Veritex (Green) 2014 Plan”). The non-performance-based restricted stock units vest in three or five equal installments on each anniversary of the grant date. There were also non-performance-based restricted stock units granted with no vesting conditions on the grant date. The performance-based restricted stock units granted in January 2019 cliff vest on January 1, 2022 with the performance period starting on December 31, 2018 and ending on December 31, 2021. The vesting percentage is determined based on the Company’s TSR relative to the TSR of 15 peer companies (“Peer Group”) over the performance period. Below is a table showing the range of vesting percentages for the performance-based restricted stock units based on the Company’s TSR percentile rank.
Certain non-performance and performance-based restricted stock units granted under the 2014 Omnibus Plan in January 2019 had terms requiring cash settlement of the awards unless and until the awards were approved by the shareholders of the Company. At the Company’s 2019 annual meeting of shareholders, the Company sought approval from its shareholders to authorize the amendment and restatement of the 2014 Omnibus Plan to increase the aggregate number of shares that are available for grant thereunder, among certain other terms, as well as approval of the 2019 equity awards so they may be settled in shares rather than in cash (the “Shareholder Approval”). Other terms amended in the 2014 Omnibus Plan included allowing the Compensation Committee to delegate to any of the Company’s officers certain limited authority to grant awards under the 2014 Omnibus Plan except to himself or herself. The Compensation Committee of the Board approved the amendment and restatement of the 2014 Omnibus Plan in April 2019, and the Shareholder Approval was received in May 2019. Pursuant to the 2014 Omnibus Plan amendments, the Compensation Committee also delegated to the Chief Executive Officer of the Company the authority to grant time-based restricted stock unit awards or time-based stock option awards representing up to an aggregate 100,000 shares, which are to be ratified by the Compensation Committee after the grant date. The Chief Executive Officer may not grant to any single individual (a) time-based stock option awards to any representing an aggregate of more than 10,000 shares or (b) time-based restricted stock unit awards representing an aggregate of more than 15,000 shares. Awards granted pursuant to this delegation of authority may have vesting periods of up to 5 years, as determined by the Chief Executive Officer. Given the requirement to settle the 2019 equity awards in cash until Shareholder Approval was obtained, the Company accounted for these awards as liability-classified awards and measured them at fair value through the date of Shareholder Approval. On the date of Shareholder Approval, known as the modification date, the Company reclassified the liability-classified awards to equity awards at fair value. A Monte Carlo simulation was used to estimate the fair value of performance-based restricted stock units on the grant date that include a market condition based on the Company’s TSR relative to its Peer Group, which determines the eligible number of restricted stock units to vest. A similar Monte Carlo valuation was also obtained on the date of Shareholder Approval, when the awards were reclassified from liability to equity awards. 2019 Grant of Stock Options and Tandem Stock Appreciation Rights In January 2019, the Company granted non-performance options under the 2014 Omnibus Plan and Veritex (Green) 2014 Plan that vest in three equal installments on each anniversary of the grant date. The fair value of each option award is estimated on the grant date using the Black-Scholes option-pricing model with the following assumptions used for the grants for the six months ended June 30, 2019 and 2018:
The expected life is based on the amount of time that options granted are expected to be outstanding. The dividend yield assumption is based on the Company’s history. The expected volatility is based on historical volatility of the Company. The risk-free interest rates are based upon yields of U.S. Treasury issues with a term equal to the expected life of the option being valued. In addition, in January 2019 the Company granted certain non-performance based stock options and tandem stock appreciation rights ("SARs"). The terms of the SARs provided that the SARs would become effective only if the Board and/or the shareholders of the Company failed to approve the issuance of shares with respect to the corresponding non-performance based stock options. In May 2019, the non-performance based stock options were approved by an affirmative vote of the Board and by shareholders at the Company's 2019 annual meeting of shareholders, at which time the SARs automatically became null and void in accordance with their terms. The corresponding non-performance based stock options will become exercisable in accordance with the vesting schedules set forth in each award agreement, which range between three and five years. Stock Compensation Expense and Liability Award Compensation Expense Stock compensation expense for non-vested equity awards as of June 30, 2019 under the 2014 Omnibus Plan was approximately $548 and $638 for the three and six months ended June 30, 2019. The Company also incurred accelerated stock compensation expense of $5,533 for awards granted under the 2014 Omnibus Plan before January 1, 2019 and $1,418 related to non-performance based restricted stock units granted in January 2019 with no vesting conditions for which the stock compensation is included in merger and acquisition expenses in the condensed consolidated statements of income during the six months ended June 30, 2019. For the three and six months ended June 30, 2018, the Company recognized $1,360 and $2,125 in stock compensation expense. Stock compensation expense for options and restricted stock unit awards granted under the Veritex (Green) 2014 Plan was approximately $386 and $771 for the three and six months ended June 30, 2019, excluding the post-combination stock compensation expense of $10,129 associated with all of Green’s fully vested replacement awards discussed above in this Note. Compensation expense for liability-classified awards under the 2014 Omnibus Plan was $695 and $1,403 for the three and six months ended June 30, 2019. As noted above, in May 2019, following the Shareholder Approval, certain awards were modified and the classification of the awards was modified from liability to equity, resulting in a reclassification of $1,403 of additional paid-in capital during the three months ended June 30, 2019. 2014 Omnibus Plan A summary of the status of the Company’s stock options under the 2014 Omnibus Plan as of June 30, 2019 and 2018, and changes during the six months then ended, is as follows:
As of June 30, 2019, December 31, 2018 and June 30, 2018, there was $1,373, $2,103 and $2,655 of total unrecognized compensation expense related to equity options awarded under the 2014 Omnibus Plan, respectively. As of June 30, 2019, there was no unrecognized compensation expense related to liability options awarded under the 2014 Omnibus Plan. The unrecognized compensation expense at June 30, 2019 is expected to be recognized over the remaining weighted average requisite service period of 2.83 years. A summary of the status of the Company’s non-performance-based restricted stock units under the 2014 Omnibus Plan as of June 30, 2019 and 2018, and changes during the six months then ended, is as follows:
A summary of the status of the Company’s performance based restricted stock units under the 2014 Omnibus Plan as of June 30, 2019 and 2018, and changes during the six months then ended, is as follows:
As of June 30, 2019, December 31, 2018 and June 30, 2018 there was $2,548, $3,430 and $4,577 of total unrecognized compensation related to equity restricted stock units awarded under the 2014 Omnibus Plan, respectively. As of June 30, 2019, there was no of unrecognized compensation related to liability restricted stock units awarded under the 2014 Omnibus Plan. The unrecognized compensation expense at June 30, 2019 is expected to be recognized over the remaining weighted average requisite service period of 2.5 years. A summary of the fair value of the Company’s stock options exercised and restricted stock units vested under the 2014 Omnibus Plan as of June 30, 2019 and 2018 is presented below:
Veritex (Green) 2014 Plan A summary of the status of the Company’s stock options under the Veritex (Green) 2014 Plan as of June 30, 2019, and changes during the three months then ended, is as follows:
As of June 30, 2019, there was $1,348 of total unrecognized compensation expense related to options awarded under the Veritex (Green) 2014 Plan. The unrecognized compensation expense at June 30, 2019 is expected to be recognized over the remaining weighted average requisite service period of 2.5 years. A summary of the status of the Company’s non-performance based restricted stock units under the Veritex (Green) 2014 Plan as of June 30, 2019 and changes during the six months then ended, is as follows:
A summary of the status of the Company’s performance based restricted stock units under the Veritex (Green) 2014 Plan as of June 30, 2019 and changes during the six months then ended, is as follows:
As of June 30, 2019, there was $2,509 of total unrecognized compensation related to outstanding performance based restricted stock units awarded under the Veritex (Green) 2014 Plan to be recognized over a remaining weighted average requisite service period of 2.5 years. A summary of the fair value of the Company’s stock options exercised and restricted stock units vested under the Veritex (Green) 2014 Plan as of June 30, 2019 is presented below:
Green Bancorp Inc. 2010 Stock Option Plan and Green Bancorp Inc. 2006 Stock Option Plan In addition to the Veritex (Green) 2014 Plan discussed earlier in this Note, the Company assumed two stock and incentive plans in the Green acquisition, the Green Bancorp Inc. 2010 Stock Option Plan (“Green 2010 Plan”) and the Green Bancorp Inc. 2006 Stock Option Plan (“Green 2006 Plan”). For the Green 2010 Plan and the Green 2006 Plan, 768,628 and 11,850 of stock options, respectively, were converted in the acquisition of Green during the six months ended June 30, 2019. No stock options or restricted stock units were awarded from these plans during the six months ended June 30, 2019. During the six months ended June 30, 2019, 49,342 stock options were exercised from the Green 2010 Plan. No stock options were exercised from the Green 2006 Plan during the six months ended June 30, 2019. As of June 30, 2019, 719,286 exercisable stock options remain outstanding in the Green 2010 Plan and 11,850 exercisable stock options remain outstanding in the Green 2006 Plan.
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Income Taxes |
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes Income tax expense for the three and six months ended June 30, 2019 and 2018 was as follows:
In connection with the acquisition of Green, the Company assumed a liability of $2,155 for an uncertain tax position. This liability would, if recognized in full, affect the Company’s effective tax rate. The Company did not have any new uncertain tax positions as of June 30, 2018 or any new uncertain tax positions as of June 30, 2019
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Capital Requirements and Restrictions on Retained Earnings |
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Banking and Thrift [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capital Requirements and Restrictions on Retained Earnings | Capital Requirements and Restrictions on Retained Earnings The Company, on a consolidated basis, and the Bank are subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can lead to the initiation of certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the Company’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Company’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the table below) of total, CET1 and Tier 1 capital (as defined in the regulations) to risk weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined). Management believes, as of June 30, 2019 and December 31, 2018 that the Company and the Bank met all capital adequacy requirements to which they were subject. As of June 30, 2019 and December 31, 2018, the Company’s and the Bank’s capital ratios exceeded those levels necessary to be categorized as “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as “well capitalized,” the Company and the Bank must maintain minimum total risk-based, CET1, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table below. There are no conditions or events since June 30, 2019 that management believes have changed the Company’s categorization as “well capitalized.” A comparison of the Company’s and Bank’s actual capital amounts and ratios to required capital amounts and ratios is presented in the following table:
Dividend Restrictions — Dividends paid by the Bank are subject to certain restrictions imposed by regulatory agencies. The Basel III Capital Rules further limit the amount of dividends that may be paid by the Bank. Dividends of $6,783 and $13,599, or $0.125 per outstanding share on the applicable record date, were paid by the Bank to the Company during the three and six months ended June 30, 2019. No dividends were paid by the Bank to the Company during the year ended December 31, 2018.
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Commitments and Contingencies |
6 Months Ended |
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Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Litigation The Company may from time to time be involved in legal actions arising from normal business activities. Management believes that the ultimate liability, if any, resulting from these actions will not materially affect the financial position or results of operations of the Company. Qualified Affordable Housing Investment As of June 30, 2019 and December 31, 2018, the balance of the investment for qualified affordable housing projects was $3,478 and $3,663, respectively. This balance is reflected in other investments on the condensed consolidated balance sheets. The total unfunded commitment related to the investment in certain qualified housing projects totaled $1,923 and $2,510 as of June 30, 2019 and December 31, 2018, respectively. The Company expects to fulfill these commitments during the year ended 2034.
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Branch Assets and Liabilities Held For Sale |
6 Months Ended |
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Jun. 30, 2019 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Branch Assets and Liabilities Held For Sale | Branch Assets and Liabilities Held for Sale Upon the closing of the Green acquisition, the Company acquired branch assets held for sale and assumed branch liabilities held for sale pursuant to a purchase and assumption agreement entered into by Green with Keystone Bank, N.A. ("Keystone") prior the acquisition date, pursuant to which Green had agreed to sell certain assets and deposits associated with one branch in the Austin metropolitan market. On May 10, 2019, the Company completed the sale of these assets and liabilities to Keystone, resulting in a cash settlement payment of $7,153 from Keystone and the recognition of a loss on the sale of $474 reported in merger and acquisition expense on the condensed consolidated statements of income for the three and six months ended June 30, 2019. The completion of the sale resulted in the Company exiting the Austin metropolitan market. There were no assets and liabilities held for sale as of June 30, 2019 or December 31, 2018.
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Business Combinations |
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Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations | Business Combinations Green Bancorp, Inc. On January 1, 2019, the Company completed its acquisition of Green. The business combination was accounted for under the acquisition method of accounting. Under this method of accounting, assets acquired and liabilities assumed are recorded at their estimated fair values. The excess cost over fair value of net assets acquired is recorded as goodwill. As the consideration paid for Green exceeded the provisional value of the net assets acquired, goodwill of $208,774 related to the acquisition was recorded. This goodwill resulted from the combination of expected operational synergies and increased market share in the Dallas-Fort Worth metroplex and Houston metropolitan area. Goodwill is not tax deductible. Consideration Under the terms of the definitive agreement for the acquisition, each outstanding share of Green common stock and Green’s outstanding restricted stock units that accelerated vesting at maximum levels at the close date was converted into the right to receive 0.79 shares of the Company’s common stock, with cash paid in lieu of fractional shares. In addition, Green’s options that accelerated vesting at maximum levels on the close date were exchanged for an option to purchase Veritex common stock at the same 0.79 conversion rate. The Company issued 497,594 shares of Veritex common stock in regards to Green’s fully vested restricted stock units. In addition, the Company was obligated to replace Green’s unvested options with 1,085,256 fully vested Veritex options. The following table presents the fair value of each class of consideration transferred at the close date.
Fair Value The measurement period for the Company to determine the fair values of acquired identifiable assets and assumed liabilities will end at the earlier of (i) 12 months from the date of the acquisition of Green or (ii) as soon as the Company receives the information it was seeking about facts and circumstances that existed as of the acquisition date or learns that more information is not obtainable. Provisional estimates for loans held for investment, bank premises, furniture and equipment and deferred and current taxes have been recorded for the acquisition as independent valuations have not been finalized. The Company does not expect any significant differences from estimated values upon completion of the valuations. Estimated fair values of the assets acquired and liabilities assumed in this transaction as of the closing date are as follows:
Acquisition-related Expenses For the three and six months ended June 30, 2019, the Company incurred $5,790 and $37,007 of pre-tax merger and acquisition expenses, respectively, related to the Green acquisition. The amounts incurred during the three months ended June 30, 2019 primarily consist of data processing expenses as a result of core system conversion and severance payments related to the acquisition. The amounts incurred during the six months ended June 30, 2019 primarily consist of stock-based compensation due to the accelerated vesting of outstanding restricted stock units and stock options of $17,082, severance and retention payments of $9,491, legal and professional fees of $5,297 and data processing expenses of $1,824 as a result of the core system conversion. The Company incurred $412 of acquisition expenses related to the Green acquisition for the three and six months ended June 30, 2018. Acquisition expenses are included in merger and acquisition expenses on the condensed consolidated statements of income. Acquired Loans and Purchased Credit Impaired Loans Acquired loans were preliminarily recorded at fair value based on a discounted cash flow valuation methodology that considers, among other things, projected default rates, loss given defaults and recovery rates. No allowance for credit losses was carried over from Green. The Company has identified certain acquired loans as PCI. PCI loan identification considers payment history and past due status, debt service coverage, loan grading, collateral values and other factors that may indicate deterioration of credit quality since origination. Accretion of purchase discounts on PCI loans is based on estimated future cash flows, regardless of contractual maturities, that include undiscounted expected principal and interest payments and use credit risk, interest rate and prepayment risk models to incorporate management’s best estimate of current key assumptions such as default rates, loss severity and payment speeds. Accretion of purchase discounts on acquired non-impaired loans will be recognized on a level-yield basis based on contractual maturity of individual loans per ASC 310-20. The following table discloses the preliminary fair value and contractual value of loans acquired from Green on January 1, 2019:
The following table presents preliminary additional information about PCI loans acquired from Green on January 1, 2019:
Intangible Assets The acquisition resulted in a core deposit intangible of $65,718, which will be amortized on a straight line basis over the estimated life of 8 years. Branch assets and liabilities held for sale Branch assets and liabilities held for sale as of the close date are valued at fair value less cost to sell. The following table discloses the preliminary fair value information about branch assets and liabilities that met the definition of held for sale on January 1, 2019:
1 Accrued interest payable and other liabilities includes $90 in expected selling costs. Certificates and other time deposits The Green acquisition resulted in a premium on time deposits of $7,318, which will be accreted on a straight line basis over the contractual lives of certificates and other time deposits, or an estimated weighted average life of 1.7 years. Subordinated debt and subordinated debentures The Green acquisition resulted in a premium on subordinated debt of $3,134 and a discount on subordinated debentures of $4,066, which will be accreted/amortized on a straight line basis over the estimated life of 2 years and 17.5 years, respectively. Supplemental Pro Forma Information (unaudited) The following table presents supplemental pro forma information for the six months ended June 30, 2018 as if the Green acquisition was completed as of January 1, 2018. The pro forma results combine the historical results of Green into the Company's condensed consolidated statements of income, including the impact of certain purchase accounting adjustments, including loan and investment discount accretion and intangible assets amortization. The pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the results that would have been obtained had the acquisition actually occurred on January 1, 2018:
Revenues and earnings of the acquired company since the acquisition date have not been disclosed as Green was merged into the Company and separate financial information is not readily available.
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Summary of Significant Accounting Policies (Policies) |
6 Months Ended |
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Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of Veritex and the Bank, its wholly-owned subsidiary. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”), but do not include all of the information and footnotes required for complete financial statements. Intercompany transactions and balances are eliminated in consolidation. In management’s opinion, these interim unaudited condensed consolidated financial statements include all adjustments of a normal recurring nature necessary for a fair statement of the Company’s condensed consolidated financial position at June 30, 2019 and December 31, 2018, condensed consolidated results of operations for the three and six months ended June 30, 2019 and 2018, condensed consolidated stockholders’ equity for the three and six months ended June 30, 2019 and 2018 and condensed consolidated cash flows for the six months ended June 30, 2019 and 2018. Accounting measurements at interim dates inherently involve greater reliance on estimates than at year end and the results for the interim periods shown herein are not necessarily indicative of results to be expected for the full year due in part to global economic and financial market conditions, interest rates, access to sources of liquidity, market competition and interruptions of business processes. These interim unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2018 included within the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the Securities and Exchange Commission on February 27, 2019. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. These estimates and assumptions may also affect disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
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Segment Reporting | Segment Reporting The Company has one reportable segment. All of the Company’s activities are interrelated, and each activity is dependent and assessed based on how each activity of the Company supports the others. For example, lending is dependent upon the ability of the Company to fund itself with deposits and borrowings while managing the interest rate and credit risk. Accordingly, all significant operating decisions are based upon analysis of the Bank as one segment or unit. The Company’s chief operating decision-maker, the Chief Executive Officer, uses the consolidated results to make operating and strategic decisions.
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Reclassifications | Reclassifications Some items in the Company’s prior year financial statements were reclassified to conform to the current presentation, including (i) the reclassification of dividend income from other noninterest income into interest on other investments of $302 and $325 for the three and six months ended June 30, 2018, respectively, in order to align with industry peers for comparability purposes and (ii) the reclassification of $1,043 and $1,378 from professional and regulatory fees to merger and acquisition expense on the condensed consolidated statements of income for the three and six months ended June 30, 2018, respectively.
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Earnings Per Share | Earnings Per Share Earnings per share (“EPS”) are based upon the weighted-average shares outstanding.
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Certain Purchased Loans | Certain Purchased Loans The Company purchases individual loans and groups of loans, through both acquisitions of other banks and the normal course of its operations, some of which have shown evidence of credit deterioration since origination. These purchased credit impaired (“PCI”) loans are recorded at fair value at acquisition in a business combination, such that there is no carryover of the seller’s allowance for loan losses. After consummation of the acquisition, losses are recognized by an increase in the provision for loan losses. These PCI loans are accounted for individually or aggregated into pools of loans based on common risk characteristics such as credit grade, loan type, and date of origination. On the date of acquisition, the Company estimates the amount and timing of expected cash flows for each purchased loan or pool, and the expected cash flows in excess of carrying value are recorded as interest income over the estimated life of the loan or pool (accretable yield). The excess of the loan’s or pool’s contractual principal and interest over expected cash flows is not recorded (nonaccretable difference). Over the life of the loan or pool, expected cash flows continue to be estimated. If the present value of expected cash flows is less than the carrying amount, except for present value changes solely due to changes in timing of cash flows, an impairment loss is recorded through the allowance for loan losses. If the present value of expected cash flows is greater than the carrying amount, any related allowance for loan loss is reversed, with the remaining yield being recognized prospectively through interest income.
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Derivative Financial Instruments | Derivative Financial Instruments The Company has certain derivative instruments that are entered into pursuant to a customer accommodation program under which the Company enters into an interest rate swap, floor, cap agreement or an interest rate collar with a commercial customer and an agreement with offsetting terms with a correspondent bank. These derivative instruments are not designated as accounting hedges and the changes in net fair value are recognized in noninterest income or expense and the fair value amounts are included in other assets and other liabilities. Interest Rate Swap, Floor, Cap, and Collar Agreements Designated as Cash Flow Hedges Cash flow hedge relationships mitigate exposure to the variability of future cash flows or other forecasted transactions. The Company uses interest rate swaps, floors, caps and collars to manage overall cash flow changes related to interest rate risk exposure on benchmark interest rate loans. The entire change in the fair value related to the derivative instrument is recognized as a component of other comprehensive income and subsequently reclassified into interest income when the forecasted transaction affects income. The Company assesses the “effectiveness” of hedging derivatives on the date an arrangement was entered into and on a prospective basis at least quarterly. Hedge “effectiveness” is determined by the extent to which changes in the fair value of a derivative instrument offset changes in the fair value, cash flows, or carrying value attributable to the risk being hedged. If the relationship between the change in the fair value of the derivative instrument and the change in the hedged item falls within a range considered to be the industry norm, the hedge is considered “highly effective” and qualifies for hedge accounting. A hedge is “ineffective” if the relationship between the changes falls outside the acceptable range. In that case, hedge accounting is discontinued on a prospective basis. The time value of the option is excluded from the assessment of effectiveness and is recognized in earnings using a straight-line amortization method over the life of the hedge arrangement.
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Loans Held-for-Sale | Loans Held for Sale Loans are classified as held-for-sale when management has positively determined that the loans will be sold in the foreseeable future and the Company has the ability to do so. The Company’s held for sale loans typically consist of certain government guaranteed loans or mortgage loans. The classification may be made upon origination or subsequent to origination or purchase. Once a decision has been made to sell loans not previously classified as held-for-sale, such loans are transferred into the held-for-sale classification and carried at the lower of cost or estimated fair value on an individual loan basis, except for those held for sale loans for which the Company elects to use the fair value option. The fair value of loans held for sale is based on commitments from investors or prevailing market prices, For the Company’s accounting policy on loans held-for-sale for which the fair value option is not elected, refer to Note 1 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. Gain on Sale of Mortgage Loans Held for Sale Mortgage loans held for sale are sold with servicing released. Gains and losses on sales of mortgage loans held for sale are based on the difference between the selling price and the carrying value of the related loan sold
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Fair Value Option | Fair Value Option On a specific identification basis, the Company may elect the fair value option for certain financial instruments in the period the financial instrument was originated or acquired. Changes in fair value for instruments using the fair value option are recorded in noninterest income.
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Gain on Sale of Guaranteed Portion of Loans, Net | Gain on Sale of Guaranteed Portion of Loans, Net The Company originates loans to customers under government guaranteed programs that generally provide for guarantees of 50% to 90% of each loan, subject to a maximum guaranteed amount. The Company can sell the guaranteed portion of the loan in an active secondary market and retains the unguaranteed portion in its portfolio. All sales of government guaranteed loans are executed on a servicing retained basis, and the Company retains the rights and obligations to service the loans. The standard sale structure provides for the Company to retain a portion of the cash flow from the interest payment received on the loan. When a loan sale involves the transfer of an interest less than the entire loan, the controlling accounting method under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 860, Transfers and Servicing, requires the seller to reallocate the carrying basis between the assets transferred and the assets retained based on the relative fair value of the respective assets as of the date of sale. The maximum gain on sale that can be recognized is the difference between the fair value of the assets sold and the reallocated basis of the assets sold. The gain on sale, which is recognized in income, is the sum of the cash premium on the guaranteed loan and the fair value of the servicing assets recognized, less the discount recorded on the unguaranteed portion of the loan retained by the Company.
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Securities Sold Under Agreements to Repurchase | Securities Sold Under Agreements to Repurchase Securities sold under agreements to repurchase represent the purchase of interests in securities by the Company’s customers. Securities sold under agreements to repurchase are stated at the amount of cash received in connection with the transaction. The Company does not account for any of its repurchase agreements as sales for accounting purposes in its financial statements. Repurchase agreements are settled on the following business day. All securities sold under agreements to repurchase are collateralized by pledged securities. The securities underlying the repurchase agreements are held in safekeeping by the Bank’s safekeeping agent.
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Securities Held to Maturity | Securities Held-to-Maturity Securities classified as held-to-maturity are carried at cost, adjusted for the amortization of premiums and the accretion of discounts. The Company has the positive intent, and the ability, to hold these assets until their respective maturities.
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Goodwill | Goodwill The Company evaluates goodwill for impairment on an annual basis or on an interim basis if an event occurs or circumstances change that would more likely than not reduce the fair value of the goodwill below its carrying amount, in accordance with ASC 350-20. During the first quarter of 2019, the Company changed its annual goodwill impairment testing date from December 31 to October 31. The Company believes that the new date is preferable as it provides additional time prior to the Company’s fiscal year end to complete the annual goodwill impairment test, especially in the event the Company pursues potential future acquisitions and experiences growth. This change does not accelerate, delay, avoid or cause an impairment charge, nor does this change result in adjustments to the Company’s previously issued financial statements. There were no impairments of goodwill recorded during the six months ended June 30, 2019 and 2018.
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Liability Classified Awards | Liability-Classified Awards The fair value of a liability award is determined on a quarterly basis beginning at the grant date until final vesting. Changes in the fair value of liability awards are recorded over the vesting period of the award. Changes in the fair value of liability awards that occur during the requisite service period are recognized as compensation cost over that period. The percentage of the fair value that is accrued as compensation cost at the end of each period equals the percentage of the requisite service that has been rendered at that date. Changes in the fair value of a liability award that occur after the end of the requisite service period are recognized as compensation cost in the period in which the changes occur. Any difference between the amount for which a liability award is settled and its fair value at the settlement date is an adjustment of compensation cost in the period of settlement. Compensation cost for liability awards is recorded in salaries and employee benefits and the associated liability is recorded in accounts payable and accrued expenses. For liability to equity award modifications, the aggregate amount of compensation cost recognized is the fair value based measure of the award on the modification date. On the modification date, the Company reclassifies the previously recorded share-based compensation liability to additional paid-in capital.
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Adoption of New Accounting Standards and Recent Accounting Pronouncements | Adoption of New Accounting Standards FASB Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) (“ASU 2016-02”) requires that lessees and lessors recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU 2018-11, Targeted Improvements. ASU 2016-02 provides for a modified retrospective transition approach requiring lessees to recognize and measure leases on the balance sheet at the beginning of either the earliest period presented or as of the beginning of the period of adoption. The Company elected to apply ASU 2016-02 as of the beginning of the period of adoption (January 1, 2019) and will not restate comparative periods. The Company has no material leasing arrangements for which it is the lessor of property or equipment. The Company has made an accounting policy election not to apply the recognition requirements in the new standard to short-term leases. The Company has elected to apply the package of practical expedients as both the lessor and lessee allowed by the new standard under which the Company need not reassess whether any expired or existing contracts are or contain leases, the Company need not reassess the lease classification for any expired or existing lease, and the Company need not reassess initial direct costs for any existing leases. The Company has also elected to use the practical expedient to make an accounting policy election for leases of certain underlying assets to include both lease and nonlease components as a single component and account for that single component as a lease. The Company’s operating leases relate primarily to office space and bank branches. Right-of-use (“ROU”) assets and operating lease liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents the Company’s incremental borrowing rate at the lease commencement date. ROU assets are further adjusted for lease incentives, deferred rent and prepaid rent. Operating lease expense, which is comprised of amortization of the ROU asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term, and is recorded in occupancy and equipment expense in the consolidated statements of income. As a result of implementing ASU 2016-02, the Company recognized an operating lease ROU asset of $18,705 and an operating lease liability of $18,753 on January 1, 2019, with no impact on the consolidated statement of income or consolidated statement of cash flows compared to the prior lease accounting model. The ROU asset and operating lease liability amounts recorded upon implementing ASU 2016-02 include the ROU asset and lease liability acquired/assumed from Green. Refer to Note 19 - Business Combinations for additional information. The ROU asset and operating lease liability are recorded in other assets and other liabilities, respectively, in the condensed consolidated balance sheets. See Note 9 - Leases for additional information. Recent Accounting Pronouncements ASU 2017-04 “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”) eliminates Step 2 from the goodwill impairment test. In addition, the amendment eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. For public companies, ASU 2017-04 is effective for fiscal years beginning after December 15, 2019 with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is in the process of evaluating the impact of this pronouncement, which is not expected to have a significant impact on the consolidated financial statements. ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost basis, ASU 2016-13 eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available for sale debt securities, credit losses should be measured in a manner similar to current GAAP, however ASU 2016-13 will require that credit losses be presented as an allowance rather than as a write-down. ASU 2016-13 affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The amendments affect loans, debt securities, trade receivables, net investments in leases, off-balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. For public business entities, ASU 2016-13 is effective for financial statements issued for fiscal years beginning after December 15, 2019 and interim periods therein, with early adoption permitted. The Company expects ASU 2016-13 to have a significant impact on the Company’s accounting policies, internal control over financial reporting and footnote disclosures. As part of the Company’s evaluation process, the Company has established a working group that includes individuals from various functional areas to implement this new accounting standard. Early implementation activities focused on system needs, designing financial models to estimate expected credit losses in accordance with the standard and assessing data, including the data acquired in connection with the Company’s acquisition of Green. The Company is currently finalizing and documenting new processes and controls, challenging estimated credit loss model assumptions and outputs, refining the qualitative framework, as well as drafting relating policies and disclosures. Additionally, parallel runs will be enhanced throughout 2019 as processes, controls and policies are finalized by the Company.
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Summary of Significant Accounting Policies (Tables) |
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Jun. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Reconciliation Between Weighted Average Shares Used for Calculating Basic and Diluted EPS | The table below sets forth the reconciliation between weighted average shares used for calculating basic and diluted EPS for the three and six months ended June 30, 2019 and 2018:
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Supplemental Statement of Cash Flows (Tables) |
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Supplemental Cash Flow Elements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Supplemental Cash Flow Information | Other supplemental cash flow information is presented below:
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Debt Securities (Tables) |
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Investments, Debt and Equity Securities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Carrying Amount and Approximate Fair Values of Available-for-Sale Securities | The amortized cost, related gross unrealized gains and losses, and the fair value of available for sale and held to maturity securities are as follows:
The Company reassessed the classification of certain investments and effective January 1, 2019, the Company transferred $4,758 of municipal securities and $3,045 of mortgage-backed securities from available for sale to held to maturity at fair value. The related unrealized gain was nominal. No gain or loss was recorded at the time of the transfer.
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Schedule of Investment Securities That Have Been in a Continuous Unrealized Loss Position | The following tables disclose the Company’s investment securities that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for 12 months or more:
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Schedule of Amortized Costs and Estimated Fair Values of Securities Available for Sale, By Contractual Maturity | .
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Schedule of Proceeds From Sales of Investment Securities Available for Sale and Gross Gains and Losses | Proceeds from sales of investment securities available for sale and gross gains and losses for the six months ended June 30, 2019 and 2018 were as follows:
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Loans and Allowance for Loan Losses (Tables) |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Loans in the Accompanying Consolidated Balance Sheets | The outstanding balance represents the total amount owed, including accrued but unpaid interest, and any amounts previously charged off.
Changes in the accretable yield for PCI loans for the three and six months ended June 30, 2019 and 2018 are included in table below.
Loans held for investment in the accompanying condensed consolidated balance sheets are summarized as follows:
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Schedule of Non-Accrual Loans | Non-accrual loans aggregated by class of loans, as of June 30, 2019 and December 31, 2018, were as follows:
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Schedule of Age Analysis of Past Due Loans, Aggregated by Class of Loans | An age analysis of past due loans, aggregated by class of loans, as of June 30, 2019 and December 31, 2018 is as follows:
(1) Loans 90 days past due and still accruing excludes $27,821 of PCI loans as of June 30, 2019.
(1) Loans 90 days past due and still accruing excludes $527 of PCI loans as of December 31, 2018. |
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Summary of Impaired Loans, Including Purchased Credit Impaired Loans and TDRs | Impaired loans and TDRs at June 30, 2019 and December 31, 2018 are summarized in the following tables.
(1) Loans reported exclude PCI loans.
(1) Loans reported exclude PCI loans. |
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Summary of Internal Ratings of Loans, Including Purchased Credit Impaired Loans | The following tables summarize the Company’s internal ratings of its loans, including PCI loans, as of June 30, 2019 and December 31, 2018:
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Schedule of Recorded Investment in Loans Related to the Balance in the Allowance for Loan Losses on the Basis of the Company's Impairment Methodology | The following tables summarize the activity in the allowance for loan losses by portfolio segment for the periods indicated.
An analysis of the allowance for loan losses for the six months ended June 30, 2019 and 2018 and year ended December 31, 2018 is as follows:
The Company’s recorded investment in loans as of June 30, 2019 and December 31, 2018 related to the balance in the allowance for loan losses on the basis of the Company’s impairment methodology is as follows:
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Schedule of Summary of Changes in Servicing Assets | The Company was servicing loans of approximately $273,301 and $74,615 as of June 30, 2019 and 2018, respectively. A summary of the changes in the related servicing assets are as follows:
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Fair Value (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets Measured at Fair Value on a Recurring Basis | The following table summarizes assets measured at fair value on a recurring basis as of June 30, 2019 and December 31, 2018, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:
(1) Represents loans held for sale elected to be carried at fair value upon origination or acquisition.
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Schedule of Assets Measured at Fair Value on a Non-Recurring Basis | The following table summarizes assets measured at fair value on a non-recurring basis as of June 30, 2019 and December 31, 2018, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:
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Schedule of Estimated Fair Values and Carrying Values of All Financial Instruments | The estimated fair values and carrying values of all financial instruments under current authoritative guidance as of June 30, 2019 and December 31, 2018 were as follows:
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Derivative Financial Instruments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments in Balance Sheet |
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Schedule of Derivative Instruments Outstanding | The following is a summary of the interest rate swaps outstanding as of June 30, 2019. The Company did not have interest rate swaps as of December 31, 2018.
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Derivative Instruments, Gain (Loss) | Pre-tax gain (loss) included in the condensed consolidated statements of income and related to derivative instruments for the three and six months ended June 30, 2019 was as follows:
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Financial Instruments with Off-Balance Sheet Risk (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of the Approximate Amounts of Financial Instruments with Off-Balance Sheet Risk | The following table sets forth the approximate amounts of these financial instruments as of June 30, 2019 and December 31, 2018:
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Leases (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Lease Costs | The table below summarizes the Company’s net lease cost:
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Summary of Remaining Lease Liabilities |
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Intangible Assets and Goodwill (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Intangible Assets | Intangible assets in the accompanying condensed consolidated balance sheets are summarized as follows:
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Schedule of Changes in Carry Value of Goodwill | Changes in the carrying amount of goodwill are summarized as follows for the three months ended June 30, 2019:
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Deposits (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Banking and Thrift [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Summarized of the Deposits | Deposits in the accompanying condensed consolidated balance sheets are summarized as follows:
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Scheduled Maturities of Certificate of Deposits | As of June 30, 2019, the scheduled maturities of certificates of deposit were as follows:
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Advances from the Federal Home Loan Bank ("FHLB") (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||
Banking and Thrift [Abstract] | |||||||||||||||||||||||||||||
Schedule of Contractual Maturities of FHLB Advances | Contractual maturities of FHLB advances at June 30, 2019 were as follows:
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Subordinated Debentures and Subordinated Notes (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Subordinated Debentures | A summary of information related to these two issues of subordinated debentures is set forth in the table below:
Total subordinated notes as of June 30, 2019 and December 31, 2018 were as follows:
Total subordinated debentures as of June 30, 2019 and December 31, 2018 were as follows:
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Stock-Based and Liability-Classified Awards (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Option Activity | A summary of the status of the Company’s stock options under the 2014 Omnibus Plan as of June 30, 2019 and 2018, and changes during the six months then ended, is as follows:
A summary of option activity under the 2010 Incentive Plan for the six months ended June 30, 2019 and 2018, and changes during the periods then ended is presented below:
A summary of the status of the Company’s stock options under the Veritex (Green) 2014 Plan as of June 30, 2019, and changes during the three months then ended, is as follows:
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Summary of Status of the Company's Restricted Shares or Restricted Stock Units | A summary of the status of the Company’s non-performance-based restricted stock units under the 2014 Omnibus Plan as of June 30, 2019 and 2018, and changes during the six months then ended, is as follows:
A summary of the status of the Company’s performance based restricted stock units under the 2014 Omnibus Plan as of June 30, 2019 and 2018, and changes during the six months then ended, is as follows:
A summary of the status of the Company’s non-performance based restricted stock units under the Veritex (Green) 2014 Plan as of June 30, 2019 and changes during the six months then ended, is as follows:
A summary of the status of the Company’s performance based restricted stock units under the Veritex (Green) 2014 Plan as of June 30, 2019 and changes during the six months then ended, is as follows:
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Schedule of Share-based Compensation, Employee Stock Purchase Plan, Activity | A summary of the fair value of the Company’s stock options exercised and restricted stock units vested under the 2010 Incentive Plan as of June 30, 2019 and 2018 is presented below:
A summary of the fair value of the Company’s stock options exercised and restricted stock units vested under the 2014 Omnibus Plan as of June 30, 2019 and 2018 is presented below:
Veritex (Green) 2014 Plan A summary of the status of the Company’s stock options under the Veritex (Green) 2014 Plan as of June 30, 2019, and changes during the three months then ended, is as follows:
As of June 30, 2019, there was $1,348 of total unrecognized compensation expense related to options awarded under the Veritex (Green) 2014 Plan. The unrecognized compensation expense at June 30, 2019 is expected to be recognized over the remaining weighted average requisite service period of 2.5 years. A summary of the status of the Company’s non-performance based restricted stock units under the Veritex (Green) 2014 Plan as of June 30, 2019 and changes during the six months then ended, is as follows:
A summary of the status of the Company’s performance based restricted stock units under the Veritex (Green) 2014 Plan as of June 30, 2019 and changes during the six months then ended, is as follows:
As of June 30, 2019, there was $2,509 of total unrecognized compensation related to outstanding performance based restricted stock units awarded under the Veritex (Green) 2014 Plan to be recognized over a remaining weighted average requisite service period of 2.5 years. A summary of the fair value of the Company’s stock options exercised and restricted stock units vested under the Veritex (Green) 2014 Plan as of June 30, 2019 is presented below:
Green Bancorp Inc. 2010 Stock Option Plan and Green Bancorp Inc. 2006 Stock Option Plan In addition to the Veritex (Green) 2014 Plan discussed earlier in this Note, the Company assumed two stock and incentive plans in the Green acquisition, the Green Bancorp Inc. 2010 Stock Option Plan (“Green 2010 Plan”) and the Green Bancorp Inc. 2006 Stock Option Plan (“Green 2006 Plan”). For the Green 2010 Plan and the Green 2006 Plan, 768,628 and 11,850 of stock options, respectively, were converted in the acquisition of Green during the six months ended June 30, 2019. No stock options or restricted stock units were awarded from these plans during the six months ended June 30, 2019. During the six months ended June 30, 2019, 49,342 stock options were exercised from the Green 2010 Plan. No stock options were exercised from the Green 2006 Plan during the six months ended June 30, 2019. As of June 30, 2019, 719,286 exercisable stock options remain outstanding in the Green 2010 Plan and 11,850 exercisable stock options remain outstanding in the Green 2006 Plan.
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Schedule of Assumptions Used to Measure Fair Value of Each Option Award Estimated On Grant Date Using Black-Scholes Option-Pricing Model | The fair value of each option award is estimated on the grant date using the Black-Scholes option-pricing model with the following assumptions used for the grants for the six months ended June 30, 2019 and 2018:
A summary of the fair value of the Company’s stock options exercised and restricted stock units vested under the 2014 Omnibus Plan as of June 30, 2019 and 2018 is presented below:
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Income Taxes Income Taxes (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Income Tax Expense | Income tax expense for the three and six months ended June 30, 2019 and 2018 was as follows:
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Capital Requirements and Restrictions on Retained Earnings (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Banking and Thrift [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Comparison of the Company's and Bank's Actual Capital Amounts and Ratios to Required Capital Amounts and Ratios | A comparison of the Company’s and Bank’s actual capital amounts and ratios to required capital amounts and ratios is presented in the following table:
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Business Combinations (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Consideration Transferred | The following table presents the fair value of each class of consideration transferred at the close date.
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Schedule of Acquired Assets and Assumed Liabilities | Estimated fair values of the assets acquired and liabilities assumed in this transaction as of the closing date are as follows:
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Summary of Loans Acquired in a Business Combination | The following table discloses the preliminary fair value and contractual value of loans acquired from Green on January 1, 2019:
The following table presents preliminary additional information about PCI loans acquired from Green on January 1, 2019:
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Schedule of Assets and Liabilities Held For Sale | The following table discloses the preliminary fair value information about branch assets and liabilities that met the definition of held for sale on January 1, 2019:
1 Accrued interest payable and other liabilities includes $90 in expected selling costs.
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Schedule of Supplemental Pro Forma Information | The pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the results that would have been obtained had the acquisition actually occurred on January 1, 2018:
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Summary of Significant Accounting Policies - Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Earnings (numerator) | ||||
Net income | $ 26,876 | $ 10,193 | $ 34,283 | $ 20,581 |
Shares (denominator) in thousands | ||||
Weighted average shares outstanding for basic EPS (in shares) | 53,969 | 24,148 | 54,130 | 24,139 |
Dilutive effect of employee stock based awards (in shares) | 960 | 398 | 901 | 388 |
Adjusted weighted average shares outstanding (in shares) | 54,929 | 24,546 | 55,031 | 24,527 |
EPS: | ||||
Basic (in dollars per share) | $ 0.50 | $ 0.42 | $ 0.63 | $ 0.85 |
Diluted (in dollars per share) | $ 0.49 | $ 0.42 | $ 0.62 | $ 0.84 |
Summary of Significant Accounting Policies - Antidilutive Securities (Details) - shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
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Accounting Policies [Abstract] | ||||
Excluded from diluted EPS weighted average shares (in shares) | 0 | 0 | 0 | 0 |
Share Transactions - (Details) - Common Stock - USD ($) |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2019 |
Jan. 28, 2019 |
|
Equity, Class of Treasury Stock [Line Items] | |||
Stock buyback program, authorized amount | $ 50,000,000 | ||
Shares repurchased (in shares) | 855,262 | 1,171,862 | |
Average price (in dollars per share) | $ 25.82 | $ 25.44 |
Debt Securities - Proceeds and Gross Gains/Losses (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Proceeds from sales of investment securities available for sale and gross gains and losses | ||
Proceeds from sales | $ 254,397 | $ 30,961 |
Gross realized gains | 522 | 335 |
Gross realized losses | $ 1,936 | $ 323 |
Loans and Allowance for Loan Losses - Troubled Debt Restructuring (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2019
USD ($)
Loan
|
Jun. 30, 2018
Loan
|
Jun. 30, 2019
USD ($)
Loan
|
Jun. 30, 2018
Loan
|
Dec. 31, 2018
USD ($)
|
|
Receivables [Abstract] | |||||
Recorded investment for financing receivable, modifications | $ | $ 1,150 | $ 1,150 | $ 1,171 | ||
Number of loans modified as TDRs for which there was a payment default | 0 | 0 | |||
Financing receivable, modifications, subsequent default, number of contracts | 0 | 0 | 0 | 0 |
Loans and Allowance for Loan Losses - PCI Loans (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Loans held for investment, net | $ 5,907,138 | $ 2,536,239 |
Loans | 5,932,171 | 2,555,509 |
Acquired Loans with Deteriorated Credit Quality | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Loans held for investment, net | 172,469 | 39,528 |
Loans | $ 231,121 | $ 49,902 |
Loans and Allowance for Loan Losses - PCI Accretable Yield Rollforward (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Certain Loans Acquired in Transfer Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward] | ||||
Balance at beginning of period | $ 33,862,000 | $ 8,139,000 | $ 18,747,000 | $ 2,723,000 |
Additions | 0 | 45,000 | 18,073,000 | 1,459,000 |
Reclassifications (to) from nonaccretable | 2,299,000 | 351,000 | 1,886,000 | 6,221,000 |
Accretion | (2,452,000) | (1,200,000) | (4,997,000) | (3,068,000) |
Balance at end of period | 33,709,000 | 7,335,000 | 33,709,000 | 7,335,000 |
Cash collections of certain loans acquired in transfer accounted for as debt securities | $ 23,000 | $ 1,760,000 | $ 413,000 | $ 1,760,000 |
Loans and Allowance for Loan Losses - Servicing Assets (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Dec. 31, 2018 |
|
Servicing Asset at Amortized Cost [Line Items] | |||||
Servicing asset | $ 273,301,000 | $ 74,615,000 | $ 273,301,000 | $ 74,615,000 | |
Summary of changes in related servicing assets | |||||
Balance at beginning of period | 3,972,000 | 8,139,000 | 1,304,000 | 2,723,000 | |
Servicing asset acquired through acquisition | 0 | 45,000 | 2,382,000 | 1,459,000 | |
Increase from loan sales | 0 | 351,000 | 461,000 | 6,221,000 | |
Amortization charged to income | (179,000) | (1,200,000) | (354,000) | (3,068,000) | |
Balance at end of period | 3,793,000 | 7,335,000 | 3,793,000 | 7,335,000 | |
Valuation allowance recorded | 0 | $ 0 | 0 | $ 0 | |
Interest-only strip | |||||
Summary of changes in related servicing assets | |||||
Interest receivable | $ 0 | $ 0 | $ 0 |
Fair Value - Non-recurring Basis (Details) |
Jun. 30, 2019
USD ($)
property
|
Dec. 31, 2018
USD ($)
|
---|---|---|
Assets measured at fair value | ||
Impaired loans, specific allowance | $ 2,669,000 | $ 368,000 |
Number of other real estate owned properties | property | 1,000 | |
Non-recurring | ||
Assets measured at fair value | ||
Impaired loans | $ 5,755,000 | 2,584,000 |
Other real estate owned | 1,748,000 | |
Liabilities measured at fair value | 0 | 0 |
Non-recurring | Level 1 Inputs | ||
Assets measured at fair value | ||
Impaired loans | 0 | 0 |
Other real estate owned | 0 | |
Non-recurring | Level 2 Inputs | ||
Assets measured at fair value | ||
Impaired loans | 0 | 0 |
Other real estate owned | 0 | |
Non-recurring | Level 3 Inputs | ||
Assets measured at fair value | ||
Impaired loans | 5,755,000 | $ 2,584,000 |
Other real estate owned | $ 1,748,000 |
Derivative Financial Instruments - Narrative (Details) - USD ($) |
1 Months Ended | |
---|---|---|
May 31, 2019 |
Jun. 30, 2019 |
|
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Notional amount | $ 706,274,000 | |
Interest rate floor | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Notional amount | $ 275,000,000 | |
Term of contract | 2 years | |
Floor interest rate | 2.43% | |
Derivative, purchase option price | $ 2,665,000 |
Derivative Financial Instruments - AOCI Reclassification (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2019 |
|
Interest rate floor | Designated as hedging instrument | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Gain recognized in other comprehensive income on cash flow derivative | $ 1,620 | |
Interest rate floor | Interest Income | Designated as hedging instrument | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Loss recognized in interest income on cash flow derivative (amount excluded from effectiveness testing) | (139) | $ (139) |
Interest rate swaps | Noninterest income | Non-hedging derivatives | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Loss recognized in noninterest income | $ (120) | $ 130 |
Financial Instruments with Off-Balance Sheet Risk (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Financial instruments with off-balance sheet risk | ||
Total commitments | $ 1,698,559 | $ 967,867 |
Commitments to extend credit | ||
Financial instruments with off-balance sheet risk | ||
Total commitments | 1,665,256 | 962,436 |
Standby and commercial letters of credit | ||
Financial instruments with off-balance sheet risk | ||
Total commitments | $ 33,303 | $ 5,431 |
Leases (Details) $ in Thousands |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2019
USD ($)
|
Jun. 30, 2019
USD ($)
|
|
Lessee, Lease, Description [Line Items] | ||
Right-of-use asset | $ 15,712 | $ 15,712 |
Lease liability | 16,294 | 16,294 |
Lease, Cost [Abstract] | ||
Operating lease cost | 1,379 | 2,763 |
Variable lease cost | 144 | 407 |
Net lease cost | $ 1,523 | 3,170 |
Operating cash flows from operating leases | $ 2,427 | |
Weighted-average remaining lease term - operating leases, in years | 4 years 1 month 6 days | 4 years 1 month 6 days |
Weighted-average discount rate - operating leases | 1.60% | 1.60% |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Remaining lease term | 1 year | |
Extension options | 5 years | 5 years |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Remaining lease term | 8 years | |
Extension options | 10 years | 10 years |
Leases - Maturity (Details) $ in Thousands |
Jun. 30, 2019
USD ($)
|
---|---|
Leases [Abstract] | |
Within one year | $ 4,092 |
After one but within two years | 3,469 |
After two but within three years | 2,785 |
After three but within four years | 2,487 |
After four but within five years | 1,931 |
After five years | 2,917 |
Total undiscounted cash flows | 17,681 |
Less: Discount on cash flows | (1,387) |
Total lease liability | $ 16,294 |
Intangible Assets and Goodwill - Summary of Goodwill (Details) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2019
USD ($)
| |
Goodwill [Roll Forward] | |
December 31, 2018 | $ 161,447 |
Effect of Green acquisition | 208,774 |
June 30, 2019 | $ 370,221 |
Deposits (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Banking and Thrift [Abstract] | ||
Noninterest-bearing demand accounts | $ 1,476,668 | $ 626,283 |
Interest-bearing demand accounts | 373,979 | 146,969 |
Savings accounts | 93,903 | 33,147 |
Limited access money market accounts | 2,178,272 | 1,133,045 |
Certificates of deposit, greater than $100 | 1,295,222 | 392,935 |
Certificates of deposit, less than $100 | 747,044 | 290,049 |
Total deposits | $ 6,165,088 | $ 2,622,428 |
Deposits - Scheduled Maturities of Certificates of Deposit (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Banking and Thrift [Abstract] | ||
2019 | $ 925,089 | |
2020 | 898,087 | |
2021 | 155,607 | |
2022 | 37,739 | |
2023 | 25,744 | |
Total | $ 2,042,266 | $ 682,984 |
Deposits - Additional Information (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Banking and Thrift [Abstract] | ||
Demand deposit overdrafts reclassified as loans | $ 488 | $ 153 |
Brokered deposits | $ 597,056 | $ 234,190 |
Advances from the Federal Home Loan Bank ("FHLB") - Additional Information (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Debt Instrument [Line Items] | ||
Advances from Federal Home Loan Bank | $ 512,945 | $ 28,019 |
Availability to borrow additional funds | $ 1,036,260 | |
Weighted Average | ||
Debt Instrument [Line Items] | ||
Advances from Federal Home Loan Bank, rate | 2.50% |
Advances from the Federal Home Loan Bank ("FHLB") - Contractual Maturities (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Banking and Thrift [Abstract] | ||
2019 | $ 385,000 | |
2020 | 75,000 | |
2021 | 25,000 | |
2022 | 27,945 | |
Total | $ 512,945 | $ 28,019 |
Stock-Based and Liability-Classified Awards - 2010 Plan (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
2010 Stock Option and Equity Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock based compensation expense | $ 0 | $ 6,000 | $ 2,000 | $ 11,000 |
Stock-Based and Liability-Classified Awards - 2010 Plan - Restricted Stock Units (Details) - Restricted Stock Units - 2010 Stock Option and Equity Incentive Plan - USD ($) |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Units | ||
Outstanding at the beginning of the period (in shares) | 24,250 | |
Vested into shares (in shares) | (8,750) | |
Forfeited (in shares) | (500) | |
Outstanding at the end of the period (in shares) | 0 | 15,000 |
Weighted Average Grant Date Fair Value | ||
Outstanding at the beginning of the period (in dollars per share) | $ 13.19 | |
Vested into shares (in dollars per share) | 10.85 | |
Forfeited (in dollars per share) | 10.85 | |
Outstanding at the end of the period (in dollars per share) | $ 14.99 | |
Unrecognized compensation expense | $ 0 | $ 8,000 |
Stock-Based and Liability-Classified Awards - Fair Value Options Exercised or Restricted Stock Units Vested (Details) - Omnibus Plan - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Non-performance based equity restricted stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Non-performance based stock options exercised | $ 315 | $ 54 |
Restricted stock units vested | 5,523 | 745 |
Performance based equity restricted stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock units vested | $ 1,089 | $ 810 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jan. 01, 2019 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Income Tax Disclosure [Abstract] | |||||
Income tax expense for the period | $ 7,369 | $ 2,350 | $ 9,358 | $ 5,861 | |
Effective tax rate | 21.50% | 18.70% | 21.40% | 22.20% | |
Liability for uncertain tax positions assumed | $ 2,155 |
Commitments and Contingencies (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
Qualified affordable housing investment | $ 3,478 | $ 3,663 |
Qualified affordable housing project investments, unfunded commitment | $ 1,923 | $ 2,510 |
Branch Assets and Liabilities Held For Sale (Details) - USD ($) |
May 10, 2019 |
Jun. 30, 2019 |
Jan. 01, 2019 |
Dec. 31, 2018 |
---|---|---|---|---|
Disposal Group, Disposed of by Sale, Not Discontinued Operations | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Proceeds from divestiture of business | $ 7,153,000 | |||
Loss on disposal | $ 474,000 | |||
Disposal Group, Held-for-sale, Not Discontinued Operations | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Branch assets held for sale | $ 0 | $ 85,307,000 | $ 0 | |
Branch liabilities held for sale | $ 0 | $ 52,682,000 | $ 0 |
Business Combinations Business Combinations - Consideration Transferred (Details) - Green Bancorp, Inc. $ / shares in Units, shares in Thousands, $ in Thousands |
Jan. 01, 2019
USD ($)
$ / shares
shares
|
---|---|
Business Acquisition [Line Items] | |
Equivalent shares of Veritex common stock issued in exchange for Green outstanding shares (in shares) | shares | 29,532,957 |
Veritex common stock price per share as of close date (in dollars per share) | $ / shares | $ 21.38 |
Fair value of Veritex common stock issued in exchange for Green outstanding shares | $ 631,415 |
Fair value of Green equity-based awards attributed to pre-combination service | 12,484 |
Cash consideration to Green shareholders | 10 |
Total consideration transferred | $ 643,909 |
Business Combinations - Assets Held For Sale (Details) - USD ($) |
Jun. 30, 2019 |
Jan. 01, 2019 |
Dec. 31, 2018 |
---|---|---|---|
Disposal Group, Held-for-sale, Not Discontinued Operations | |||
Business Acquisition [Line Items] | |||
Cash and cash equivalents | $ 392,000 | ||
Loans | 78,366,000 | ||
Bank premises, furniture and equipment | 19,000 | ||
Intangible assets | 6,013,000 | ||
Other assets | 517,000 | ||
Branch assets held for sale | $ 0 | 85,307,000 | $ 0 |
Noninterest-bearing deposits | 52,319,000 | ||
Accounts payable and accrued expenses | 40,000 | ||
Accrued interest payable and other liabilities | 323,000 | ||
Branch liabilities held for sale | $ 0 | 52,682,000 | $ 0 |
Green Bancorp, Inc. | |||
Business Acquisition [Line Items] | |||
Expected selling costs | $ 90,000 |
Business Combinations Business Combinations - Pro Forma Information (Details) $ / shares in Units, $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2018
USD ($)
$ / shares
| |
Business Combinations [Abstract] | |
Net Interest Income | $ | $ 138,011 |
Net Income | $ | $ 55,626 |
Basic EPS (in dollars per share) | $ / shares | $ 1.03 |
Diluted EPS (in dollars per share) | $ / shares | $ 1.01 |
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