Veritex Holdings (VBTX)

Texas-based bank holding company Veritex Holdings (NASDAQGM:VBTX) fell short of the market’s revenue expectations in Q2 CY2025 as sales rose 2.8% year on year to $109.8 million. Its non-GAAP profit of $0.56 per share was 3.1% above analysts’ consensus estimates.

Company Overview

Founded during the 2009 financial crisis when many banks were failing, Veritex Holdings (NASDAQGM:VBTX) operates Veritex Community Bank, providing commercial and retail banking services to small and medium-sized businesses and professionals in Texas.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

Veritex Holdings competes with other Texas-based regional banks such as Prosperity Bancshares (NYSE:PB), Cullen/Frost Bankers (NYSE:CFR), and Texas Capital Bancshares (NASDAQ:TCBI), as well as with national banks operating in the Dallas-Fort Worth and Houston markets.

Net interest income and and fee-based revenue are the two pillars supporting bank earnings. The former captures profit from the gap between lending rates and deposit costs, while the latter encompasses charges for banking services, credit products, wealth management, and trading activities. Thankfully, Veritex Holdings’s 6.7% annualized revenue growth over the last five years was decent. Its growth was slightly above the average banking company and shows its offerings resonate with customers.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. Veritex Holdings’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 2.9% over the last two years. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Veritex Holdings’s revenue grew by 2.8% year on year to $109.8 million, falling short of Wall Street’s estimates.

Net interest income made up 89.1% of the company’s total revenue during the last five years, meaning Veritex Holdings barely relies on non-interest income to drive its overall growth.

While banks generate revenue from multiple sources, investors view net interest income as the cornerstone - its predictable, recurring characteristics stand in sharp contrast to the volatility of non-interest income.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Veritex Holdings’s solid 6.6% annual EPS growth over the last five years aligns with its revenue performance. This tells us it maintained its per-share profitability as it expanded.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Veritex Holdings, its two-year annual EPS declines of 13.3% mark a reversal from its (seemingly) healthy five-year trend. We hope Veritex Holdings can return to earnings growth in the future.

In Q2, Veritex Holdings reported adjusted EPS of $0.56, up from $0.52 in the same quarter last year. This print beat analysts’ estimates by 3.1%. Over the next 12 months, Wall Street expects Veritex Holdings’s full-year EPS of $2.23 to stay about the same.

Banks operate as balance sheet businesses, with profits generated through borrowing and lending activities. Valuations reflect this reality, emphasizing balance sheet strength and long-term book value compounding ability.

This is why we consider tangible book value per share (TBVPS) the most important metric to track for banks. TBVPS represents the real, liquid net worth per share of a bank, excluding intangible assets that have debatable value upon liquidation. Traditional metrics like EPS are helpful but face distortion from M&A activity and loan loss accounting rules.

Veritex Holdings’s TBVPS grew at an excellent 9% annual clip over the last five years. The last two years show a similar trajectory as TBVPS grew by 8.4% annually from $19.14 to $22.48 per share.

Over the next 12 months, Consensus estimates call for Veritex Holdings’s TBVPS to grow by 6.6% to $23.97, mediocre growth rate.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, Veritex Holdings has averaged a Tier 1 capital ratio of 10.7%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity (ROE) measures how effectively banks generate profit from each dollar of shareholder equity - a critical funding source. High-ROE institutions typically compound shareholder wealth faster over time through retained earnings, share repurchases, and dividend payments.

Over the last five years, Veritex Holdings has averaged an ROE of 8.6%, respectable for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired.

We struggled to find many positives in these results. Its revenue slightly missed and its EPS slightly exceeded Wall Street’s estimates. Overall, this was a softer quarter. The stock remained flat at $33.69 immediately after reporting.

Updated: November 12, 2025 at 11:48 PM EST

When considering an investment in Veritex Holdings, investors should account for its valuation and business qualities as well as what’s happened in the latest quarter.

Veritex Holdings’s business quality ultimately falls short of our standards. .

Veritex Holdings’s price-to-sales ratio based on the trailing 12 months is 3.9x. The market typically values companies like Veritex Holdings based on their anticipated profits for the next 12 months, but there aren’t enough published estimates to arrive at a reliable number. You should avoid this stock for now - better opportunities lie elsewhere.