UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

ITEM 1.  BUSINESS

Our Company

Except where the context otherwise requires or where otherwise indicated, references in this Annual Report on Form 10-K to “we,” “us,” “our,” “our company,” the “Company” or “Veritex” refer to Veritex Holdings, Inc. and our wholly-owned banking subsidiary,its subsidiaries, including Veritex Community Bank, and the term “Bank”Bank. The word “Holdco” refers to Veritex Holdings, Inc. The word “the Bank” refers to Veritex Community Bank.

Veritex Holdings, Inc. is a Texas corporation and bank holding company headquarteredstate banking organization, with corporate offices in Dallas, Texas. Through our wholly-owned subsidiary, Veritex CommunityThe Bank provides a full range of banking services, including commercial and retail lending and checking and savings deposit products, to individual and corporate customers. The Texas state chartered bank, we provide relationship-driven commercial banking products and services tailored to meet the needsDepartment of small to medium-sized businesses and professionals. Beginning at our inception in 2010, we initially targeted customers and focused our acquisitions primarily in the Dallas metropolitan area, which we consider to be DallasBanking (the "TDB") and the adjacent communities in North Dallas. As a resultBoard of our recent acquisitionsGovernors of Sovereign Bancshares, Inc. (“Sovereign”the Federal Reserve System (the "Federal Reserve") are the primary regulators of the Company and Liberty Bancshares, Inc. (“Liberty”), ourthe Bank, and both regulatory agencies perform periodic examinations to ensure regulatory compliance. Our current primary market now includes the broader Dallas-Fort Worth metroplex which also encompasses Arlington, as well asand the Houston metropolitan area. We currently operate twenty branches and one mortgage office locatedAs we continue to grow, we may expand to other metropolitan banking markets in the Dallas-Fort Worth metroplex and one branch in the Houston metropolitan area.Texas.

Our business is conducted through one reportable segment, community banking, where we generatewhich generates the majority of our revenues from interest income on loans, customer service and loan fees, gains on sale of Small Business Administration (“SBA”)government guaranteed loans and mortgage loans and interest income from securities. We incur interest expense on deposits and other borrowed funds and noninterest expense, such as salaries, and employee benefits and occupancy expenses. We analyze our ability to maximize income generated from interest earning assets and expense of our liabilities through our net interest margin. Net interest margin is a ratio calculated as net interest income divided by average interest-earning assets. Net interest income is the difference between interest income on interest-earning assets, such as loans and securities, and interest expense on interest-bearing liabilities, such as deposits and borrowings, which are used to fund those assets.

Our primary customers are small and medium-sized businesses, generally with annual revenues of under $30 million, and professionals. We believe that these businesses and professionals highly value the local decision-making and relationship-driven, quality service we provide and our deep, long-term understanding of Texas community banking. As a result of consolidation, we believe that few locally-based publicly traded banks are dedicated to providing this level of service to small and medium-sized businesses.businesses and professionals. Our management team’s long-standing presence and experience in Texas gives us unique insight into local market opportunities and the needs of our customers. This enables us to respond quickly to customers, provide high quality personal service and develop comprehensive, long-term banking relationships by providing products and services tailored to meet the individual needs of our customers. This focus and approach enhances our ability to continue to grow organically, successfully recruit and retain talented bankers and strategically source potential acquisitions in our target markets.

Our History and Growth

Our management team is led by our Chairman andof the Board of Directors, Chief Executive Officer and President, C. Malcolm Holland, III, who has overseen and managed our organic growth and acquisition activity since we commenced banking operations.

During the year ended December 31, 2017, we continued this trend by focusing on growing2021, the Company purchased a 49% interest in Thrive Mortgage, LLC ("Thrive") which is accounted for as an equity method investment. See Note 1 of the Notes to the Consolidated Financials for further discussion of our total loans and deposits organically by increasing our commercial lending relationships through further expansioninterest in Thrive.

During the year ended December 31, 2021, the Company acquired North Avenue Capital, LLC ("NAC"), making the Bank a leading player in the Dallas-Fort Worth metroplexUSDA Business & Industry Loan Program and Houston metropolitan area. On January 1, 2018, we completedfurthered the Company’s strategy of diversifying revenue streams and providing meaningful gain on sale of two Austin branches acquired as partand loan servicing fees. The Company will leverage NAC’s loan sourcing technology to further enhance the Company’s products and services. See Note 25 of the Sovereign acquisition. The completion of this branch sale resulted in us fully exitingNotes to the Austin market.

Our business strategy consists of the following components:

We focus on delivering a wide variety of relationship-driven commercial banking products and services tailored to meet the needs of small to medium-sized businesses and professionals. A general discussion of the range of commercial banking products and other services we offer follows.

Our underwriting philosophy seeks to balance our desire to make sound, high quality loans while recognizing that lending money involves a degree of business risk. Managing credit risk is a company-wide process. Our strategy for credit risk management includes well-defined, centralized credit policies, uniform underwriting criteria by loan type and ongoing risk monitoring and review processes for all types of credit exposures. Our processes emphasize early-stage review of loans, regular credit evaluations and management reviews of loans, which supplement the ongoing and proactive credit monitoring and loan servicing provided by our loan officers and lending support staff. Our Executive Loan Committee and Executive LoanCredit Portfolio Management Committee providesprovide company-wide credit oversight and periodically reviewsreview all credit risk portfolios via internal loan reviews throughout the year to ensure that the risk identification processes are functioning properly and that our credit standards are followed. In addition, a third-party loan review is performed at least annually to identify problem assets and confirm our internal risk rating of loans. We attempt to identify potential problem loans early in an effort to aggressively seek resolution of these situations before the loans become a loss, record any necessary charge-offs promptly and maintain adequate allowance for credit loss ("ACL") levels for probable loancredit losses inherent in the loan portfolio.

We offer a full array of commercial treasury management services designed to be competitive with banks of all sizes. Treasury management services include balance reporting (including current day and previous day activity), transfers between accounts, wire transfer initiation, automated clearinghouse origination and stop payments. Cash management deposit products and services consist of lockbox, remote deposit capture, positive pay, reverse positive pay, account reconciliation services, zero balance accounts and sweep accounts, including loan sweep.

Investments

Our Market Area

We currentlyprimarily operate in the Dallas-Fort Worth metroplex area, which is part of the broader Dallas-Fort Worth-Arlington metroplex statistical area, and the Houston metropolitan area. The economy in these areas is fueled by the real estate, technology, financial services, insurance, transportation, manufacturing, health care and energy sectors. These market areas are among the most vibrant in the United States with rapidly growing populations, a high level of job growth, an affordable cost of living and a pro-growth business climate. On January 1, 2018, we completed the sale of the Austin branches acquired as part of the Sovereign acquisition and as a result have exited the Austin metropolitan area.

Competition

The Texas market for banking businessservices is highly competitive,competitive. Texas’ largest banking organizations are headquartered outside of Texas and our profitability will depend principally upon our ability toare controlled by organizations outside the state. We compete with other banks and non-bank financial institutions located in our market for lending opportunities, deposit funds, bankers and acquisition candidates. Our banking competitors in our target markets include Chase Bank, Wells Fargo, Bank of America, BBVA Compass, Amegy Bank, Comerica Bank, Regions Bank, Prosperity Bank, Independent Bank, Texas Capital Bank and various community banks.

Employees and Human Capital Resources

Our Corporate Information

Our principal executive offices are located at 8214 Westchester Drive, Suite 400,800, Dallas, Texas 75225, and our telephone number is (972) 349-6200. Our website is www.veritexbank.com. We make available at this address, free of charge, our annual report on Form 10-K, our annual reports to shareholders, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) as soon as reasonably practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission (the “SEC”).SEC. These documents are also available on the SEC’s website of the Securities and Exchange Commission (the "SEC") at www.sec.gov. The information contained on or accessible from our website does not constitute a part of this Annual Report on Form 10-K and is not incorporated by reference herein.

Regulation and Supervision

The U.S. banking industry is highly regulated under federal and state law. These laws and regulations affect the operations and performance of Veritex and our subsidiaries and are intended primarily for the Companyprotection of the Deposit Insurance Fund of the Federal Deposit Insurance Corporation (the “FDIC”), the bank’s depositors and its subsidiaries. the public, rather than our shareholders or creditors.

Statutes, regulations and policies limit the activities in which the Companywe may engage and how it conductswe conduct certain permitted activities. Further, the bank regulatory system imposesagencies impose reporting and information collection obligations. The Company incursobligations on us. We incur significant costs relating to compliance with these laws and regulations. Banking statutes, regulations and policies are continually under review by federal and state legislatures and regulatory agencies, and a change in them, including changes in how they are interpreted or implemented, could have a material adverse effect on our business. We cannot predict whether or in what form any statute, regulation or policy will be proposed or adopted or the Company’s business.extent to which our business may be affected by any new statute, regulation or policy.

The material statutory and regulatory requirements that are applicable to the Companyus and itsour subsidiaries are summarized below. The description below is not intended to summarize all laws and regulations applicable to the Companyus and itsour subsidiaries, and is based upon the statutes, regulations, policies, interpretive letters and other written guidance that are in effect as of the date of this Annual Report on Form 10-K.

The Bank is a Texas-chartered banking association, the deposits of which are insured by the Deposit Insurance FundDIF of the Federal Deposit Insurance Corporation (the “FDIC”)FDIC up to applicable legal limits. The Bank is a member of the Federal Reserve System; therefore, the Bank is subject to ongoing and comprehensive supervision, regulation, examination and enforcement by the Texas Department of Banking (the “TDB”)TDB and the Board of Governors of the Federal Reserve System (the “Federal Reserve”).Reserve.

A company that acquires ownership or control of 25% or more of any class of voting securities of a bank or bank holding company, that controls the election of a majority of the board of directors of such an institution, or that exercises a controlling influence over the affairs of such an institution, is a bank holding company and must obtain the prior approval of and later register with the Federal Reserve under the Bank Holding Company Act of 1956, as amended (the “BHC Act”). A company that acquires less than 25% but more than 5% of a class of voting securities may be required to enter into passivity commitments with the Federal Reserve.

Bank holding companies are subject to regulation, examination, supervision and enforcement by the Federal Reserve under the BHC Act. The Federal Reserve’s jurisdiction also extends to any company that is directly or indirectly controlled by a bank holding company. Similarly, bank holding companies of Texas state-chartered banks are subject to regulation, examination, supervision and enforcement by the TDB.

Broad Supervision, Examination and Enforcement Powers

A principal objective of the U.S. bank regulatory system is to protect depositors by ensuring the financial safety and soundness of banking organizations. To that end, the banking regulators have broad regulatory, examination and enforcement authority. The regulators regularly examine the operations of banking organizations. In addition, banking organizations are subject to periodic reporting requirements. Insured depository institutions with total assets of $500 million or more, such as the Bank, must submit annual audit reports prepared by independent auditors to federal and state regulators. In some instances, the audit report of the insured depository institution’s bank holding company can be used to satisfy this requirement. Auditors mustUnder regulatory guidance, auditors are expected to receive examination reports, supervisory agreements and reports of enforcement actions.

The regulators have various remedies available if they determine that the financial condition, capital resources, asset quality, earnings prospects, management, liquidity or other aspects of a banking organization’s operations are unsatisfactory. The regulators may also take action if they determine that the banking organization or its management is violating or has violated any law or regulation. The regulators have the power to, among other things:

Engaging in unsafe or unsound practices or failing to comply with applicable laws, regulations and supervisory agreements could subject usthe Company and our subsidiaries or their officers, directors and institution-affiliated parties to the remedies described above and other sanctions. See “Item 1A. Risk Factors—Risks Related to Veritex’s Industry and Regulation”.

The Dodd-Frank Act and the Economic Growth, Regulatory Reform, and Consumer Protection Act (“EGRRCPA”)

On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) was signed into law. The Dodd-Frank Act imposed significant regulatory and compliance requirements, including the designation of certain financial companies as systemically important financial companies, enhanced oversight of credit rating agencies, the imposition of increased capital, leverage and liquidity requirements, and numerous other provisions designed to improve supervision and oversight of, and strengthen safety and soundness within, the financial services sector.

The Volcker Rule

Section 619 of the Dodd-Frank Act, popularly known as the “Volcker Rule,” generally prohibits “banking entities” from engaging in “proprietary trading” and making investments and conducting certain other activities with private equity funds and hedge funds. These prohibitions apply to banking entities of any size, including us and the Bank. In 2013, the Federal Reserve, together with the FDIC, the OCC,Office of the Comptroller of the Currency (the “OCC”), the SEC and the CFTC,Commodity Futures Trading Commission, issued regulations to implement the Volcker Rule. As implemented by the federal banking agencies, EGRRCPA exempted banking entities with total consolidated assets of $10 billion or less, and total trading assets and liabilities of less than 5% of total consolidated assets, from the Volcker Rule. Although we do not believe we engaged in any activities covered by the Volcker Rule, but fullthe exemption eliminates any need for a Volcker Rule compliance was not required until July 21, 2017.program for so long as we remain covered by the exemption. We have reviewed the scope of the Volcker Rule and have determined that we do not have any activities or investments at this time that arewould be subject to the requirements of the rule at this time.

Notice and Approval Requirements Related to Control

Federal and state banking laws impose notice, application, approval or non-objection and ongoing regulatory requirements on any shareholder or other person that controls or seeks to acquire direct or indirect “control” of an FDIC-insured depository institution. In addition to requirements that may apply under the BHC Act, described above under “Bank and Bank Holding Company Regulation,” the Change in Bank Control Act and the Texas Banking Act require regulatory filings by a shareholder or other person that seeks to acquire direct or indirect “control” of an FDIC-insured, Texas-chartered depository institution. The determination of whether a person “controls” a depository institution or its holding company is based on all of the facts and circumstances surrounding the investment. As a general matter, a person is deemed to control a depository institution or other company if the person owns or controls 25% or more of any class of voting stock. Subject to rebuttal, a person is presumed to control a depository institution or other company if the person owns or controls 10% or more of any class of voting stock and other regulatory criteria are met. The holdings of certain affiliated persons, or persons acting in concert, are typically aggregated for the purpose of applying the 10% and 25% thresholds.

In addition, except under limited circumstances, bank holding companies are prohibited from acquiring, without prior approval of the Federal Reserve, control of any other bank or bank holding company or all or substantially all the assets thereof;thereof, or more than 5% of the voting shares of a bank or bank holding company whichthat is not already a subsidiary.

Permissible Activities and Investments

Banking laws generally restrict our ability to engage in, or acquire 5% or more than 5% of the voting shares of a company engaged in, activities other than those determined by the Federal Reserve to be so closely related to banking as to be a proper incident thereto. The Gramm-Leach-Bliley Financial Modernization Act of 1999 (the “GLB Act”) expanded the scope of permissible activities to include those that are financial in nature or incidental or complementary to a financial activity for a bank holding company that elects to be a financial holding company, which requires the satisfaction of certain conditions. We have not elected financial holding company status.

In addition, as a general matter, we must receive prior regulatory approval before establishing or acquiring a depository institution or, in certain cases, a non-bank entity.

The Texas Constitution, as amended in 1986, provides that a Texas-chartered bank has the same rights and privileges that are or may be granted to national banks domiciled in Texas. To the extent that the Texas laws and regulations may have allowed state-chartered banks to engage in a broader range of activities than national banks, the Federal Deposit Insurance Corporation Improvement Act of 1991 (the “FDICIA”(“FDICIA”), has operated to limit such activities. FDICIA provides that no state bank or subsidiary thereof may engage as a principal in any activity in which national banks are not permitted for national banks,to engage, unless the institution complies with applicable capital requirements and the FDIC determines that the activity poses no significant risk to the Deposit Insurance FundDIF of the FDIC. In general, statutory restrictions on the activities of banks are aimed at protecting the safety and soundness of depository institutions.

Branching

Texas law provides that a Texas-chartered bank can establish a branch anywhere in Texas provided that the branch is approved in advance by the TDB. The branch must also be approved by the Federal Reserve.  The regulators consider a number of factors, including financial history, capital adequacy, earnings prospects, character of management, needs of the community, record of the Community Reinvestment Act (the "CRA") performance and consistency with corporate powers. The Dodd-Frank Act permits insured state banks that satisfy certain conditions to engage in de novo interstate branching if the laws of the state where the new branch is to be established would permit the establishment of the branch if it were chartered by such state.

Regulatory Capital Requirements and Capital Adequacy

The bank regulators view capital levels as important indicators of an institution’s financial soundness. As a general matter, FDIC-insured depository institutions and their holding companies are required to maintain minimum capital relative to the amount and types of assets they hold. The final supervisory determination on an institution’s capital adequacy is based on the regulator’s assessment of numerous factors.  As a bank holding company and a state-chartered member bank, we and the Bank are subject to several regulatory capital requirements.

CapitalThe federal banking agencies' current generally applicable capital requirements have evolved over the last thirty years. The current requirementfor bank holding companies and banks took effect on January 1, 2015, with phase-in periods for certain requirements.requirements; as of January 1, 2019, all of the requirements were fully phased in. The requirements are based on a set of international standards popularly known as Basel III. By virtue

In the same definition as Tier 1 capital.    Under thefirst quarter of 2020, U.S. federal regulatory authorities issued an interim final rules,rule that provides banking organizations werethat adopt CECL during the 2020 calendar year with the option to delay for two years the estimated impact of CECL on regulatory capital relative to regulatory capital determined under the prior incurred loss methodology, followed by a three-year transition period to phase out the aggregate amount of the capital benefit provided during the initial two-year delay (i.e., a one-time optionfive-year transition in their initial regulatory financial report filed aftertotal). In connection with our adoption of CECL on January 1, 2015,2020, the Company elected to remove certain componentsutilize the five-year CECL transition. As a result, the effects of accumulated other comprehensive incomeCECL on the Company's and the Bank’s regulatory capital will be delayed through the year 2021, after which the effects will be phased-in over a three-year period from the computation of common equity regulatory capital.January 1, 2022 through December 31, 2024.

At December 31, 2017,2021, if we and the Bank washad not been eligible for or elected to be subject to the CBLR, we and the Bank would have been in compliance with the minimum common equity Tier 1 capital, Tier 1 capital, total capital, tangible capital and leverage capital requirements.

For the Companyus to be “well capitalized,” the Bank must be well-capitalizedwell capitalized and the CompanyVeritex must not be subject to any written agreement, order, capital directive or prompt corrective action directive issued by the Federal Reserve to meet and maintain a specific capital level for any capital measure. As of December 31, 2017, the Company2021, we met all the requirements to be deemed well-capitalized.

A depository institution is “under-capitalized”“under capitalized” if it has a total risk-based capital ratio of less than 8.0%, a common equity Tier 1 capital ratio of less than 4.5%, a Tier 1 risk-based capital ratio of less than 6.0% or a leverage ratio of less than 4.0%. A depository institution is “ significantly“significantly undercapitalized” if it has a total risk-based capital ratio of less than 6.0%, a common equity Tier 1 capital ratio of less than 3.0%, a Tier 1 risk-based capital ratio of less than 4.0% or a leverage ratio of less than 3.0%. anAn institution is critically undercapitalized if its ratio of tangible equity to total assets is equal to or less than 2.0%. Significantly undercapitalized institutions are subject to a wider array of adverse agency actions than undercapitalized institutions. A critically undercapitalized institution is likely to be place in receivership if it does not find a merger partner. Under certain circumstances, an institution may be treated as if the institution were in the next lower capital category.

A banking institution that is undercapitalized is required to submit a capital restoration plan. The capital restoration plan will not be accepted by the regulators unless each company having control of the undercapitalized institution provides a performance guarantee of the subsidiary’s compliance with the capital restoration plan up to the lesser of 5% of the bank’s total assets or the amount necessary to bring the bank into compliance with capital requirements as of the time it fell out of compliance.

Regulatory Limits on Dividends and Distributions

As a bank holding company, we are subject to certain restrictions on paying dividends under applicable federal and Texas laws, regulations and regulations.guidance. The Federal Reserve has issued a policy statement that provides that a bank holding company should not pay dividends unless (i) its net income over the last four quarters (net of dividends paid) has been sufficient to fully fund the dividends, (ii) the prospective rate of earnings retention appears to be consistent with the capital needs, asset quality and overall financial condition of the bank holding company and its subsidiaries and (iii) the bank holding company will continue to meet minimum required capital adequacy ratios. Accordingly, a bank holding company should not pay cash dividends that exceedsexceed its net income or that can only be funded in ways that weaken the bank holding company’s financial health, such as by borrowing. The Dodd-Frank Act imposes, and Basel III results in, additional restrictions on the ability of banking institutions to pay dividends.

Substantially all of our income, and a principal source of our liquidity, are dividends from the Bank. Bank dividend activity is governed by federal and state laws, regulations and policies.

Reserve Requirements

Pursuant to regulations of the Federal Reserve, all banking organizations are required to maintain average daily reserves at mandated ratios against their transaction accounts. In addition, reserves must be maintained on certain non-personal time deposits. These reserves must be maintained in the form of vault cash or in an account at a Federal Reserve Bank. In response to the COVID-19 pandemic, the Federal Reserve reduced reserve requirement ratios to 0% effective March 26, 2020. Increases to the reserve requirement would decrease the amount of the Bank’s assets that it may make available for lending and investment activities.

Limits on Transactions with Affiliates and Insiders

The FDIA restricts the use of brokered deposits by certain depository institutions. Under the applicable regulations, a “wellA well capitalized insured depository institution”institution may solicit and accept, renew or roll over any brokered deposit without restriction. An “adequatelyadequately capitalized insured depository institution”institution may not accept, renew or roll over any brokered deposit unless it has applied for and been granted a waiver of this prohibition by the FDIC. The FDIC may grant a waiver upon a finding that the acceptance of brokered deposits does not constitute an unsafe or unsound practice with respect to such institution. The rates that an adequately capitalized institution with a waiver may pay on brokered deposits may not exceed certain ceilings. An “undercapitalized insured depository institution” may not accept, renew or roll over any brokered deposit. As of December 31, 2021, the Bank is considered a well capitalized insured depository institution and had total brokered deposits of $182.3 million.

Concentrated Commercial Real EstateCRE Lending Guidance

The federal banking agencies, including the Federal Reserve, have promulgated guidance governing financial institutions with concentrations in commercial real estateCRE lending. The guidance provides that a bank has a concentration in commercial real estateCRE lending if (i) total reported loans for construction, land development and other land represent 100% or more of total risk-based capital or (ii) total reported loans secured by multifamily and non-farm, residentialnon-residential properties and loans for construction, land development and other land represent 300% or more of total risk-based capital and the bank’s commercial real estateCRE loan portfolio has increased 50% or more during the prior 36 months. Owner-occupied commercial real estateCRE loans are excluded from this second category. If a concentration is present, management must employ heightened risk management practices that address the following key elements: board and management oversight and strategic planning, portfolio management, development of underwriting standards, risk assessment and monitoring through market analysis and stress testing, and maintenance of increased capital levels as needed to support the level of commercial real estateCRE lending. At December 31, 2017,2021, our total reported loans for construction, land development and other land represented over 100% of our total capital, indicating a concentration in commercial real estateCRE lending. At December 31, 2017,2021, our management believes that it is in compliance withhas adequately addressed the requirements and guidance of federal banking agencies, including the Federal Reserve, for institutions with concentrations in commercial real estateCRE lending.

Examination and Examination Fees

Deposit Insurance and Deposit Insurance Assessments

Depositor Preference

The FDIA provides that, in the event of the “liquidation or other resolution” of an insured depository institution, the claims of depositors of the institution (including the claims of the FDIC as subrogee of insured depositors) and certain claims for administrative expenses of the FDIC as a receiver will have priority over other general unsecured claims against the institution. If the Company investswe invest in or acquiresacquire an insured depository institution that fails, insured and uninsured depositors, along with the FDIC, will have priority in payment ahead of unsecured, non-deposit creditors, including the Company,Veritex, with respect to any extensions of credit they have made to such insured depository institution.

Consumer Laws and Regulations

Banking organizations are subject to numerous Federalfederal laws and regulations intended to protect consumers. These laws include, among others:

The Community Reinvestment ActCRA

Changes in Laws, Regulations or Policies

Federal, state and local legislators and regulators regularly introduce measures or take actions that would modify the regulatory requirements applicable to banks, their holding companies and other financial institutions. Changes in laws, regulations or regulatory policies could adversely affect the operating environment for us in substantial and unpredictable ways, increase our cost of doing business, impose new restrictions on the way in which the Company conducts itswe conduct our operations or add significant operational constraints that might impair the Company’sour profitability. Whether new legislation will be enacted and, if enacted, the effect that it, or any implementing regulations, would have on the Company and its subsidiaries’our business, financial condition or results of operations cannot be predicted. The majority of these changes will be implemented over time by various regulatory agencies. The full effect that theseany such changes will have on us and our subsidiaries remains uncertain at this time and may have a material adverse effect on the Company’sour business and results of operations.

Effect on Economic Environment

Veritex’sOur business concentration in Texas, and specifically the Dallas-Fort Worth metroplex and the Houston metropolitan area, imposes risks and may magnify the consequences of any regional or local economic downturn affecting the Dallas-Fort Worth metroplex and the Houston metropolitan area, including any downturn in the real estate sector.

We operate in an uncertain economic environment, including generally uncertain conditions nationally and locally in itsour industry and market. Financial institutions continue to be affected by volatility in the real estate market in some parts of the country and uncertain regulatory and interest rate conditions. Veritex retainsWe retain direct exposure to the residential and commercial real estateCRE market in Texas, particularly in the Dallas-Fort Worth metroplex and Houston metropolitan area, and isare affected by these events.

Veritex’sOur ability to assess the creditworthiness of customers and to estimate the losses inherent in itsour loan portfolio is made more complex by uncertain market and economic conditions. Veritex’sUnfavorable economic trends, sustained high unemployment, and declines in real estate values can cause a reduction in the availability of commercial credit and can negatively impact the credit performance of commercial and consumer loans, resulting in increased write-downs. These negative trends can cause economic pressure on consumers and businesses and diminish confidence in the financial markets, which may adversely affect our business, financial condition, results of operations and ability to access capital. A worsening of these conditions, such as a recession or economic slowdown, would likely exacerbate the adverse effects of these difficult market conditions on us and others in the financial services industry.

Our risk management practices, such as monitoring the concentration of itsour loans within specific industries and itsour credit approval practices, may not adequately reduce credit risk, and itsour credit administration personnel, policies and procedures may not adequately adapt to changes in economic or any other conditions affecting customers and the quality of the loan portfolio. A national economic recession or deterioration of conditions in Veritex’sour market could drive losses beyond that which is provided for in itsour allowance for loancredit losses and result in one or more of the following consequences:

Declines in real estate values, volume of home sales and financial stress on borrowers as a result of the uncertain economic environment, including job losses, could have an adverse effect on Veritex’sour borrowers and/or their customers, which could adversely affect Veritex’sour business, financial condition and results of operations.

Interest rate shifts could reduce net interest income and otherwise negatively impact Veritex’sour financial condition and results of operations.

An increase in interest rates may also, among other things, reduce the demand for loans and Veritex’sour ability to originate loans and decrease loan repayment rates. A decrease in the general level of interest rates may affect Veritexus through, among other things, increased prepayments on itsour loan portfolio and increased competition for deposits. Accordingly, changes in the level of market interest rates affect Veritex’sour net yield on interest-earning assets, loan origination volume, loan portfolio and overall results. Although Veritex’sour asset-liability management strategy is designed to control and mitigate exposure to the risks related to changes in market interest rates, those rates are affected by many factors outside of Veritex’sour control, including governmental monetary policies, inflation, deflation, recession, changes in unemployment, the money supply, international disorder and instability in domestic and foreign financial markets.

Additionally, interest rate increases often result in larger payment requirements for our borrowers, which increases the potential for default and could result in a decrease in the demand for loans. At the same time, the marketability of the property securing a loan may be adversely affected by any reduced demand resulting from higher interest rates. In a declining interest rate environment, there may be an increase in prepayments on loans as borrowers refinance their loans at lower rates. In addition, in a low interest rate environment, loan customers often pursue long-term fixed rate credits, which could adversely affect our earnings and net interest margin if rates increase. Changes in interest rates also can affect the value of loans, securities and other assets. An increase in interest rates that adversely affects the ability of borrowers to pay the principal or interest on loans may lead to an increase in nonperforming assets and a reduction of income recognized, which could have a materialan adverse effect on our results of operations and cash flows. Further, when Veritex placeswe place a loan on nonaccrual status, Veritex reverseswe reverse any accrued but unpaid interest receivable, which decreases interest income. At the same time, Veritex continueswe continue to haveincur a cost to fund the loan, which is reflected as interest expense on deposits and borrowings, without any interest income to offset the associated funding expense. We would incur a higher cost of funds to retain these deposits in a rising interest rate environment. Our net interest income could be adversely affected if the rates we pay on deposits and borrowings increase more rapidly than the rates we earn on loans and debt securities. Thus, an increase in the amount of nonperforming assets would have an adverse impact on Veritex’sour net interest income.

A large portion of Veritex’sour loan portfolio consists of commercial loans secured by receivables, promissory notes, inventory, equipment or other commercial collateral, the deterioration in value of which could increase the potential for future losses.

As of December 31, 2017, $684.6 million2021, $2.0 billion, or 30.6%27.3%, of Veritex’sour total LHI, excluding PPP loans, consisted of commercial loans to businesses. In general, these loans are collateralized by general business assets including, among other things, accounts receivable, promissory notes, inventory and equipment, and most are backed by a personal guaranty of the borrower or principal. These commercial loans are typically larger in amount than loans to individuals and, therefore, have the potential for larger losses on a single loan basis. Additionally, the repayment of commercial loans is subject to the ongoing business operations of the borrower. The collateral securing such loans generally includes moveable property such as equipment and inventory, which may decline in value more rapidly than Veritex anticipateswe anticipate, thereby exposing itus to increased credit risk. A significant portion of Veritex’sour commercial loans are secured by promissory notes that evidence loans made by Veritex to borrowers that in turn make loans to others that are secured by real estate. Accordingly, negative changes in the economy affecting real estate values and liquidity could impair the value of the collateral securing these loans. Significant adverse changes in the economy or local market conditions in which Veritex’sour commercial lending customers operate could cause rapid declines in loan collectability and the values associated with general business assets resulting in inadequate collateral coverage that may expose Veritexus to credit losses and could adversely affect itsour business, financial condition and results of operations.

Our CRE and construction and land loan portfolios expose itus to credit risks that could be greater than the risks related to other types of loans.

As of December 31, 2017, $909.3 million,2021, $2.8 billion, or 40.7%37.9% of total LHI, excluding MW and PPP loans, consisted of commercial real estateCRE loans (including owner occupied commercial real estate loans) and $277.8 million,$1.1 billion, or 12.4%14.5% of total LHI, excluding MW and PPP loans, consisted of construction and land loans. These loans typically involve repayment dependent upon income generated, or expected to be generated, by the property securing the loan in amounts sufficient to cover operating expenses and debt service. The availability of such income for repayment may be adversely affected by changes in the economy or local market conditions. These loans expose a lender to greater credit risk than loans secured by other types of collateral because the collateral securing these loans is typically more difficult to liquidate due to the fluctuation of real estate values. Additionally, non-owner occupied commercial real estateCRE loans generally involve relatively large balances to single borrowers or related groups of borrowers. Unexpected deterioration in the credit quality of Veritex’sour non-owner occupied commercial real estateCRE loan portfolio could require itus to increase the allowance for loancredit losses, which would reduce profitability and could have a materialan adverse effect on Veritex’sour business, financial condition and results of operations.

Construction and land loans also involve risks attributable to the fact that loan funds are secured by a project under construction, and the project is of uncertain value prior to its completion. It can be difficult to accurately evaluate the total funds required to complete a project, and construction lending often involves the disbursement of substantial funds with repayment dependent, in part, on the success of the ultimate project rather than the ability of a borrower or guarantor to repay the loan. If Veritex iswe are forced to foreclose on a project prior to completion, itwe may be unable to recover the entire unpaid portion of the loan. In addition, Veritexwe may be required to fund additional amounts to complete a project and may have to hold the property for an indeterminate period of time, any of which could adversely affect Veritex’sour business, financial condition and results of operations.

Because a significant portion of itsour loan portfolio consists of real estate loans, negative changes in the economy affecting real estate values and liquidity could impair the value of collateral securing Veritex’sour real estate loans and result in loan and other losses.

As of December 31, 2017, $1.52021, $5.3 billion, or 68.9%72.5% of total LHI excluding PPP loans, consisted of loans with real estate as a primary or secondary component of collateral. As a result, adverse developments affecting real estate values in the Texas markets in which we operate could increase the credit risk associated with Veritex’sour real estate loan portfolio. Real estate values in many Texas markets have experienced periods of fluctuation over the last five years. Theyears, and the market value of real estate can fluctuate significantly in a short period of time. Adverse changes affecting real estate values and the liquidity of real estate in one or more of Veritex’sour markets could increase the credit risk associated with Veritex’sour loan portfolio, and could result in losses that adversely affect credit quality, financial condition and results of operation.operations. Negative changes in the economy affecting real estate values and liquidity in Veritex’sour market areas could significantly impair the value of property pledged as collateral on loans and affect itsour ability to sell the collateral upon foreclosure without a loss or additional losses. Collateral may haveneed to be sold for less than the outstanding balance of the loan, which could result in losses on such loans. Such declines and losses could have a materialan adverse impact on Veritex’sour business, results of operations and growth prospects. If real estate values decline, it is also more likely that Veritexwe would be required to increase the allowance for loancredit losses, which could adversely affect itsour business, financial condition and results of operations.

We have a concentration of loans outstanding to a limited number of borrowers, which may increase itsour risk of loss.

A lack of liquidity could impair our ability to fund operations, adversely affect our operations and jeopardize our business, financial condition and results of operations.

Liquidity is essential to Veritex’sour business. Veritex reliesWe rely on itsour ability to generate deposits and effectively manage the repayment and maturity schedules of loans and investmentdebt securities, respectively, to ensure that it haswe have adequate liquidity to fund operations. An inability to raise funds through deposits, borrowings, the sale of Veritex’s investmentour debt securities, or the sale of loans and other sources could have a substantial negative effect on itsour liquidity.

Our most important source of funds is core deposits. Core deposit balances can decrease when customers perceive alternative investments as providing a better risk/return tradeoff. If customers move money out of bank deposits and into other investmentsproducts, such as money market funds, Veritexwe would lose a relatively low-cost source of funds, increasing funding costs and reducing net interest income and net income.

Other primary sources of funds consist of cash flows from operations, maturities and sales of investment securities, and proceeds from the issuance and sale of Veritexour equity and debt securities to investors. Additional liquidity is provided by the ability to borrow from Veritex’sour brokered deposit network, which includes the Federal Home Loan Bank of Dallas, or the FHLB and the Federal Reserve Bank of Dallas or the FRB. Veritex("FRB"). We also may borrow funds from third-party lenders, such as other financial institutions. Access to funding sources in amounts adequate to finance or capitalize itsour activities, or on acceptable terms, could be impaired by factors that affect Veritexus directly or the financial services industry or economy in general, such as disruptions in the financial markets or negative views and expectations about the prospects for the financial services industry. Veritex’sOur access to funding sources could also be affected by a decrease in the level of business activity as a result of a downturn in the Dallas-Fort Worth metroplex or the Houston metropolitan area or by one or more adverse regulatory actions against it.Veritex.

Any decline in available funding could adversely impact Veritex’sour ability to originate loans, invest in securities, meet itsour expenses or fulfill obligations such as repaying borrowings or meeting deposit withdrawal demands, any of which could have a materialan adverse impact on liquidity and could, in turn, adversely affect Veritex’sour business, financial condition and results of operations.

We were formed as a bank holding company in 2009 and commenced banking operations in 2010. Accordingly, Veritex haswe have a limited operating history upon which to evaluate itsour business and future prospects. As a result, it is difficult if not impossible, to predict future operating results and to assess the likelihood of the success of Veritex’sour business. As a relatively young financial institution, Veritex Bank is also subject to risks and levels of risk that are often greater than those encountered by financial institutions with longer established operations and relationships. New financial institutions often require significant capital from sources other than operations. Since Veritex is a relatively young financial institution, its management team and employees will shoulder the burdens of the business operations and a workload associated with business growth and capitalization that is disproportionately greater than a more mature, established financial institution.

We may need to raise additional capital in the future, and if it failswe fail to maintain sufficient capital, whether due to losses, an inability to raise additional capital or otherwise, Veritex’sour financial condition, liquidity and results of operations, as well as the ability to maintain regulatory compliance, could be adversely affected.

We face significant capital and other regulatory requirements as a financial institution. VeritexWe may need to raise additional capital in the future to provide sufficient capital resources and liquidity to meet itsour commitments and business needs, which could include the possibility of financing acquisitions. In addition, Veritex,we, on a consolidated basis, and Veritex Bank, on a stand-alonestandalone basis, must meet certain regulatory capital requirements and maintain sufficient liquidity. Importantly, regulatory capital requirements could increase from current levels, which could require Veritexus to raise additional capital or reduce itsour operations. Veritex’sOur ability to raise additional capital depends on conditions in the capital markets, economic conditions and a number of other factors, including investor perceptions regarding the banking industry, market conditions and governmental activities, and on Veritex’sour financial condition and performance. Accordingly, Veritexwe may be unable to raise additional capital if needed or on acceptable terms. If Veritex failswe fail to maintain capital to meet regulatory requirements, itsour liquidity, business, financial condition and results of operations could be adversely affected.

We could recognize losses on investmentdebt securities held in itsour securities portfolio, particularly if interest rates increase or economic and market conditions deteriorate.

While Veritex attemptswe attempt to invest a significant percentage of itsour assets in loans (its(our loan to deposit ratio, excluding MW and PPP loans, was 98.0%92.0% as of December 31, 2017)2021), itwe also investsinvest a percentage of itsour total assets in investmentdebt securities (7.7%(10.8% as of December 31, 2017)2021) with the primary objectives of providing a source of liquidity, providing an appropriate return on funds invested, managing interest rate risk, meeting pledging requirements and meeting regulatory capital requirements. As of December 31, 2017,2021, the fair value of Veritex’sour AFS debt securities portfolio was $228.1 million,$1.0 billion, which included a net unrealized lossgain of $1.6$31.6 million. Factors beyond Veritex’sour control can significantly influence the fair value of debt securities in itsour portfolio and can cause potential adverse changes to the fair value of these securities. For example, fixed-rate debt securities are generally subject to decreases in market value when interest rates rise. Additional factors include, but are not limited to, rating agency downgrades of the securities, defaults by the issuer or individual borrowers with respect to the underlying securities, and continued instability in the credit markets. Any of the foregoing factors could cause other-than-temporary impairment in future periods and result in realized losses. The process for determining whether impairment is other-than-temporary usually requires difficult, subjective judgments about the future financial performance of the issuer and any collateral underlying the security in order to assess the probability of receiving all contractual principal and interest payments on the security. Because of changing economic and market conditions affecting interest rates, the financial condition of issuers of the securities and the performance of the underlying collateral, Veritexwe may recognize realized and/or unrealized losses in future periods, which could have an adverse effect on itsour business, financial condition and results of operations.

We conduct our operations exclusively in Texas and particularly in the Dallas-Fort Worth metroplex and Houston metropolitan area. Many of Veritex’sour competitors offer the same, or a wider variety of, banking services within the same market area. These competitors include banks with nationwide operations, regional banks and other community banks. VeritexWe also facesface competition from many other types of financial institutions, including savings banks, credit unions, finance companies, mutual funds, insurance companies, brokerage and investment banking firms, asset-based non-bank lenders and certain other non-financial entities, such as retail stores which may maintain their own credit programs and certain governmental organizations which may offer more favorable financing or deposit terms than Veritexwe can. In addition, a number of out-of-state financial intermediaries have opened production offices, or otherwise solicit deposits, in itsour market area. Increased competition in Veritex’sour market may result in reduced loans and deposits, as well as reduced net interest margin, fee income and profitability. Ultimately, Veritexwe may not be able to compete successfully against current and future competitors. If it iswe are unable to attract and retain banking customers, Veritexwe may be unable to continue to grow loan and deposit portfolios, and itsour business, financial condition and results of operations could be adversely affected.

Our ability to compete successfully depends on a number of factors, including, among other things:

Failure to perform in any of these areas could significantly weaken Veritex’sour competitive position, which could adversely affect itsour growth and profitability, which, in turn, could adversely effect itsaffect our business, financial condition and results of operations.

Negative public opinion regarding Veritex or Veritex’sour failure to maintain itsour reputation in the community could adversely affect itsour business and prevent Veritexus from continuing to grow itsour business.

As a community bank, Veritex’sour reputation within the community it serveswe serve is critical to itsour success. Veritex strivesWe strive to enhance itsour reputation by recruiting, hiring and retaining employees who share itsour core values of being an integral part of the communities Veritex serves and delivering superior service to itsour customers. If Veritex’sour reputation is negatively affected by the actions of itsour employees or otherwise, Veritexwe may be less successful in attracting new customers, and itsour business, financial condition, results of operations and prospects could be materially and adversely affected. Further, negative public opinion cancould expose Veritexus to litigation and regulatory action as it seekswe seek to implement itsour growth strategy.

As a publicly traded company, we are required to accurately report itsfile periodic reports containing our consolidated financial results or prevent fraud.

We must also comply with Section 404 of the Sarbanes-Oxley Act of 2002 or the Sarbanes-Oxley Act,(the “Sarbanes-Oxley Act”), which requires that we perform an annual management assessmentsevaluation of the effectiveness of itsour internal control over financial reporting. During the course of our evaluation and testing, we may identify deficiencies, including material weaknesses, which would have to be remediated to satisfy SEC rules for attesting to the effectiveness of our internal control over financial reporting. A material weakness is defined by the standards issued by the Public Company Accounting Oversight Board as a deficiency, or combination of deficiencies, in internal control over financial reporting and, when Veritex ceases tothat results in a reasonable possibility that a material misstatement of our annual or interim financial statements will not be an emerging growth company under the JOBS Act,prevented or detected on a report by its independent auditors addressing these assessments. Veritex’s management may conclude that its internal control over financial reporting is not effective due to its failure to cure any identifiedtimely basis. If a material weakness or otherwise. Moreover, even if Veritex’sis determined to exist, we must disclose this deficiency in periodic reports we file with the SEC. The existence of a material weakness would preclude management concludesfrom concluding that itsour internal control over financial reporting is effective Veritex’sand would also preclude our independent registered public accounting firm may not conclude that itsauditors from attesting to the effectiveness of our internal control over financial reporting is effective.reporting. In the future, Veritex’s independent registered public accounting firm may not be satisfied with its internal control overaddition, disclosures of this type in our SEC reports could cause investors to lose confidence in our financial reporting orand may negatively affect the level at which its controlsmarket price of our common stock.

More generally, if we are documented, designed, operated or reviewed, or it may interpret the relevant requirements differently from Veritex. In addition, during the course of the evaluation, documentation and testing of Veritex’s internal control over financial reporting, Veritex may identify deficiencies that it may not be able to remediate in timeunable to meet the deadline imposed by the SEC for compliance withdemands that have been placed upon us as a public company, including the requirements of Section 404 of the Sarbanes-Oxley Act. Any such deficiencies may also subject Veritex to adverse regulatory consequences. If Veritex fails to achieve and maintain the adequacy of its internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, VeritexAct, we may be unable to accurately report itsour financial information on a timely basis, it may not be ableresults in future periods, or report them within the timeframes required by law or stock exchange regulations. Failure to conclude on an ongoing basis that it has effective internal control over financial reporting in accordancecomply with the Sarbanes-Oxley Act and it may suffer adverse regulatory consequences or violations of listing standards. There could also potentially subject us to sanctions or investigations by the SEC or other regulatory authorities. Under such circumstances, we may be unable to implement the necessary internal controls in a negative reactiontimely manner, or at all, and future material weaknesses may exist or may be discovered. If we fail to implement the necessary improvements, or if material weaknesses or other deficiencies occur, our ability to accurately and timely report our financial position could be impaired, which could result in late filings of our annual and quarterly reports with the SEC, restatements of our consolidated financial markets duestatements, a decline in our stock price, suspension or delisting of our common stock, and could have an adverse effect on our business, results of operations or financial condition. Even if we are able to report our financial statements accurately and in a losstimely manner, any failure in our efforts to implement the improvements or disclosure of investor confidencematerial weaknesses in our future filings with the reliability of Veritex’s financial statements.SEC could cause our reputation to be harmed and our stock price to decline significantly.

We are subject to certain operational risks, including, but not limited to, customer or employee fraud and data processing system failures and errors.

Employee errors and employee or customer misconduct could subject Veritexus to financial losses or regulatory sanctions and seriously harm itsour reputation. Misconduct by Veritex’sour employees could include hiding unauthorized activities, improper or unauthorized activities on behalf of customers or improper use of confidential information. It is not always possible to prevent employee errors andor misconduct, and the precautions Veritex takeswe take to prevent and detect this activitythese activities may not be effective in all cases. Employee errors could also subject Veritexus to financial claims for negligence.

We maintain a system of internal controls to mitigate against operational risks, including data processing system failures and errors and customer or employee fraud, as well as insurance coverage designed to protect itus from material losses associated with these risks, including losses resulting from any associated business interruption. If these internal controls fail to prevent or detect an occurrence, or if any resulting loss is not insured or exceeds applicable insurance limits, it could adversely affect Veritex’sour business, financial condition and results of operations.

In addition, Veritex relieswe rely heavily upon information supplied by third parties, including the information contained in credit applications, property appraisals, title information, equipment pricing and valuation and employment and income documentation, in deciding which loans to originate, as well as the terms of those loans. If any of the information upon which Veritex relies is misrepresented, either fraudulently or inadvertently, and the misrepresentation is not detected prior to loan funding, the value of the loan may be significantly lower than expected, or Veritexwe may fund a loan that it would not have funded or on terms itwe would not have extended. Whether a misrepresentation is made by the loan applicant or another third party, Veritexwe will generally bear the risk of loss associated with the misrepresentation. A loan subject to a material misrepresentation is typically unsellable or subject to repurchase if it is sold prior to detection of the misrepresentation. The sources of the misrepresentations are often difficult to locate, and recovery of any of the resulting monetary losses Veritexwe may suffer could be difficult.

The financial services industry is undergoing rapid technological changes with frequent introductions of new technology-driven products and services. In addition to better serving customers, the effective use of technology increases efficiency and enables financial institutions to reduce costs. Veritex’sOur future success will depend, at least in part, upon itsour ability to address the needs of customers by using technology to provide products and services that will satisfy customer demands for convenience as well as to create additional efficiencies in operations as it continueswe continue to grow and expand the products and services offered. Veritexwe offer. We may experience operational challenges as it implementswe implement these new technology enhancements or products, which could result in an inability to fully realize the anticipated benefits from such new technology or significant costs to remedy any such challenges in a timely manner.

Many of Veritex’sour larger competitors have substantially greater resources to invest in technological improvements. As a result, they may be able to offer additional or superior products compared to those that Veritexwe will be able to provide, which would put itus at a competitive disadvantage. Accordingly, Veritexwe may lose customers seeking new technology-driven products and services to the extent it iswe are unable to provide such products and services.

Our operations could be interrupted if third-party service providers experience difficulty, terminate their services or fail to comply with banking regulations.

We depend on a number of relationships with third-party service providers. Specifically, Veritex receiveswe receive certain third-party services from third parties including, but not limited to, core systems processing, essential web hosting and other Internet systems, online banking services, deposit processing and other processing services. Veritex’sOur operations could be interrupted if any of these third-party service providers experienceexperiences difficulties, or terminate theirterminates its services, and Veritex iswe are unable to replace themthe provider with other service providers, particularly on a timely basis. If an interruption were to continue for a significant period of time, Veritex’sour business, financial condition and results of operations could be adversely affected, perhaps materially. In addition, we may not be insured against all types of losses as a result of third-party failures, and insurance coverage may be inadequate to cover all losses resulting from interruptions of third-party services. Even if Veritex iswe are able to replace third-party service providers, it may be at a higher cost to it,us, which could adversely affect itsour business, financial condition and results of operations.

Consumers may decide not to use banks to complete their financial transactions.

Technology and other changes are allowing consumers to complete financial transactions through alternative methods that historically have involved banks.banks through alternative methods. For example, consumers can now maintain funds that would have historically been held as bank deposits in brokerage accounts, mutual funds, or general-purpose reloadable prepaid cards.cards or other mobile payment services. Consumers can also complete transactions such as paying bills and transferring funds directly without the assistance of banks. The process of eliminating banks as intermediaries, which may increase as consumers become more comfortable with these new technologies and offerings, could result in the loss of fee income, as well as the loss of customer deposits and the related income generated from those deposits. The loss of these revenue streams and the lower cost of deposits as a source of funds could have a materialan adverse effect on our financial condition and results of operations.

If the goodwill that Veritex haswe have recorded or may record in connection with a business acquisition becomes impaired, it could require charges to earnings, which would adversely effect itsaffect our business, financial condition and results of operations.

Goodwill represents the amount by which the cost of an acquisition exceeded the fair value of net assets acquired in connection with the purchase of another financial institution. Veritex reviewsWe review goodwill for impairment at least annually, or more frequently if a triggering event occurs which indicates that the carrying value of the asset might be impaired. Veritex utilizesWe may first assess qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value of a reporting unit is less than its carrying amounts, including goodwill. We have an unconditional option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the first step of the goodwill impairment test, and we may resume performing the qualitative assessment in any subsequent period. If we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the entity shall perform the first step of the two-step process to test forgoodwill impairment of goodwill.test. Under the first step, the estimation of fair value of Veritex’s onethe reporting unit is compared to its carrying value including goodwill. If step one indicates a potential impairment, the second step is performed to measure the amount of impairment, if any. If the carrying amount of the reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. Any such adjustments are reflected in Veritex’sthe results of operations in the periods in which they become known. As of December 31, 2017,2021, goodwill totaled $159.5$403.8 million. Although Veritex haswe have not recorded any impairment charges since the goodwill was initially recorded, future evaluations of existing goodwill or goodwill acquired in the future may result in findings of impairment and related write-downs, which could adversely affect Veritex’sour business, financial condition and results of operations.

Risks Related to Veritex’s Industry and Regulation

The ongoing implementation of the Dodd-Frank Actchanges in regulation could adversely affect Veritex’sour business, financial condition, and results of operations.

financial services regulatory framework may impact the profitability of Veritex’sour business activities, require changes to certain of itsour business practices, require the development of new compliance infrastructure, impose upon Veritexus more stringent capital, liquidity and leverage requirements or otherwise adversely affect itsour business. These changes may also require Veritexus to invest significant management attention and resources to evaluate and make any changes necessary to comply with new statutory and regulatory requirements. Failure to comply with the new requirements or with any future changes in laws or regulations could adversely affect Veritex’sour business, financial condition and results of operations.

We operate in a highly regulated environment and the laws and regulations that govern itsour operations, corporate governance, executive compensation and accounting principles, or changes in them, or failure to comply with them, could adversely affect Veritex’sour business, financial condition and results of operations.

State and federal banking agencies periodically conduct examinations of Veritex’sour business, including our compliance with laws and regulations, and failure to comply with any supervisory actions to which Veritex iswe are or may become subject as a result of such examinations could adversely affect Veritex’sour business, financial condition and results of operations.

The TDB and the Federal Reserve periodically conduct examinations of Veritex’sour business, including our compliance with laws and regulations. If, as a result of an examination, a Texas or federal banking agency were to determine that the financial condition, capital resources, asset quality, earnings prospects, management, liquidity or other aspects of any of Veritex’sour operations had become unsatisfactory, or that Veritex, the Bank or their respective management were in violation of any law or regulation, it may take a number of different remedial actions as it deems appropriate. These actions include the power to prohibit “unsafe or unsound” practices, to require affirmative actions to correct any conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforced, to direct an increase in Veritex’sour capital levels, to restrict itsour growth, to assess civil monetary penalties against Veritex, the Bank or their respective officers or directors, to remove officers and directors and to terminate the Bank’s deposit insurance upon notice and hearing. If Veritex becomeswe become subject to such regulatory actions, itsour business, financial condition, results of operations and reputation could be adversely affected.

Many of Veritex’sour new activities and expansion plans require regulatory approvals, and failure to obtain them may restrict future growth.

We intend to complement and expand itsour business by pursuing strategic acquisitions of financial institutions and other complementary businesses. Generally, Veritexwe must receive state and federal regulatory approval before itwe can acquire a depository institution insured by the FDIC or related business. In determining whether to approve a proposed acquisition, federal banking regulators will consider, among other factors, the effect of the acquisition on competition, Veritex’sour financial condition, itsour future prospects and the impact of the proposal on U.S. financial stability. The regulators also review current and projected capital ratios and levels, the competence, experience and integrity of management and itsthe parties' record of compliance with laws and regulations, the convenience and needs of the communities to be served (including the acquiring institution’sparties' record of complianceperformance under the CRA) and the effectiveness of the acquiring institutionparties' in combating money laundering activities. Such regulatory approvals may not be granted on terms that are acceptable to it,us, or at all. VeritexWe may also be required to sell branches as a condition to receiving regulatory approval, which condition may not be acceptable to itus or, if acceptable to it,us, may reduce the benefit of any acquisition.

Financial institutions, such as the Bank, face a risk of noncompliance with and enforcement action withunder the Bank Secrecy Act and other anti-money laundering statutes and regulations.

The Bank Secrecy Act, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, orBSA, the USA PATRIOT Act, and other laws and regulations require financial institutions, among other duties,requirements, to institute and maintain an effective anti-money launderingAML program and file suspicious activity and currency transaction reports as appropriate. The Financial Crimes Enforcement Network,FinCEN, established by the U.S. Department of the Treasury or the Treasury Department, to administer the Bank Secrecy Act,BSA, is authorized to impose significant civil money penalties for violations of those requirements, and has recently engagedmay engage in coordinated enforcement efforts with the individual federal banking regulators, as well as the U.S. Department of Justice, Drug Enforcement Administration, and Internal Revenue Service. There is also increased scrutiny of complianceService, among other government and law enforcement agencies. In addition, OFAC may pursue enforcement actions for failure to comply with the sanctions programs and rules administered and enforced by the Treasury Department’s Office of Foreign Assets Control.it administers.

The FDIC’s restoration plan and the related increased assessment rate could adversely affect Veritex’sour earnings and results of operations.

Veritex isWe are subject to increased capital requirements, which may adversely impact return on equity or prevent Veritexus from paying dividends or repurchasing shares.

The Dodd-Frank Act requires the federal banking agencies to establish stricter risk-based and leverage capital requirements to apply to banksinsured depository institutions and bank and savings and loantheir holding companies. TheIn 2013, the federal banking agencies have adopted revised risk-based and leverage capital requirements as well as a revised method for calculating risk-weighted assets. assets ("RWA").

The Federal Reserve may require Veritexus to commit capital resources to support the Bank.

A bank holding company is required to act as a source of financial and managerial strength to its subsidiary banks and to commit resources to support its subsidiary banks. The Federal Reserve may require a bank holding company to make capital injections into a troubled subsidiary bank at times when the bank holding company may not be inclined to do so and may charge the bank holding company with engaging in unsafe and unsound practices for failurefailing to commit resources to such a subsidiary bank. Accordingly, Veritexwe could be required to provide financial assistance to the Bank if it experiences financial distress.

Such a capital injection may be required at a time when Veritex’sour resources are limited and itwe may be required to borrow the funds to make the required capital injection. In the event of a bank holding company’s bankruptcy, the bankruptcy trustee will assume any commitment by the holding company to a federal bank regulatory agency to maintain the capital of a subsidiary bank. Moreover, bankruptcy law provides that claims based on any such commitment will be entitled to a priority of payment over the claims of the holding company’s general unsecured creditors, including the holders of any note obligations.

Financial services institutions are interrelated as a result of trading, clearing, counterparty or other relationships. Veritex hasWe have exposure to many different industries and counterparties, and routinely executesexecute transactions with counterparties in the financial services industry, including commercial banks, brokers and dealers, investment banks and other institutional clients. Many of these transactions expose Veritexus to credit risk in the event of a default by a counterparty or client. In addition, Veritex’sour credit risk may be exacerbated when itsour collateral cannot be foreclosed upon or is liquidated at prices not sufficient to recover the full amount of the credit or derivative exposure due. Any such losses could adversely affect Veritex’sour business, financial condition and results of operations.

Monetary policies and regulations of the Federal Reserve could adversely affect Veritex’sour business, financial condition and results of operations.

In addition to being affected by general economic conditions, Veritex’sour earnings and growth are affected by the policies of the Federal Reserve. An important function of the Federal Reserve is to regulate the U.S. money supply and credit conditions. Among the instruments used by the Federal Reserve to implement these objectives are open market operations in U.S. government securities, adjustments of both the discount rate and the federal funds rate and changes in reserve requirements against bank deposits. These instruments are used in varying combinations to influence overall economic growth and the distribution of credit, bank loans, investments and deposits. Their use also affects interest rates charged on loans or paid on deposits.

The monetary policies and regulations of the Federal Reserve have had a significant effect on the operating results of commercial banks in the past and are expected to continue to do so in the future. Although Veritexwe cannot determine the effects of such policies on itus at this time, such policies could adversely affect itsour business, financial condition and results of operations.

The market price of Veritex’sour common stock may fluctuate significantly.

The market price of Veritex’sour common stock could fluctuate significantly due to a number of factors, including, but not limited to:

In particular, the realization of any of the risks described in this “Item 1A. Risk Factors” section could have a materialan adverse effect on the market price of Veritex’sour common stock and cause the value of your investment to decline. In addition, the stock market in general has experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of Veritex’sour common stock over the short, medium or long-term, regardless of Veritex’sour actual performance. If the market price of Veritex’sour common stock reaches an elevated level, it may materially and rapidly decline. In the past, following periods of volatility in the market price of a company’s securities, shareholders have often instituted securities class action litigation. If Veritexwe were to be involved in a class action lawsuit, it could divert the attention of senior management and could adversely affect Veritex’sour business, financial condition and results of operations.

If securities or industry analysts change their recommendations regarding Veritex’sour common stock or if Veritex’sour operating results do not meet their expectations, Veritex’sour stock price could decline.

The trading market for Veritex’sour common stock could be influenced by the research and reports that industry or securities analysts may publish about Veritex or itsour business. If one or more of these analysts cease coverage of Veritexus or fail to publish reports on itus regularly, Veritexwe could lose visibility in the financial markets, which in turn could cause itsour stock price or trading volume to decline. Moreover, if one or more of the analysts who cover Veritexus downgrade itsour stock or if Veritex’sour operating results do not meet their expectations, either absolutely or relative to Veritex’sour competitors, Veritex’sour stock price could decline significantly.

Future sales or the possibility of future sales of a substantial amount of Veritexour common stock may depress the price of shares of Veritex’sthe common stock.

Future sales or the availability for sale of substantial amounts of Veritex’sour common stock in the public market, or the perception that these sales could occur, could adversely affect the prevailing market price of Veritex’sour common stock and could impair itsour ability to raise capital through future sales of equity securities.

We may issue shares of itsour common stock or other securities from time to time as consideration for future acquisitions and investments and pursuant to compensation and incentive plans. If any such acquisition or investment is significant, the number of shares of Veritex’sour common stock, or the number or aggregate principal amount, as the case may be, of other securities that Veritexwe may issue may in turn be substantial. VeritexWe may also grant registration rights covering those shares of itsour common stock or other securities in connection with any such acquisitions and investments.

We cannot predict the size of future issuances of itsour common stock or the effect, if any, that future issuances and sales of its common stock will have on the market price of itsour common stock. Sales of substantial amounts of Veritex’sour common stock (including shares of itsour common stock issued in connection with an acquisition or under a compensation or incentive plan), or the perception that such sales could occur, may adversely affect prevailing market prices for itsour common stock and could impair Veritex’sour ability to raise capital through future sales of its securities.

The holders of Veritex’sour debt obligations will have priority over Veritex’sour common stock with respect to payment in the event of liquidation, dissolution or winding up of Veritex and with respect to the payment of interest and preferred dividends.

We depend on the Bank for cash flow, and the Bank’s ability to make cash distributions is restricted, which could impact Veritex’sour ability to satisfy its obligations.

Our primary asset is the Bank. As such, Veritex depends uponwe depend on cash flow through dividends from the Bank for cash distributions through dividends on the Bank’s stock to pay Veritex’sour operating expenses and satisfy itsour obligations, including debt obligations. There are numerous laws and banking regulations that limit the Bank’s ability to pay dividends to Veritex.Holdco. If the Bank is unable to pay dividends to Veritex, VeritexHoldco, we will not be able to satisfy itsour obligations. Federal and state statutes and regulations restrict the Bank’s ability to make cash distributions to Veritex. These statutes and regulations require, among other things, that the Bank maintain certain levels of capital in order to pay a dividend. Further, federal and state banking authorities have the ability to restrict the Bank’s payment of dividends through supervisory action. See also “Item 1. Business—Regulation and Supervision—Regulatory Limits on Dividends and Distributions.”

In January 2019, we initiated a quarterly cash dividend on our common stock. Holders of our common stock are entitled to receive only such cash dividends as longour Board of Directors may declare out of funds legally available for the payment of dividends. The timing, declaration, amount and payment of future cash dividends, if any, will be within the discretion of our Board of Directors and will depend upon then-existing conditions, including our results of operations, financial condition, capital requirements, investment opportunities, growth opportunities, any legal, regulatory, contractual or other limitations on our ability to pay dividends and other factors our Board of Directors may deem relevant. As a bank holding company, our ability to pay dividends is also affected by the policies and enforcement powers of the Federal Reserve and any future payment of dividends will depend on the Bank’s ability to make distributions and payments to Holdco, as Veritexthese distributions and payments are our principal source of funds to pay dividends. The Bank is an emerging growth company, Veritex willalso subject to various legal, regulatory and other restrictions on its ability to make distributions and payments to Holdco. In addition, in the future, we may enter into borrowing or other contractual arrangements that restrict our ability to pay dividends. As a consequence of these various limitations and restrictions, we may not be requiredable to comply with certain reporting requirements, including disclosure about its executive compensation, that applymake, or may have to other public companies.

The requirements of being a public company, including compliance with the reporting requirements of the Exchange Act and the requirements of the Sarbanes-Oxley Act, of 2002, may strain Veritex’sour resources, increase itsour costs and distract management.

We completed itsour initial public offering in October 2014. As a public company, Veritex incurswe incur significant legal, accounting and other expenses that itwe did not incur as a private company. VeritexWe also incur costs associated with itsour public company reporting requirements and with corporate governance requirements, including requirements under the Sarbanes-Oxley Act, of 2002, Nasdaqstock exchange rules and the rules implemented by the SEC. These rules and regulations have increased Veritex’sour legal and financial compliance costs and make some activities more time-consuming and costly. These rules and regulations also make it more difficult and more expensive for Veritexus to obtain director and officer liability insurance. As a result, it may be more difficult for Veritexus to attract and retain qualified individuals to serve on its boardour Board of directorsDirectors or as executive officers.

Shareholders may be deemed to be acting in concert or otherwise in control of Veritex,us, which could impose notice, approval and ongoing regulatory requirements upon them and result in adverse regulatory consequences for such holders.

As a general matter, a party is deemed to control a depository institution or other company if the party (1) owns or controls 25.0% or more of any class of voting stock of the bank or other company, (2) controls the election of a majority of the directors of the bank or other company, or (3) has the power to exercise a controlling influence over the management or policies of the bank or other company. In addition, subject to rebuttal, a party may be presumed to control a depository institution or other company if the investor owns or controls 10.0% or more of any class of voting stock. Ownership by affiliated parties, or parties acting in concert, is typically aggregated for these purposes. “Acting in concert” generally means knowing participation in a joint activity or parallel action towards the common goal of acquiring control of a bank or a parent company, whether or not pursuant to an express agreement. The manner in which this definition is applied in individual circumstances can vary and cannot always be predicted with certainty.

An investment in Veritex’sour common stock is not an insured deposit and is not guaranteed by the FDIC, so you could lose some or all of your investment.

An investment in Veritex’sour common stock is not a bank deposit and, therefore, is not insured against loss or guaranteed by the FDIC, any other deposit insurance fund or by any other public or private entity. An investment in Veritex’sour common stock is inherently risky for the reasons described herein. As a result, if you acquire Veritex’sour common stock, you could lose some or all of your investment.

ITEM 1B.  UNRESOLVED STAFF COMMENTS

None.

ITEM 2.  PROPERTIES

At December 31, 2017,2021, our executive offices were located at 8214 Westchester Drive, Suite 400,800, Dallas, Texas 75225. In addition to our executive offices, at December 31, 2017,2021, we had twenty18 full-service branches and one mortgage office located in the Dallas-Fort Worth metroplex twoand 10 full-service branches in the Austin metropolitan area and one full-service branch in the Houston metropolitan area. On January 1, 2018, the Company sold the two full-service branches in the Austin metropolitan area. We own the building in which our executive offices are located and lease the majority of the space in which our other administrative offices are located. As of December 31, 2017,2021, we owned thirteen17 of our branch locations and leased the mortgageremaining 11 branch and office and remaining ten branch locations. The remaining terms of our leases on our full-services branches range from one to fiveten years and give us the option to renew for subsequent terms of equal duration or otherwise extend the lease term subject to price adjustment based on market conditions at the time of renewal. The net book value of our investment in premises, equipment and leaseholds, excluding computer equipment, was approximately $77.0 million, which includes $5.1 million of premises and equipment classified as held for sale, at December 31, 2017. We believe that our current facilities are adequate to meet theour present and immediately foreseeable needs of the Bank and the Company.needs.

ITEM 3.  LEGAL PROCEEDINGS

We are from time to time subject to claims and litigation arising in the ordinary course of business. These claims and litigation may include, among other things, allegations of violation of banking and other applicable regulations, competition law,laws, labor laws and consumer protection laws, as well as claims or litigation relating to intellectual property, securities, breach of contract and tort. We intend to defend ourselves vigorously against any pending or future claims and litigation.

At this time, in the opinion of management, the likelihood is remote that the impact of such proceedings, either individually or in the aggregate, would have a material adverse effect on our consolidated results of operations, financial condition or cash flows. However, one or more unfavorable outcomes in any claim or litigation against us could have a material adverse effect for the period in which they are resolved. In addition, regardless of their merits or their ultimate outcomes, such matters are costly, divert management’s attention and may materially adversely affect our reputation, even if resolved in our favor.

ITEM 4.  MINE AND SAFETY DISCLOSURES

Not applicable.

Market Information for Common Stock

Shares of our common stock are traded on the Nasdaq Global Market under the symbol “VBTX”. Our shares have been traded on the Nasdaq Global Market since October 9, 2014. Prior to that date, there was no public trading market for our common stock.

As of March 13, 2018,February 25, 2022, there were 33349,582,605 holders of record of our common stock.

Dividend Policy

We have notOn January 25, 2022, Veritex Holdings, Inc. announced that its Board of Directors declared or paid any dividendsa quarterly cash dividend of $0.20 per share on our outstanding common stock. We currently intendThe dividend was paid on February 25, 2022 to retain allshareholders of record as of February 11, 2022. For the year ended December 31, 2021, we declared and paid $36.5 million in cash dividends.

The timing, declaration, amount and payment of any future cash dividends are at the discretion of our future earnings, ifBoard of Directors and will depend on many factors, including our results of operations, financial condition, capital requirements, investment opportunities, growth opportunities, any for use in our business and do not anticipate paying any cash dividendslegal, regulatory, contractual or other limitations on our common stock in the foreseeable future.

Unregistered Sales of Equity Securities

Equity Compensation Plan Information

See “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters”. The information regarding the securities authorized for issuance under equity compensation plans called for by this item is set forth in our 2022 Proxy Statement, and is incorporated herein by reference.

The following table and graph compares the cumulative total shareholder return on our common stock to the cumulative total return of the S&P 500 Total Return Indexour peer group and the Nasdaq Bank Index for the period beginning on October 9, 2014, the first day of trading of our common stock on the Nasdaq Global Market through December 31, 2017.2021. The following information reflects index values as of close of trading, assumes $100 invested on October 9, 2014 in our common stock, the S&P 500 Total Return Indexpeer group and the Nasdaq Bank Index, and assumes the reinvestment of dividends, if any. The historical stock price performance for our common stock shown on the graph below is not necessarily indicative of future stock performance.

Stock Repurchases

No purchasesOn January 28, 2019, our Board of Directors authorized a stock buyback program pursuant to which we may, from time to time, purchase up to $50.0 million of our outstanding common stock (the “Stock Buyback Program”). Our Board of Directors authorized increases of $50.0 million in September 2019, $75.0 million in December 2019 and $75.0 million in September 2021, resulting in an aggregate authorization to purchase of up to $250.0 million of our common stock were made by or on behalfstock. Our Board of us or any “affiliated purchaser” as defined in Rule 10b-18(a)(3) underDirectors also authorized extensions of the Exchange Act duringexpiration date of the year endedStock Buyback Program from December 31, 2017.  There is currently2019 to December 31, 2020, then from December 31, 2020 to March 31, 2021 and then from March 31, 2021 to December 31, 2022. 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 SEC. The Stock Buyback Program does not obligate the Company to purchase any shares. The Stock Buyback Program may be terminated or amended by the Board of Directors at any time prior to its expiration. During the fourth quarter of 2021, the Company had no authorization to repurchaserepurchases of shares of outstandingits common stock.

Overview

We are a bank holding company headquarteredTexas state banking organization with corporate offices in Dallas, Texas. Through our wholly owned subsidiary, Veritex Community Bank, a Texas state charteredstate-chartered bank, we provide relationship-driven commercial banking products and services tailored to meet the needs of small to medium-sized businesses and professionals. Beginning at our operational inception in 2010, we initially targeted customers and focused our acquisitions primarily in the Dallas metropolitan area, which we consider to be Dallas and the adjacent communities in North Dallas. As a result of our recent acquisitions of Sovereign and Liberty, ourOur current primary market now includes the broader Dallas-Fort Worth metroplex which also encompasses Arlington, as well asand the Houston metropolitan area. As we continue to grow, we may expand to other metropolitan banking markets within the State ofin Texas.