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Veritex Holdings Inc (NASDAQ:VBTX)
Q4 2019 Earnings Call
Jan 29, 2020, 9:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day and welcome to the Veritex Holdings Fourth Quarter 2019 Earnings Conference Call and Webcast.

[Operator Instructions]

I would now like to turn the conference over to Ms. Susan Caudle, Investor Relations Officer and Secretary of the Board of Veritex Holdings.

Susan Caudle -- Investor Relations Officer and Secretary of the Board of Veritex Holdings

Thank you.

Before we get started, I'd like to remind you that this presentation may include forward-looking statements and those statements are subject to risks and uncertainties that could cause actual and anticipated results to differ. The company undertakes no obligation to publicly revise any forward-looking statements. At this time, if you're logged into our webcast, please refer to our slide presentation, including our Safe Harbor statement beginning on Slide 2. For those of you joining us by phone, please note that the Safe Harbor statement and presentation are available on our website veritexbank.com. All comments made during today's call are subject to that Safe Harbor statement. In addition, some of the financial metrics discussed will be on a non-GAAP basis, which our management believes better reflects the underlying core operating performance of the business. Please see the reconciliation of all discussed non GAAP measures in our filed 8-K earnings release.

Joining me today are Malcolm Holland, our Chairman and CEO; Terry Earley, our Chief Financial Officer; and Clay Riebe, our Chief Credit Officer. Malcolm?

Malcolm Holland -- Chairman & Chief Executive Officer

Thank you, Susan, and good morning everyone.

The first full-year of the new Veritex is in the books. We have accomplished a great deal and feel some real positive momentum moving into 2020. For the quarter ending 12/31/2019, we delivered operating income of $30.3 million or $0.58 per share. For the year ending 12/31/2019, our operating EPS was $2.29 per share versus $1.84 for the year ending 12/31/2018, a 25% increase to annual earnings, just like we forecasted at the announcement of the Green merger in July 2018.

The non-mortgage warehouse loan growth for our fourth quarter was the best quarter of the year. We finally saw paydowns and payoffs pull back a bit and found some funding stability in Houston. Our DFW market continues to produce majority of our net loan growth. For the quarter, loans increased 6% annualized, majority funded in December. So, we didn't receive the full interest income benefit during Q4. Our pipelines remained steady and growing.

You can see later in the deck that our quarterly loan commitments continued to progress upward at a nice pace. I previously stated that we underestimated the disruption that our merger would have on our loan production side. We're now approaching levels of new commitments that should produce mid-single-digit loan growth in 2020.

The growth on the deposit side was remarkable. DDA growth exceeded 21% annualized, while interest-bearing transaction accounts grew 20%. We have not seen this type of growth in these accounts for years. The reasons for this growth can be found in a few areas. First, getting the noise of the merger behind us, both our relationship managers and clients, feel that the challenges of our combination are behind us. Second, the competitive marketplace for deposit seems to have softened, fueled by the Fed slowing the reduction in rates. And third, our continued pursuit from the top of the house pushing the importance of deposit-gathering behaviors and our corresponding deposit incentive programs. I'm pretty sure we won't be able to keep this paced up, but I am encouraged by the momentum we currently have in this area.

Net interest margin does appear to be settling down a bit, although it is still somewhat challenging, as we continue to reprice the deposit book. Terry will provide additional details shortly. From a credit perspective, we feel we had an excellent quarter with just one exception, a legacy Green relationship in the child care industry with two real property loan facilities, with total debt of $18.9 million was added to non-accrual during the quarter. An impairment analysis was performed on both loans and there is currently no impairment to the principal balance. This relationship was the main driver, increasing our NPAs from 0.21% to 0.5%. Other than that outlier, we continued to have strong confidence in our original marks on the Green PCI loan book. This specific book reduced $22 million or 15% during the quarter. For the year, the book has been reduced from $177 million to the current level of $126 million.

I'll now turn the call over to Terry.

Terry S. Earley -- Chief Financial Officer

Thank you, Malcolm, and good morning everybody. I'd like to take a few minutes to provide you with more details on Veritex's financial results for the fourth quarter and the full-year 2019.

As in the last couple of quarters, we do have some noise in the numbers, although the noise has declined substantially and is almost out of the operating results. So, please note that for the most part, my commentary will focus on Veritex's fourth quarter financial results on a non-GAAP operating basis, which excludes loss on securities sales, merger expenses and other tax-related items.

Now on to Slide 4, which focuses on our Q4 results. Malcolm has already mentioned our operating fully diluted earnings per share. But in addition, the operating pre-tax, pre-provision return on average assets was 2.07%, which represents our fourth consecutive quarter above 2%. And the operating return on average tangible common equity improved to 16.87%.

On Slide 5, note that table at the bottom half of the page, which shows 2019 versus 2018 operating results. Malcolm mentioned a few of the financial metrics in his remarks, but I don't want to pass by this page without highlighting the strong earnings profile that has been created through the merger between Veritex and Green.

Skipping to Slide 7, focusing on the bottom right hand graph, tangible book value per share is $14.74 as of the end of the fourth quarter, which is equal to the book value immediately before the Green merger. During 2019, in addition to the $1.38 in tangible book value dilution from the Green Bank merger that was disclosed in the Q1 results, we've also absorbed approximately $1.32 per share dilution from stock buybacks and dividends. From our perspective, the earn-back of the tangible book value dilution from the merger is occurring meaningfully faster than originally modeled.

On Slide 8, the GAAP net interest margin decreased 9 basis points to 3.81% in Q4, while the adjusted net interest margin, which excludes the impact of purchase accounting, declined 13 basis points to 3.47%. The table in the bottom right of the slide shows the items that impacted both the GAAP NIM and the adjusted NIM. Focusing on the adjusted net interest margin, which excludes the impact of purchase accounting, following short-term interest rates coupled with a loan portfolio that is 70% floating, impacted the yield on loans and reduced the adjusted net interest margin by 24 basis points. The purchased interest rate floors and those embedded in our floating-rate loans will continue to help offset potential continued downward pressure on short-term rates. This was partially offset by a 14 basis point NIM expansion from lower rates on interest-bearing deposits and another 4 basis points expansion from the lower rates paid on our Federal Home Loan Bank advances.

As we have discussed for several quarters, we will continue to be aggressive on the funding side, including rate reductions on the deposit portfolio and the use of structured Federal Home Loan Bank funding. More to come on the funding side in a minute. As we announced during the quarter, Veritex completed the issuance of $75 million in subordinated debt. This funding caused a 3 basis point decline in the net interest margin.

Finally, as can be seen on Page 9 in the earnings release, we carried considerable excess liquidity during the quarter, as a result of the debt issuance, strong deposit growth and late quarter loan growth. This excess liquidity was largely deployed by the end of the quarter. It's management's intent to continue to transition the balance sheet to a more neutral position as we believe the risk is greater to falling rates as opposed to rising rates. We made good progress on reducing interest rate risk in Q4 to falling rates as the impact of netting interest income from 100 basis point decrease in rates declined almost 30%.

On Slide 9, Veritex reported operating fee income of $7.6 million, down from $8.4 million in Q3. The results for the quarter were weaker in all categories, except deposit fees. Deposit fees account for 45% of fee income and have grown 6% since Q1. It was another disappointing quarter for the SBA business after a great start into 2019 in Q1 [Phonetic]. Also, our customer interest rate swap business had a weaker Q4, after a very strong Q3.

On Slide 10, the company continues to operate efficiently, realizing the benefits of scale from the Green merger and the branch-like [Phonetic] business model. Overall expenses were up by $1.8 million, due primarily to personnel costs. Within this category, the vast majority of the increase is in variable compensation and stock-based compensation. If you will recall, we've been signaling for several quarters that we expected expenses to run in the $34 million to $35 million range. We were slightly above that target in Q4 for the reasons I just mentioned.

On Slide 11, total loans increased $87 million or 6.1% on a linked-quarter annualized basis, excluding mortgage warehouse. Loan held production continues to improve with Q4 levels, the best in the year. DFW continues to be very strong with Houston making some progress. Clearly, an improving growth profile as we head into 2020. The acquired loan portfolio is now down to $2.2 billion and has declined approximately $1.25 billion during 2019. We're pleased with the progress in working down this part of the portfolio and continued significant reductions remain a goal for 2020. Please see the table in the top-right quadrant of the page.

The detail on the floors, embedded in our loan portfolio, is shown in bottom left and again should provide additional relief, if short-term rates continue to lower. The loan portfolio mix is shown in the bottom right. We like the diversification of the portfolio, but would prefer to increase the allocation to residential mortgages because of the duration of this asset class.

As Malcolm mentioned, on Page 12, it was an amazing quarter on the deposit front. Growth, excluding time deposits, was $210 million or 21% growth linked-quarter annualized. The mix of the deposit portfolio has improved significantly over 2019, with the reliance on time deposits dropping from 36% to 29%.The loan-to-deposit ratio, excluding the mortgage warehouse, stood at 97.3% and inside the range we've targeted. As we have discussed on every earnings call since the Fed pivoted on interest rates in May, we've been aggressively reducing money market and time deposit rates, and shifting out of the higher-cost market index deposits and into structured borrowings. The graph in the bottom left of the page shows it on a quarterly basis. Deposit rates, excluding purchase accounting declined by 24 basis points from Q3 to Q4.

Turning to Federal Home Loan Bank side of it, we were able to lower the cost of Federal Home Loan Bank borrowings from Q3 to Q4 by 48 bps. This was on top of the rate reduction we achieved in Q3 of 69 basis points. So, the total in the back half of 2019 was a 117 basis points when the Federal Reserve moved only 75 basis points. Finally, non interest-bearing deposits now stand at 26.4% of total deposits.

Moving to Slide 13, Malcolm's already discussed credit in his comments, I would like to point out that approximately $1.2 million of the Q4 loan loss provision relates to the migration of the acquired portfolio into the Veritex originated portfolio through the normal renewal process. After the implementation of CECL on January 1, this quarterly addition to the provision will no longer be necessary, because this will be incorporated into the CECL transition adjustment.

Finally on Slide 14, capital ratios at the holding company and the bank remained very strong. Our tangible common equity to tangible assets decreased only slightly to 10.01%, even with all of our capital actions. Back in December, Veritex announced increase in stock buyback to $175 million. During the quarter, we returned $42.2 million to common shareholders, including $35.7 million from the repurchase of $1,454,000 shares of stock and $6.5 million in dividends. On a year-to-date basis, we returned $121 million to shareholders through the buyback of over 3.8 million shares or 7% of the outstanding shares and dividend, which we initiated in '19 -- outstanding shares of the company.

Looking forward, considering our excess capital, organic capital generation from our strong earnings profile, and the [Phonetic] $80.5 million we have remaining under our approved buyback. We expect to remain active with the share repurchases because we believe this to be the best investment we can make with our excess capital.

As you saw in the press release, Veritex increased its regular quarterly dividend by 36% to $0.17 per share, which will be paid in February.

Lastly, it's our understanding that during Q4, our last private equity shareholder that held 2.6 million shares at September 30, has exited their position. We're glad to finally have the overhang from the private equity ownership [Indecipherable].

With that, I'd like to turn the call back over to Malcolm.

Malcolm Holland -- Chairman & Chief Executive Officer

Thank you, Terry.

As you can see, we continue to execute on our plan to deliver the metrics, we communicated over a year and a half ago. Our year-over-year metrics included: 25% increase in operating earnings; operating pre-tax, pre-provision return of 2.24%; return on average assets of 1.56%; and return on TCE of 17%; and an operating efficiency ratio of 44%. My team and I still think we have room for some improvement.

We continue to be very active on the hiring front. Since 09/30/19, we have hired three new lenders and have ongoing discussions with several high-level managers, lenders and leaders, in both DFW and Houston. The recent disruption in our marketplace by another announced merger has triggered quite a stirring of potential seasoned bankers that may be available for hire in all areas of our business model. I expect hiring opportunities to increase during the next couple of quarters.

Concerning M&A, it would be fair to communicate that it is lower on the radar and not something that we're actively pursuing. However, we remain open to any opportunities that may present themselves that would add value to our business. Our team continues to focus on maintaining our top objectives for 2020; quality credit, growing loans in deposits and deploying capital in the most efficient way possible. 2020 is looking like a solid year for Veritex and we're already off to a good start.

Operator, at this time we can open the line for any questions.

Questions and Answers:

Operator

[Operator Instructions]

Our first question comes from Brad Milsaps with Piper Sandler. Your line is now open.

Brad Milsaps -- Piper Sandler -- Analyst

Hey, good morning guys.

Malcolm Holland -- Chairman & Chief Executive Officer

Good morning, Brad.

Brad Milsaps -- Piper Sandler -- Analyst

Terry, maybe I'll start with expenses. I heard you loud and clear that you guys have been talking about investing in the franchise in that sort of $34 million to $35 million run rate. But maybe I would have thought that would have come with more fee revenues related to SBA and swaps continued [Phonetic] that in the quarter they were weaker, but the expenses were still there. Just kind of curious on your outlook for both, as you kind of move into 2020, particularly on the expense side, is that $34 million to $35 million still a good run rate, even if you see a step-up in some of those revenue line items that maybe a little weaker than you would have thought this quarter?

Terry S. Earley -- Chief Financial Officer

Brad, I think we've got to continue. Look, we are focused on hitting short-term targets, but our goal is really to create a better bank for the long term. And, I'm just not in the position to support, not investing where we need to invest. And we need to -- we are in a market that gives us unbelievable opportunity in growth. There is tremendous disruption in both DFW and Houston. And if there is good people in the market that are available, we've got to bring them onto our team. We've got to put the best people in the court, we can. And if that means we overspend a little bit right now in the short run to create a better bank in the long run, I'm OK with that. So, so much for the monologue.

Look, $34 million to $35 million is probably too low. I don't really see us running at that level in 2020. I think $35 million -- right now, as I look at the first half of the year, $35 million to $36 million is probably more reasonable. Where we get in the back half is going to be a function of how successful we are on the recruiting front. But I would say this, if we're going to invest a lot in people, we need to expect more out of growth in fees.

Brad Milsaps -- Piper Sandler -- Analyst

Fair enough. And then, just maybe on the NIM, maybe as it specifically relates to the accretion, I think on the loan book this quarter, there was about $5.6 million that came through. Just kind of curious under the CECL framework, kind of how you see that number tailing off maybe in 2020? And kind of what that would mean for provisioning? As you mentioned in your opening remarks that obviously some of that that you've built this quarter won't be needed under CECL as you ought be able to recapture some of that discount.

Terry S. Earley -- Chief Financial Officer

Well, on accretion, I'm excited to get the 2020 accretion versus 2019 accretion because accretion is going to create some headwinds. And getting through 2020, when accretion isn't that bigger part of our NIM or our earnings is going to really set us up well for 2021. So, it's going to continue to come down. The impact of the mark on the deposit side is almost through -- we're almost through with it.

And on the loan side, it's going to continue to come down. I don't see CECL affecting -- it's going to come down on its own because we have less of a portfolio, still in the acquired book as I said. We took that book down a $1.25 billion this year. So, there's less loans to earn accretion on and we're later into accreting it down. So, it's going to come down. I want it to come down because it improves the overall quality of our earnings.

There was another question in there too. I've already forgotten it, but -- is it about NIM and accretion?

Brad Milsaps -- Piper Sandler -- Analyst

Yeah, sure. Just any outlook for the NIM would be great.

Terry S. Earley -- Chief Financial Officer

Yeah, look, I'm really focused on the adjusted NIM because accretion is going to bounce around and do what it's going to do. I think on the adjusted NIM, I expect it, if the Fed stays flat, which is not what the market expects, but what I expect. I think we're going to be pretty stable because we've got hundreds and hundreds of millions of dollars in the first half of the year and CDs are going to reprice meaningfully lower. And we've got most of the loan repricing, we're through that from the November adjustment of the Fed. So, I'm looking for a pretty stable NIM. I do think the liquidity effect, it is a little bit. And we can certainly shift some things around, but overall, I'm looking for a pretty steady NIM from here as long as the Fed stays on hold.

Brad Milsaps -- Piper Sandler -- Analyst

Great, that's helpful. Appreciate it, guys.

Malcolm Holland -- Chairman & Chief Executive Officer

Thanks, Brad.

Operator

Our next question comes from Brady Gailey with KBW. Your line is now open.

Brady Gailey -- KBW -- Analyst

Hey, thanks. Good morning, guys.

Malcolm Holland -- Chairman & Chief Executive Officer

Hey, Brady.

Brady Gailey -- KBW -- Analyst

So, the child care facility that was a legacy Green loan. So, no impairment taken this quarter. Did you already or do you already have a mark kind of set aside for that asset? And any idea when that NPA may be resolved?

Malcolm Holland -- Chairman & Chief Executive Officer

Yeah, Clay Riebe, our Chief Credit Officer has details on that one.

Clay Riebe -- Chief Credit Officer

Yeah, thanks, Brady. Yeah. So, we did not have a credit mark on that asset, primarily because it did not show any signs of delinquency or issues until mid- to late this quarter [Phonetic]. So, there is no mark associated with that. Where we stand on that right now is we're working with a borrower, the bankruptcy of the tenant is the issue in that credit. And we're working with the borrower to find a replacement operator for that property -- for both of those properties. And we really view this as the best outcome for the Bank today is to continue to work with the borrower on that. Relative to when this is going to resolve with the bankruptcy of the tenant being an impact there, we anticipate this to be at late Q2, possibly Q3 atop resolution.

Brady Gailey -- KBW -- Analyst

All right, that's helpful. And then, was it Malcolm or Terry, you all were talking about, I think it was a legacy Green portfolio that had been reduced down to $126 million? What were you referring to there in that bucket?

Malcolm Holland -- Chairman & Chief Executive Officer

Yeah, that was the PCI buckets. We initially had that bucket at about $177 million at close. And so, one of the goals last year and continuing, it's just to shrink that bucket up. And so, we made some great progress, over $50 million worth of moving some of those problem credits out. So, it's the PCI bucket.

Brady Gailey -- KBW -- Analyst

Got it. All right. And then, finally for me, it sounds like you all are going to continue to be active on the buyback, you all repurchased 7% of the company in 2019, which was a big number, but the stock was a little cheaper. I think, on average, you've repurchased stock a little under $25. Now, the stock is at roughly $28.50. So, it's still cheap. Not as cheap as it used to be. How does the price per share impact your buyback decisions as we enter 2020?

Malcolm Holland -- Chairman & Chief Executive Officer

I think the buyback is going to still be important part of 2020 for us. You've got that exactly right. I mean, it's a little bit more expensive, but there's a lot of different metrics that we run on our buyback. We still think it makes sense. At these levels, we have some forward thinking around our table on what the real valuation of this company is. And if we can buy back cheaper than that, then that's something we need to look at. So, the answer is that we're going to continue to evaluate. We've obviously been blacked out. So, we haven't done much recently, but the price doesn't completely scare us and we'll still be active in the buyback during 2020.

Terry S. Earley -- Chief Financial Officer

Yeah, Brady, it's Terry. Look, you said the metrics really well, sub-$25 on the 7% we bought back. You will see us be more aggressive on price, but the higher the price goes, the less aggressive we're willing to be. But even $3 a share movement, it still only extend the buyback, the TBV earnback about one year. And so, we still think it's a great investment. We've got too much capital. We've increased the dividend. Our capital is going to build. And even with mid-to-high single-digit loan growth, I mean, we're generating so much more capital than we need to underpin that growth. And so, -- look there is a level at which we will not do anything. But right now, it's a pretty important way to continue to deploy capital. And we think, at current levels, it's not unreasonable to be a buyer there. Now, there is a price place where it will go, where we won't be there, but it's not where it is now.

Brady Gailey -- KBW -- Analyst

Got it. Thanks, guys.

Malcolm Holland -- Chairman & Chief Executive Officer

Thanks, Brady.

Operator

Our next question comes from Matt Olney with Stephens. Your line is now open.

Matt Olney -- Stephens -- Analyst

Hey, great, thanks. Good morning, guys.

Malcolm Holland -- Chairman & Chief Executive Officer

Hi, Matt.

Matt Olney -- Stephens -- Analyst

I want to go back to the the reinvestment opportunities that you see. I think, Malcolm, you mentioned you've hired three new producers, since September 30. And it sounds like you've got more opportunities from here. Any more color on what you're looking for. Are these seasoned-commercial lenders, are they in Houston, are they in Dallas? I'm curious kind of where the opportunity is right now as you see it?

Malcolm Holland -- Chairman & Chief Executive Officer

Yes, yes and yes. The big two mergers in our markets, I can't communicate more of the disruption that's going on on the lender side. Now, listen, it's not just lenders, these are other folks at different parts of the bank that are becoming available in a couple of different areas that we need some help in, some upgrading in. And so, I'm talking to everybody that I can to try to upgrade our company, people that have seen the movie that we're running here with the experience.

And so, it's not just revenue generators, the lion's share is probably that.

But, there is still some other folks in other areas of the company that [Indecipherable] to be quite helpful. It's happening more in the DFW market than in Houston. But Houston, there's disruption as well. So, you've got these -- Veritex sits at $8 billion right in between the lower public bank at $5 billion and the next one is up at $25 billion. So, we're a viable option for some of those folks. And we want to be at the table to hire those folks that we need. We don't know how many they're going to be. But I can tell you, there is a lots of opportunity. And so, we're going to be smart about how we do it, but I think it will enhance our company big time.

Matt Olney -- Stephens -- Analyst

Okay, that's great. And then, going back to Brad's question on the outlook for fees, I think you know that these are a little bit softer in the fourth quarter. So, is this $7.6 million level in the fourth quarter, is this a good run rate as we move into early 2020?

Terry S. Earley -- Chief Financial Officer

Well, I hope not. I don't know that we'll necessarily get -- how much more we'll get from SBA. I think we can do better, but do I think we're going to have a quarter like Q1 of '19? I don't. But, I think where I'm probably most encouraged and where I think we can make it up is on the interest rate swap side. We've already had a -- we've already done more in the first 10 days of January than we did in the fourth quarter.

So, but don't take that too mean, I'm not saying we're going to be $9 million or $10 million either. But I'm just saying, we can do better than this, we've got to do better. And I think the opposite -- look deposit fees are a wonderful annuity, but our two real levers are gain on sale of the SBA and interest rate swaps. And I think there, the opportunity really is probably to beat what we did in 2019, is much more on the interest rate swap side than the SBA side.

Malcolm Holland -- Chairman & Chief Executive Officer

And the fact is we underperformed on the SBA side. That's plain and simple. We can do better there and we will.

Clay Riebe -- Chief Credit Officer

But we didn't do any USDA.

Malcolm Holland -- Chairman & Chief Executive Officer

Right. We had no USDA business.

Matt Olney -- Stephens -- Analyst

Okay, thank you. And then I guess on the core margin, I understand the outlook, Terry, is to be relatively stable, if the Fed kind of holds from here. It looks like you built some liquidity in the fourth quarter. Was this any kind of seasonal impact or are you trying to build liquidity for any reason? Just any color around the liquidity built is helpful.

Terry S. Earley -- Chief Financial Officer

Well, just as I said, we did it in sub-debt raise, deposit growth was strong through the quarter, loan growth came later [Phonetic]. And it just calls us to carry -- in spite of running off a lot of high-priced time deposits it still calls us to carry on some pretty hot liquidity levels. On the end of the quarter, things had gotten right. But I just wondered [Indecipherable] it was there, it was a drag on the NIM a little bit. And it's pretty well taken care of now. And look, when you have the stronger quarters we had on the deposit side, I'll take the liquidity -- excess liquidity challenges that come with it.

Matt Olney -- Stephens -- Analyst

Sure. Okay, great. Thanks, guys.

Malcolm Holland -- Chairman & Chief Executive Officer

Thanks.

Operator

Our next question comes from Gary Tenner with D.A. Davidson. Your line is now open.

Gary Tenner -- D.A. Davidson -- Analyst

Hey, guys. Good morning. I wanted to just ask a follow-up on the CD maturities. Sounds like there is a good slot coming in the first half of the year. In terms of the repricing gap on the maturity versus what your renewal rates are, could you give us a little color there and what you're thinking about in terms of retention rates?

Malcolm Holland -- Chairman & Chief Executive Officer

Well, we had $725 million in the first two quarters, at a rate of $227 million above the average rate. It's probably repricing down in the 55 basis points to 65 basis point level, something like that. Retention, we had the best quarter of the year. You can't see it, but I can. We ran of -- we were really good on CD retention in Q4, even while reducing rates. But, we ran off on really more brokered stuff. And so, we actually -- on our customer CDs, we were pretty flat over the quarter -- we were flat over the quarter. While doing that, we're probably down a little bit. I don't know that we can necessarily be that good again, but it's a meaningful opportunity.

But there's also -- there's some floating-rate loans that are more than just one month LIBOR and prime. And so, in my mind, I'm using this repricing this $725 million of CDs to little bit hedge the repricing of the loan portfolio that was more than 30 days to 45 days out because we got 90-day LIBOR. We've got other things that are in there. And so, I just kind of think that's going to kind of keep us pretty leveled.

Did that help?

Gary Tenner -- D.A. Davidson -- Analyst

Yeah, that's great. Thank you. And then, also I missed it, you mentioned CECL with regard to not having the need obviously on the provision build for renewing loans or renewing acquired loans. Did you update at all your kind of projections for the day one CECL impact?

Terry S. Earley -- Chief Financial Officer

When we took our audit committee through this day before yesterday, I'd say our range is centered right around where it was, which I think last quarter we said 1.15 to 1.35 [Phonetic], but the range has gotten tighter on both ends. So, let's just call it 1.20 to 1.30 [Phonetic].

Gary Tenner -- D.A. Davidson -- Analyst

Great, thank you.

Malcolm Holland -- Chairman & Chief Executive Officer

And I'd like to be within the confines of GAAP, which can be very confining at times. I would like to be above the midpoint of the range, if possible.

Operator

And our next question comes from Michael Rose with Raymond James. Your line is now open.

Michael Rose -- Raymond James -- Analyst

Hey, guys. How are you?

Malcolm Holland -- Chairman & Chief Executive Officer

Hey, Michael.

Michael Rose -- Raymond James -- Analyst

Just wanted to talk about this quarter's loan growth and figure out how much was the reunderwriting of the Green loans, because if I look at the acquired non-PCI loans, obviously, those were down by $400 million -- $350 million, but the originated loans obviously strong growth. So, how much of this quarter's growth was kind of reunderwriting of the Green loans?

Malcolm Holland -- Chairman & Chief Executive Officer

The 6% annualized growth was all new business, was all new loans. So, none of that was rewriting or renewing or what have you. That was real growth. I think the best slide on there is just our commitment slide. And it just shows you the movement -- that we've started to gain a little bit more momentum each quarter on the amount of new commitments we're putting out. And so, that probably gives you the clearest view of our loan production and coming loan production. First quarter looks pretty damn solid, nothing crazy. But I think we're seeing a lot of commitments and we're getting some funny paydowns. Listen, you're always going to have paydowns in a healthy portfolio. But I think they're getting to a point where we're managing those and understanding those better. But I'm encouraged for what 2020 is going to bring us on the loan side.

And Michael, I would add. I tend to watch the pipelines on an incredibly granular basis week-to-week, loan-by-loan and where it is in this stage and how it's progressing through. And it's strengthening week-to-week, which is not only are we closing deals and funding deals, but as we look ahead, the quality and the opportunity within there is building. And so, I think that's a function of focus [Indecipherable] our teams, it's a function of, there's a market disruption and it's a function of just how good DFW, especially with Houston also is right now. So, I'm pretty bullish on how the pipelines are building.

Michael Rose -- Raymond James -- Analyst

Yeah, I'm glad you brought up the commitments because that was going to be my next question. So, kind of balancing the natural payoffs in the acquired book with pretty strong commitments and commitment growth, just kind of upper single-digit loan growth on a net basis, the way to kind of think about growth for you guys this year?

Malcolm Holland -- Chairman & Chief Executive Officer

Yes, sir. I wouldn't want to see you get any higher of what the consensus growth is today.[Speech Overlap] Don't take our optimism as a sign, we think you're racist.

Terry S. Earley -- Chief Financial Officer

I tracked 35 banks and the median loan growth is negative this quarter. And for us to do six, a little over six, excluding mortgage warehouse, we're pretty happy about and some people have had some good quarters, some people have done some shrinkage. And 6% is pretty good. We will take that, but we like where you guys are for the year.

Malcolm Holland -- Chairman & Chief Executive Officer

And let me just add on to, where we think we could -- and I agree with Terry. I think your numbers are right on. But if we are able to be successful at hiring some of these folks depending on when we hire them, we may give you a little bit different answer later in the year because we're not just higher than these new people to just continue that mid single-digit loan growth. There is going to be expectations from us that those are going to change. But let's get them in-house, let's figure out who they are, and we would probably give you some more insight later in the year.

Terry S. Earley -- Chief Financial Officer

And once you get them, it takes time. It takes six months to a year to before they start turning.

Michael Rose -- Raymond James -- Analyst

Fair enough. Just one follow-up question for me, you guys are around 100% loan-to-deposit ratio. I know you had good growth this quarter. As we're thinking about moving through the year to fund that growth, could we expect some potential further pressure on the core margin once the CD repricing hits in the first part of the year?

Terry S. Earley -- Chief Financial Officer

For sure, we don't have a lot of degrees of freedom on the loan-to-deposit side. There is no doubt about that. I mean, if growth really accelerates, I mean we're going to continue to manage the same between -- we like the 95% to 100% loan-to-deposit ratio, excluding the mortgage warehouse. And look, we're at a seasonally low for the mortgage warehouse. And obviously that's a lower spread business and if that builds in the middle two quarters of the year, that's going to have to put some pressure on the NIM as well.

So, I mean there's a lot of moving pieces, it's still a little bit, but that it's going to come and go depending on the mix of the loans and how that works and it's going to be also be affected by a little bit -- if we have to get real aggressive on the deposit side, sure. But it feels like the sensitivity to customers to interest rates right now is just changed materially from where it was 90 days, 180 days ago. And I hope it's going to stay there. And if we need to need to open this, pick it up a little more, I hope it doesn't take that much in terms of price to drive that, if you will.

Malcolm Holland -- Chairman & Chief Executive Officer

And disruptions in our marketplace, not only it is on people, but it's really, really on deposits. We think that's a big driver of why we've been able to grow that to buy the book. I don't see that slowing down.

Michael Rose -- Raymond James -- Analyst

Fair enough. Thanks for all the color, guys. I appreciate it.

Malcolm Holland -- Chairman & Chief Executive Officer

Thanks. See you, Michael.

Operator

[Operator Closing Remarks]

Duration: 40 minutes

Call participants:

Susan Caudle -- Investor Relations Officer and Secretary of the Board of Veritex Holdings

Malcolm Holland -- Chairman & Chief Executive Officer

Terry S. Earley -- Chief Financial Officer

Clay Riebe -- Chief Credit Officer

Brad Milsaps -- Piper Sandler -- Analyst

Brady Gailey -- KBW -- Analyst

Matt Olney -- Stephens -- Analyst

Gary Tenner -- D.A. Davidson -- Analyst

Michael Rose -- Raymond James -- Analyst

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