U.S. Markets closed
  • S&P 500

    4,538.43
    -38.67 (-0.84%)
     
  • Dow 30

    34,580.08
    -59.71 (-0.17%)
     
  • Nasdaq

    15,085.47
    -295.85 (-1.92%)
     
  • Russell 2000

    2,159.31
    -47.02 (-2.13%)
     
  • Crude Oil

    66.22
    -0.28 (-0.42%)
     
  • Gold

    1,782.10
    +21.40 (+1.22%)
     
  • Silver

    22.45
    +0.17 (+0.76%)
     
  • EUR/USD

    1.1317
    +0.0012 (+0.1019%)
     
  • 10-Yr Bond

    1.3430
    -0.1050 (-7.25%)
     
  • Vix

    30.67
    +2.72 (+9.73%)
     
  • GBP/USD

    1.3235
    -0.0067 (-0.5029%)
     
  • USD/JPY

    112.8000
    -0.4090 (-0.3613%)
     
  • BTC-USD

    47,418.45
    -9,631.71 (-16.88%)
     
  • CMC Crypto 200

    1,367.14
    -74.62 (-5.18%)
     
  • FTSE 100

    7,122.32
    -6.89 (-0.10%)
     
  • Nikkei 225

    28,029.57
    +276.20 (+1.00%)
     

CBTX, Inc. Reports Fourth Quarter Financial Results

  • Oops!
    Something went wrong.
    Please try again later.
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

HOUSTON, Jan. 30, 2019 (GLOBE NEWSWIRE) -- CBTX, Inc. (the “Company”) (CBTX), the bank holding company for CommunityBank of Texas N.A., today announced net income of $14.1 million, or $0.56 per diluted share, for the quarter ended December 31, 2018, compared to $2.0 million, or $0.08 per diluted share, for the quarter ended December 31, 2017 and $13.0 million, or $0.52 per diluted share, for the quarter ended September 30, 2018.

For 2018, net income and earnings per share were positively impacted by the 14% reduction of the corporate U.S. statutory federal tax rate from 35% to 21% as a result of the enactment of the Tax Cuts and Jobs Act (the “Tax Act”), which became effective January 1, 2018.

The Company reported net income for the year ended December 31, 2018 of $47.3 million, or $1.89 per diluted share, compared to $27.6 million, or $1.22 per diluted share, for the year ended December 31, 2017.

Highlights

  • Return on average shareholders’ equity was 10.2% for the year ended December 31, 2018, compared to 7.2% for the year ended December 31, 2017.

  • Net interest income for the quarter ended December 31, 2018 totaled $33.2 million, an increase of 5.4% from the third quarter of 2018, primarily due to the impact of increased average loans and higher average yields on loans, partially offset by the impact of increased interest-bearing deposits and higher rates on those deposits.

  • The efficiency ratio improved to 59.0% for the year ended December 31, 2018, compared to 64.2% for the year ended December 31, 2017.

“We are pleased with our 2018 operating results, as our growth led to all-time highs in assets, loans and deposits,” said Robert R. Franklin, Jr., Chairman, President and Chief Executive Officer of CBTX, Inc. “We reported record earnings for the year, driven by stable organic growth in loans and deposits, continued improvement in expense efficiency and excellent credit metrics.”

Operating Results:

Net Interest Income

Net interest income was $33.2 million for the fourth quarter of 2018, compared to $28.2 million for the fourth quarter of 2017 and $31.5 million for the third quarter of 2018. The increase in net interest income in the fourth quarter of 2018 from the fourth quarter of 2017, was primarily due to increased interest income resulting from higher average loans and higher average yields on loans and federal funds sold, partially offset by an increase in interest expense due to higher average interest-bearing deposits and higher rates on those deposits.

The increase in net interest income in the fourth quarter of 2018 from the third quarter of 2018 was due to increased interest income resulting from higher average loans and higher average yields on loans, partially offset by the impact on interest expense of increased average interest-bearing deposits and higher rates on those deposits.

Net interest income was $124.7 million for the year ended December 31, 2018, compared to $107.8 million for year ended December 31, 2017. The increase in net interest income in 2018, as compared to 2017 was due to increased interest income resulting from higher average loans and securities and higher average yields on loans and federal funds sold, partially offset by the impact of increased interest expense due to higher average interest-bearing deposits and higher rates on those deposits, offset by lower interest expense in 2018 due to the payoff of our note payable in the fourth quarter of 2017.

Provision (Recapture) for Loan Losses

Provision for loan loss was a recapture of $2.2 million for the fourth quarter of 2018, compared to a provision of $1.1 million for the fourth quarter of 2017 and a recapture of $1.1 million for the third quarter of 2018. The recapture in the fourth quarter of 2018 was due to the impact of recoveries during the quarter. The recapture in the third quarter of 2018 was driven by strong credit quality, continuing low nonperforming and impaired loans and minimal charge-off history. The provision in the fourth quarter of 2017 reflects the increase in loans during that period.

Provision for loan loss was a recapture of $1.8 million for the year ended December 31, 2018, compared to a recapture of $338,000 for the year ended December 31, 2017. The recapture in the year ended December 31, 2018 was due to the recapture in the third and fourth quarter of 2018 (see explanation above). The recapture in the year ended December 31, 2017 was primarily the result of pay-offs of certain classified and problem loans, which resulted in a decrease in their related allowance for loan losses.

The allowance for loan losses was $23.7 million, or 0.97% of total loans, at December 31, 2018, compared to $24.8 million, or 1.07% of total loans, at December 31, 2017 and $24.5 million, or 0.99% of total loans, at September 30, 2018.

Noninterest Income

Noninterest income was $3.9 million for the fourth quarter of 2018, $3.1 million for the fourth quarter of 2017 and $3.5 million for the third quarter of 2018. Noninterest income for the fourth quarter of 2018 was higher compared to the fourth quarter of 2017 primarily due to an increase in deposit account service charges and higher net gains on sales of assets during the fourth quarter of 2018. Noninterest income for the fourth quarter of 2018 was higher compared to the third quarter of 2018 primarily due to an increase in deposit account service charges.

Noninterest income was $14.3 million for the year ended December 31, 2018 compared to $14.2 million for the year ended December 31, 2017. Although overall noninterest income increased minimally between 2018 and 2017, there were increases in deposit account service charges, card interchange fees and earnings on bank-owned life insurance, partially offset by decreased gains on sales of fixed assets.

Noninterest Expense

Noninterest expense was $21.8 million for the fourth quarter of 2018, $22.0 million for the fourth quarter of 2017 and $20.0 million for the third quarter of 2018.

Noninterest expense decreased $233,000 in the fourth quarter of 2018 compared to the fourth quarter of 2017 primarily due to higher salaries, group health insurance and stock compensation expense during 2018, partially offset by lower deferred compensation expense during 2018 and the impact of a change in control charge of $2.2 million related to our initial public offering (IPO) recorded in the fourth quarter of 2017.

Noninterest expense increased $1.8 million or 9.0% during the fourth quarter of 2018 compared to the third quarter of 2018 primarily due to increased group health insurance and employee bonus expense during 2018.

Noninterest expense was $82.0 million for 2018, as compared to $78.3 million for 2017. This increase during 2018 of $3.7 million was primarily due to increased salaries, group health insurance and stock compensation expense during 2018, partially offset by lower deferred compensation expense and repossessed real estate costs in 2018 and the impact of a change in control charge of $2.5 million related to our IPO recorded in the fourth quarter of 2017.

Income Taxes

Income tax expense was $3.4 million for the fourth quarter of 2018, $6.3 million for the fourth quarter of 2017 and $3.2 million for the third quarter of 2018. Income tax expense was $11.4 million for the year ended December 31, 2018 and $16.5 million for the year ended December 31, 2017.

The effective tax rates were 19.3% for the fourth quarter of 2018, 19.8% for the third quarter of 2018 and 19.4% for the year ended December 31, 2018. The effective tax rates for the 2018 periods reflect the reduction of the federal tax rate from 35% to 21% effective January 1, 2018 as a result of the Tax Act. The effective tax rate for the fourth quarter of 2017 was 76.3%, reflecting the impact of the deferred tax asset remeasurement adjustment of $3.9 million related to the adoption of the Tax Act. The effective tax rate for the year ended December 31, 2017 was 37.4%, reflecting the impact of the adoption of the Tax Act as well as true-ups and return to provision adjustments recorded in 2017. The effective tax rate for the fourth quarter of 2017 and the year ended December 31, 2017, would have been 29.7% and 28.6% without the impact of the deferred tax remeasurement adjustment noted above.

Balance Sheet Highlights:

Loans

Loans were $2.4 billion at December 31, 2018, $2.3 billion at December 31, 2017 and $2.5 billion at September 30, 2018.

Asset Quality

Nonperforming assets remain low relative to total assets at $3.5 million, or 0.11% of total assets, at December 31, 2018, $8.4 million, or 0.27% of total assets, at December 31, 2017 and $5.8 million, or 0.18% of total assets at September 30, 2018.

Annualized net charge-offs (recoveries) to average loans were (0.22%) for the fourth quarter of 2018, 0.00% for the fourth quarter of 2017 and 0.02% for the third quarter of 2018. The annualized charge-offs (recoveries) for the fourth quarter of 2018 reflects the impact of recoveries in that period.

Deposits and Borrowings

Total deposits were $2.8 billion at December 31, 2018, compared to $2.6 billion at December 31, 2017 and $2.7 billion at September 30, 2018.

We define total borrowings as the total of notes payable, repurchase agreements and Federal Home Loan Bank (FHLB) advances. Total borrowings were comprised of repurchase agreements at December 31, 2018, December 31, 2017 and September 30, 2018 and were $2.5 million, $1.5 million and $1.4 million, respectively.

Capital

At December 31, 2018, the Company remained well capitalized under bank regulatory requirements.

Our ratio of tangible equity to tangible assets was 12.6% at December 31, 2018, 12.0% at December 31, 2017 and 12.4% at September 30, 2018. Tangible equity to tangible assets is a non‑GAAP financial measure. The most directly comparable GAAP financial measure to tangible equity to tangible assets is total shareholders’ equity to total assets, which was 14.9% at December 31, 2018, 14.5% at December 31, 2017 and 14.8% at September 30, 2018. See the table captioned “Non‑GAAP to GAAP Reconciliation” at the end of this earnings release.

About CBTX, Inc.

CBTX, Inc. is the bank holding company for CommunityBank of Texas, N.A., a $3.3 billion asset bank, offering commercial banking solutions to local small and mid-sized businesses and professionals in Houston, Dallas, Beaumont and surrounding communities in southeast Texas. Visit www.communitybankoftx.com for more information.

Forward-Looking Statements

This release may contain certain forward-looking statements within the meaning of the securities laws that are based on various facts and derived utilizing important assumptions, current expectations, estimates and projections about the Company and its subsidiary. Forward-looking statements include information regarding the Company’s future financial performance, business and growth strategy, projected plans and objectives, as well as projections of macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact economic trends, and any such variations may be material. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing. Further, certain factors that could affect our future results and cause actual results to differ materially from those expressed in the forward-looking statements include, but are not limited to, whether the Company can: prudently manage and execute its growth strategy; manage risks associated with its acquisition and de novo branching strategy; maintain its asset quality; address the volatility and direction of market interest rates; continue to have access to debt and equity capital markets; avoid or address interruptions or breaches in the Company’s information system security; and achieve its performance goals. The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) and other reports and statements that the Company has filed with the SEC. If one or more events related to these or other risks or uncertainties materialize, or if the Company’s underlying assumptions prove to be incorrect, actual results may differ materially from what it anticipates. Accordingly, you should not place undue reliance on any such forward looking statements. Any forward-looking statement speaks only as of the date on which it is made, and the Company does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New factors emerge from time to time, and it is not possible for the Company to predict which will arise. In addition, the Company cannot assess the impact of each factor on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Copies of the SEC filings for the Company are available for download free of charge from www.communitybankoftx.com under the Investor Relations tab.

CBTX, INC. AND SUBSIDIARY

Condensed Consolidated Balance Sheets (Unaudited)

(In thousands)

Balance Sheet Data (at period end):

12/31/2018

9/30/2018

6/30/2018

3/31/2018

12/31/2017

Loans, excluding loans held for sale

$

2,446,823

$

2,463,197

$

2,404,132

$

2,356,053

$

2,311,544

Allowance for loan losses

(23,693

)

(24,486

)

(25,746

)

(25,349

)

(24,778

)

Loans, net

2,423,130

2,438,711

2,378,386

2,330,704

2,286,766

Cash and equivalents

382,070

281,640

245,265

279,915

326,199

Debt securities

229,964

222,493

230,393

221,183

223,208

Premises and equipment, net

51,622

52,032

52,607

53,135

53,607

Goodwill

80,950

80,950

80,950

80,950

80,950

Other intangible assets, net

5,775

6,038

6,276

6,521

6,770

Repossessed real estate and other assets

12

175

137

295

705

Loans held for sale

-

384

560

113

1,460

Other assets

105,573

108,030

106,186

101,974

101,418

Total Assets

$

3,279,096

$

3,190,453

$

3,100,760

$

3,074,790

$

3,081,083

Noninterest-bearing deposits

$

1,183,058

$

1,144,985

$

1,114,155

$

1,120,521

$

1,109,789

Interest-bearing deposits

1,583,224

1,545,095

1,447,119

1,479,181

1,493,183

Total deposits

2,766,282

2,690,080

2,561,274

2,599,702

2,602,972

Repurchase agreements

2,498

1,351

1,448

861

1,525

Federal Home Loan Bank advances

-

-

50,000

-

-

Junior subordinated debt

1,571

6,726

6,726

6,726

6,726

Other liabilities

21,120

20,445

20,117

15,930

23,646

Total Liabilities

2,791,471

2,718,602

2,639,565

2,623,219

2,634,869

Shareholders' Equity

487,625

471,851

461,195

451,571

446,214

Total Liabilities and Shareholders' Equity

$

3,279,096

$

3,190,453

$

3,100,760

$

3,074,790

$

3,081,083


CBTX, INC. AND SUBSIDIARY

Condensed Consolidated Statements of Income (Unaudited)

(In thousands)

For the Three Months Ended

For the Years Ended

12/31/2018

9/30/2018

6/30/2018

3/31/2018

12/31/2017

12/31/2018

12/31/2017

Interest Income

Interest and fees on loans

$

33,427

$

31,513

$

30,493

$

28,462

$

27,726

$

123,895

$

107,368

Securities

1,542

1,535

1,507

1,436

1,357

6,020

5,347

Federal Funds and interest-bearing deposits

1,913

1,617

1,127

1,187

1,283

5,844

3,944

Total Interest Income

36,882

34,665

33,127

31,085

30,366

135,759

116,659

Interest Expense

Deposits

3,551

2,961

2,126

1,948

1,993

10,586

7,652

Repurchase agreements

1

1

1

1

4

5

Federal Home Loan Bank advances

61

12

73

Note payable

4

4

3

4

122

15

906

Junior subordinated debt

106

112

109

93

86

420

322

Total Interest Expense

3,662

3,139

2,251

2,046

2,201

11,098

8,885

Net Interest Income

33,220

31,526

30,876

29,039

28,165

124,661

107,774

Provision (Recapture) for Loan Losses

(2,169

)

(1,142

)

690

865

1,050

(1,756

)

(338

)

Net Interest Income After Provision (Recapture) for Loan Losses

35,389

32,668

30,186

28,174

27,115

126,417

108,112

Noninterest Income

Deposit account service charges

1,709

1,597

1,497

1,478

1,388

6,281

5,800

Net gain (loss) on sale of assets

168

152

210

130

(7

)

660

1,524

Card interchange fees

921

922

971

927

941

3,741

3,453

Earnings on bank-owned life insurance

456

443

465

451

460

1,815

1,580

Other

605

412

363

375

362

1,755

1,847

Total Noninterest Income

3,859

3,526

3,506

3,361

3,144

14,252

14,204

Noninterest Expense

Salaries and employee benefits

13,834

12,499

12,496

12,695

14,021

51,524

48,573

Net occupancy expense

2,268

2,428

2,433

2,265

2,346

9,394

9,151

Regulatory fees

507

488

513

545

487

2,053

2,176

Data processing

664

664

666

683

674

2,677

2,629

Software

408

400

403

365

344

1,576

1,208

Printing, stationery and office

303

291

303

264

288

1,161

1,097

Amortization of intangibles

237

245

248

255

263

985

1,079

Professional and director fees

1,123

809

686

919

1,168

3,537

3,105

Correspondent bank and customer related transaction expenses

64

66

68

67

67

265

286

Loan processing costs

153

102

75

118

141

448

461

Advertising, marketing and business development

406

437

475

506

508

1,824

1,461

Repossessed real estate and other asset expense

7

3

5

57

66

72

609

Security and protection expense

317

346

311

302

300

1,276

1,355

Telephone and communications

408

342

394

386

344

1,530

1,316

Other expenses

1,057

844

936

857

972

3,694

3,786

Total Noninterest Expense

21,756

19,964

20,012

20,284

21,989

82,016

78,292

Net Income Before Income Tax Expense

17,492

16,230

13,680

11,251

8,270

58,653

44,024

Income Tax Expense

3,380

3,207

2,638

2,139

6,313

11,364

16,453

Net Income

$

14,112

$

13,023

$

11,042

$

9,112

$

1,957

$

47,289

$

27,571


CBTX, INC. AND SUBSIDIARY

Financial Highlights (Unaudited)

(In thousands, except per share data and percentages)

For the Three Months Ended

For the Years Ended

12/31/2018

9/30/2018

6/30/2018

3/31/2018

12/31/2017

12/31/2018

12/31/2017

Profitability:

Net income

$

14,112

$

13,023

$

11,042

$

9,112

$

1,957

$

47,289

$

27,571

Basic earnings per share

$

0.57

$

0.52

$

0.44

$

0.37

$

0.08

$

1.90

$

1.23

Diluted earnings per share

$

0.56

$

0.52

$

0.44

$

0.37

$

0.08

$

1.89

$

1.22

Return on average assets (1)

1.7

%

1.6

%

1.4

%

1.2

%

0.3

%

1.5

%

0.9

%

Return on average shareholders' equity (1)

11.7

%

11.0

%

9.7

%

8.2

%

1.8

%

10.2

%

7.2

%

Net interest margin- tax equivalent (1)

4.4

%

4.3

%

4.4

%

4.2

%

4.1

%

4.4

%

4.1

%

Efficiency ratio (2)

58.7

%

57.0

%

58.2

%

62.6

%

70.2

%

59.0

%

64.2

%

Liquidity and Capital Ratios:

Total shareholders' equity to total assets

14.9

%

14.8

%

14.9

%

14.7

%

14.5

%

14.9

%

14.5

%

Tangible equity to tangible assets (3)

12.6

%

12.4

%

12.4

%

12.2

%

12.0

%

12.6

%

12.0

%

Common equity tier 1 capital ratio

14.7

%

14.3

%

14.1

%

14.1

%

14.2

%

14.7

%

14.2

%

Tier 1 risk-based capital ratio

14.8

%

14.5

%

14.3

%

14.4

%

14.4

%

14.8

%

14.4

%

Total risk-based capital ratio

15.6

%

15.4

%

15.3

%

15.4

%

15.4

%

15.6

%

15.4

%

Tier 1 leverage ratio

12.8

%

12.8

%

12.9

%

12.6

%

12.3

%

12.8

%

12.3

%

Other Data:

Weighted average common shares outstanding- Basic

24,886

24,859

24,858

24,833

23,629

24,859

22,457

Weighted average common shares outstanding- Diluted

25,047

25,060

24,997

24,954

23,742

25,018

22,573

Common shares outstanding at period end

24,907

24,859

24,859

24,833

24,833

24,907

24,833

Dividends per share

$

0.05

$

0.05

$

0.05

$

0.05

$

0.05

$

0.20

$

0.20

Book value per share

$

19.6

$

19.0

$

18.6

$

18.2

$

18.0

$

19.6

$

18.0

Tangible book value per share (3)

$

16.1

$

15.5

$

15.0

$

14.7

$

14.4

$

16.1

$

14.4

Employees - full-time equivalents

495

489

488

477

462

495

462


(1)

Quarterly ratios are annualized.

(2)

Efficiency ratio represents noninterest expense divided by the sum of net interest income and noninterest income.

(3)

Non‑GAAP financial measure. The most directly comparable GAAP financial measure is book value per share. See the table captioned “Non‑GAAP to GAAP Reconciliation” at the end of this earnings release.



CBTX, INC. AND SUBSIDIARY

Net Interest Margin (Unaudited)

(In thousands, except percentages)

For the Three Months Ended

12/31/2018

9/30/2018

12/31/2017

Interest

Interest

Interest

Average

Earned/

Average

Average

Earned/

Average

Average

Earned/

Average

Outstanding

Interest

Yield/

Outstanding

Interest

Yield/

Outstanding

Interest

Yield/

Balance

Paid

Rate (1)

Balance

Paid

Rate (1)

Balance

Paid

Rate (1)

Assets

Interest-earnings assets:

Total loans (2)

$

2,468,415

$

33,427

5.37

%

$

2,404,491

$

31,513

5.20

%

$

2,252,735

$

27,726

4.88

%

Debt securities

226,882

1,542

2.70

%

230,592

1,535

2.64

%

222,602

1,357

2.42

%

Federal funds sold and other interest-earning assets

293,299

1,697

2.30

%

272,739

1,404

2.04

%

317,484

1,093

1.37

%

Nonmarketable equity securities

14,789

216

5.79

%

16,799

213

5.01

%

14,698

190

5.13

%

Total interest-earning assets

3,003,385

$

36,882

4.87

%

2,924,621

$

34,665

4.70

%

2,807,519

$

30,366

4.29

%

Allowance for loan losses

(24,305

)

(25,689

)

(24,127

)

Noninterest-earnings assets

295,236

292,598

296,108

Total assets

$

3,274,316

$

3,191,530

$

3,079,500

Liabilities and Shareholders’ Equity

Interest-bearing liabilities:

Interest-bearing deposits

$

1,578,146

$

3,551

0.89

%

$

1,530,077

$

2,961

0.77

%

$

1,519,631

$

1,993

0.52

%

Repurchase agreements

1,925

1

0.21

%

1,516

1

0.26

%

1,793

FHLB advances

11,141

61

2.17

%

Note payable

4

4

11,252

122

4.30

%

Junior subordinated debt

9,817

106

4.28

%

10,826

112

4.14

%

10,826

86

3.15

%

Total interest-bearing liabilities

1,589,888

$

3,662

0.91

%

1,553,560

$

3,139

0.80

%

1,543,502

$

2,201

0.56

%

Noninterest-bearing liabilities:

Noninterest-bearing deposits

1,181,035

1,145,516

1,087,416

Other liabilities

23,083

23,600

23,271

Total noninterest-bearing liabilities

1,204,118

1,169,116

1,110,687

Shareholders’ equity

480,310

468,854

425,311

Total liabilities and shareholders’ equity

$

3,274,316

$

3,191,530

$

3,079,500

Net interest income

$

33,220

$

31,526

$

28,165

Net interest spread (3)

3.96

%

3.90

%

3.73

%

Net interest margin (4)

4.39

%

4.28

%

3.98

%

Net interest margin—tax equivalent (5)

4.42

%

4.31

%

4.06

%


(1)

Annualized.

(2)

Includes average outstanding balances of loans held for sale of $642,000, $741,000 and $521,000 for the quarter ended December 31, 2018, September 30, 2018 and December 31, 2017, respectively.

(3)

Net interest spread is the average yield on interest‑earning assets minus the average rate on interest‑bearing liabilities.

(4)

Net interest margin is equal to net interest income divided by average interest‑earning assets.

(5)

To make pre‑tax income and resultant yields on tax‑exempt investments and loans comparable to those on taxable investments and loans, a tax equivalent adjustment of $257,000, $261,000 and $549,000 for the quarter ended December 31, 2018, September 30, 2018 and December 31, 2017, respectively, has been computed using a federal income tax rate of 21% for 2018 and 35% for 2017.


For the Years Ended December 31,

2018

2017

Interest

Interest

Average

Earned/

Average

Average

Earned/

Average

Outstanding

Interest

Yield/

Outstanding

Interest

Yield/

(Dollars in thousands)

Balance

Paid

Rate

Balance

Paid

Rate

Assets

Interest-earnings assets:

Total loans (1)

$

2,392,348

$

123,895

5.18

%

$

2,206,541

$

107,368

4.87

%

Debt securities

227,384

6,020

2.65

%

220,953

5,347

2.42

%

Federal funds sold and other interest-earning assets

255,323

5,030

1.97

%

272,715

3,204

1.17

%

Nonmarketable equity securities

15,282

814

5.32

%

14,692

740

5.04

%

Total interest-earning assets

2,890,337

$

135,759

4.70

%

2,714,901

$

116,659

4.30

%

Allowance for loan losses

(25,063

)

(25,319

)

Noninterest-earnings assets

290,868

284,165

Total assets

$

3,156,142

$

2,973,747

Liabilities and Shareholders’ Equity

Interest-bearing liabilities:

Interest-bearing deposits

$

1,519,643

$

10,586

0.70

%

$

1,503,350

$

7,652

0.51

%

Repurchase agreements

1,601

4

0.25

%

2,254

5

0.27

%

FHLB advances

3,356

73

2.18

%

Note payable

15

22,164

906

4.09

%

Junior subordinated debt

10,572

420

3.97

%

10,826

322

2.97

%

Total interest-bearing liabilities

1,535,172

$

11,098

0.72

%

1,538,594

$

8,885

0.58

%

Noninterest-bearing liabilities:

Noninterest-bearing deposits

1,134,191

1,031,707

Other liabilities

22,082

19,388

Total noninterest-bearing liabilities

1,156,273

1,051,095

Shareholders’ equity

464,697

384,058

Total liabilities and shareholders’ equity

$

3,156,142

$

2,973,747

Net interest income

$

124,661

$

107,774

Net interest spread (2)

3.97

%

3.72

%

Net interest margin (3)

4.31

%

3.97

%

Net interest margin—tax equivalent (4)

4.35

%

4.06

%

(1) Includes average outstanding balances of loans held for sale of $589,000 and $769,000 for the year ended December 31, 2018 and 2017, respectively.
(2) Net interest spread is the average yield on interest‑earning assets minus the average rate on interest‑bearing liabilities.
(3) Net interest margin is equal to net interest income divided by average interest‑earning assets.
(4) To make pre‑tax income and resultant yields on tax‑exempt investments and loans comparable to those on taxable investments and loans, a tax equivalent adjustment of $1.1 million and $2.3 million for the year ended December 31, 2018 and 2017, respectively, has been computed using a federal income tax rate of 21% for 2018 and 35% for 2017.

CBTX, INC. AND SUBSIDIARY
Yield Trend (Unaudited)

For the Three Months Ended

12/31/2018

9/30/2018

6/30/2018

3/31/2018

12/31/2017

Yield Trend - Annualized:

Interest-earnings assets:

Total loans

5.37

%

5.20

%

5.15

%

4.98

%

4.88

%

Debt securities

2.70

%

2.64

%

2.65

%

2.60

%

2.42

%

Federal funds sold and other interest-earning assets

2.30

%

2.04

%

1.86

%

1.60

%

1.37

%

Nonmarketable equity securities

5.79

%

5.01

%

5.17

%

5.32

%

5.13

%

Total interest-earning assets

4.87

%

4.70

%

4.71

%

4.49

%

4.29

%

Interest-bearing liabilities:

Interest-bearing deposits

0.89

%

0.77

%

0.58

%

0.53

%

0.52

%

Repurchase agreements

0.21

%

0.26

%

0.26

%

0.29

%

FHLB advances

2.17

%

2.19

%

Note payable

4.30

%

Junior subordinated debt

4.28

%

4.14

%

4.04

%

3.48

%

3.15

%

Total interest-bearing liabilities

0.91

%

0.80

%

0.60

%

0.55

%

0.56

%

Net interest spread (1)

3.96

%

3.90

%

4.11

%

3.93

%

3.73

%

Net interest margin (2)

4.39

%

4.28

%

4.39

%

4.19

%

3.98

%

Net interest margin—tax equivalent (3)

4.42

%

4.31

%

4.43

%

4.23

%

4.06

%

(1) Net interest spread is the average yield on interest‑earning assets minus the average rate on interest‑bearing liabilities.
(2) Net interest margin is equal to net interest income divided by average interest‑earning assets.
(3) To make pre‑tax income and resultant yields on tax‑exempt investments and loans comparable to those on taxable investments and loans, a tax equivalent adjustment has been computed using a federal income tax rate of 21% for 2018 and 35% for 2017.


CBTX, INC. AND SUBSIDIARY
Average Outstanding Balances (Unaudited)
(In thousands)

For the Three Months Ended

12/31/2018

9/30/2018

6/30/2018

3/31/2018

12/31/2017

Average Outstanding Balances:

Assets

Interest-earnings assets:

Total loans (1)

$

2,468,415

$

2,404,491

$

2,375,253

$

2,319,463

$

2,252,735

Debt securities

226,882

230,592

228,262

223,730

222,602

Federal funds sold and other interest-earning assets

293,299

272,739

201,906

252,722

317,484

Nonmarketable equity securities

14,789

16,799

14,823

14,701

14,698

Total interest-earning assets

3,003,385

2,924,621

2,820,244

2,810,616

2,807,519

Allowance for loan losses

(24,305

)

(25,689

)

(25,392

)

(24,866

)

(24,127

)

Noninterest-earnings assets

295,236

292,598

288,416

287,099

296,108

Total assets

$

3,274,316

$

3,191,530

$

3,083,268

$

3,072,849

$

3,079,500

Liabilities and Shareholders’ Equity

Interest-bearing liabilities:

Interest-bearing deposits

$

1,578,146

$

1,530,077

$

1,478,016

$

1,491,613

$

1,519,631

Repurchase agreements

1,925

1,516

1,540

1,418

1,793

FHLB advances

11,141

2,198

Note payable

11,252

Junior subordinated debt

9,817

10,826

10,826

10,826

10,826

Total interest-bearing liabilities

1,589,888

1,553,560

1,492,580

1,503,857

1,543,502

Noninterest-bearing liabilities:

Noninterest-bearing deposits

1,181,035

1,145,516

1,111,736

1,097,085

1,087,416

Other liabilities

23,083

23,600

20,441

21,165

23,271

Total noninterest-bearing liabilities

1,204,118

1,169,116

1,132,177

1,118,250

1,110,687

Shareholders’ equity

480,310

468,854

458,511

450,742

425,311

Total liabilities and shareholders’ equity

$

3,274,316

$

3,191,530

$

3,083,268

$

3,072,849

$

3,079,500

(1) Includes average outstanding balances of loans held for sale.


CBTX, INC. AND SUBSIDIARY
Period End Balances (Unaudited)
(In thousands, except percentages)

12/31/2018

9/30/2018

6/30/2018

3/31/2018

12/31/2017

Amount

%

Amount

%

Amount

%

Amount

%

Amount

%

Loan Portfolio:

Commercial and industrial

$

519,779

21.2

%

$

569,334

23.1

%

$

565,850

23.5

%

$

559,070

23.7

%

$

559,363

24.1

%

Real estate:

Commercial real estate

795,733

32.4

%

776,439

31.4

%

780,224

32.4

%

767,108

32.5

%

738,293

31.9

%

Construction and development

515,533

21.0

%

487,289

19.7

%

449,390

18.6

%

436,260

18.5

%

449,211

19.4

%

1-4 family residential

282,011

11.5

%

288,737

11.7

%

279,227

11.6

%

260,580

11.0

%

258,584

11.2

%

Multi-family residential

221,194

9.0

%

236,907

9.6

%

229,609

9.5

%

236,000

10.0

%

220,305

9.5

%

Consumer

39,421

1.6

%

39,807

1.6

%

41,833

1.7

%

40,869

1.7

%

40,433

1.7

%

Agricultural

11,076

0.5

%

11,609

0.5

%

10,951

0.5

%

8,807

0.4

%

11,256

0.5

%

Other

68,382

2.8

%

59,484

2.4

%

53,376

2.2

%

52,382

2.2

%

40,344

1.7

%

Gross loans

2,453,129

100.0

%

2,469,606

100.0

%

2,410,460

100.0

%

2,361,076

100.0

%

2,317,789

100.0

%

Less deferred fees and unearned discount

(6,306

)

(6,025

)

(5,768

)

(4,910

)

(4,785

)

Less allowance for loan losses

(23,693

)

(24,486

)

(25,746

)

(25,349

)

(24,778

)

Less loans held for sale

(384

)

(560

)

(113

)

(1,460

)

Loans, net

$

2,423,130

$

2,438,711

$

2,378,386

$

2,330,704

$

2,286,766

Deposits:

Interest-bearing demand accounts

$

387,457

14.0

%

$

367,120

13.6

%

$

342,890

13.4

%

$

345,378

13.3

%

$

363,015

14.0

%

Money market accounts

737,770

26.7

%

722,382

26.9

%

650,747

25.4

%

717,548

27.6

%

702,299

27.0

%

Savings accounts

96,962

3.5

%

94,344

3.5

%

97,576

3.8

%

95,603

3.7

%

95,842

3.7

%

Certificates and other time deposits, $100,000 or greater

189,007

6.8

%

182,552

6.8

%

164,464

6.4

%

161,777

6.2

%

172,469

6.6

%

Certificates and other time deposits, less than $100,000

172,028

6.2

%

178,697

6.6

%

191,442

7.5

%

158,875

6.1

%

159,558

6.1

%

Total interest-bearing deposits

1,583,224

57.2

%

1,545,095

57.4

%

1,447,119

56.5

%

1,479,181

56.9

%

1,493,183

57.4

%

Noninterest-bearing deposits

1,183,058

42.8

%

1,144,985

42.6

%

1,114,155

43.5

%

1,120,521

43.1

%

1,109,789

42.6

%

Total deposits

$

2,766,282

100.0

%

$

2,690,080

100.0

%

$

2,561,274

100.0

%

$

2,599,702

100.0

%

$

2,602,972

100.0

%


CBTX, INC. AND SUBSIDIARY
Credit Quality (Unaudited)
(In thousands, except percentages)

12/31/2018

9/30/2018

6/30/2018

3/31/2018

12/31/2017

Nonperforming assets (at period end):

Nonaccrual loans:

Commercial and industrial

$

1,317

$

2,161

$

1,734

$

2,533

$

3,280

Real estate:

Commercial real estate

1,517

2,751

2,092

2,217

3,216

Construction and development

13

225

233

252

1-4 family residential

656

677

738

765

898

Multi-family residential

Consumer

4

21

Agricultural

Nonaccrual loans

3,490

5,602

4,793

5,769

7,646

Accruing loans 90 or more days past due

Total nonperforming loans

3,490

5,602

4,793

5,769

7,646

Foreclosed assets, including other real estate:

Commercial real estate, construction and development, land and land development

12

175

137

295

298

Residential real estate

407

Total foreclosed assets

12

175

137

295

705

Total nonperforming assets

$

3,502

$

5,777

$

4,930

$

6,064

$

8,351

Allowance for Loan Losses (at period end):

Commercial and industrial

$

7,719

$

8,763

$

7,648

$

7,439

$

7,257

Real estate:

Commercial real estate

6,730

6,913

10,930

10,742

10,375

Construction and development

4,298

3,606

3,335

3,356

3,482

1-4 family residential

2,281

2,454

1,404

1,329

1,326

Multi-family residential

1,511

1,630

1,479

1,520

1,419

Consumer

387

394

479

517

566

Agricultural

62

71

66

53

68

Other

705

655

405

393

285

Total allowance for loan losses

$

23,693

$

24,486

$

25,746

$

25,349

$

24,778

Credit Quality Ratios (at period end):

Nonperforming assets to total assets

0.11

%

0.18

%

0.16

%

0.20

%

0.27

%

Nonperforming loans to total loans

0.14

%

0.23

%

0.20

%

0.24

%

0.33

%

Allowance for loan losses to nonperforming loans

678.9

%

437.1

%

537.2

%

439.4

%

324.1

%

Allowance for loan losses to total loans

0.97

%

0.99

%

1.07

%

1.08

%

1.07

%


CBTX, INC. AND SUBSIDIARY
Allowance for Loan Losses (Unaudited)
(In thousands, except percentages)

For the Three Months Ended

12/31/2018

9/30/2018

6/30/2018

3/31/2018

12/31/2017

Analysis of Allowance for Loan Losses

Allowance for loan losses at beginning of period

$

24,486

$

25,746

$

25,349

$

24,778

$

23,757

Provision (recapture) for loan losses

(2,169

)

(1,142

)

690

865

1,050

Net (charge-offs) recoveries

Commercial and industrial

1,521

(114

)

(301

)

(297

)

52

Real estate:

Commercial real estate

(156

)

(3

)

5

3

(118

)

Construction and development

(1

)

1-4 family residential

4

(2

)

(7

)

Multi-family residential

Consumer

1

(4

)

3

2

9

Agricultural

10

35

Other

1

(1

)

Total net (charge-offs) recoveries

1,376

(118

)

(293

)

(294

)

(29

)

Allowance for loan losses at end of period

$

23,693

$

24,486

$

25,746

$

25,349

$

24,778

Net charge-offs (recoveries) to average loans

(0.22

%)

0.02

%

0.05

%

0.05

%

0.00

%


CBTX, INC. AND SUBSIDIARY
Non‑GAAP to GAAP Reconciliation (Unaudited)
(In thousands, except per share data and percentages)

Our accounting and reporting policies conform to GAAP and the prevailing practices in the banking industry. However, we also evaluate our performance based on certain additional non‑GAAP financial measures. We classify a financial measure as being a non‑GAAP financial measure if that financial measure excludes or includes amounts or is subject to adjustments that have the effect of excluding or including amounts, that are not included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP as in effect from time to time in the United States in our statements of income, balance sheets or statements of cash flows. Non‑GAAP financial measures do not include operating and other statistical measures or ratios or statistical measures calculated using exclusively financial measures calculated in accordance with GAAP. Non‑GAAP financial measures should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the way we calculate the non‑GAAP financial measures may differ from that of other companies reporting measures with similar names.

We calculate (1) tangible equity as total shareholders’ equity, less goodwill and other intangible assets, net of accumulated amortization, and (2) tangible book value per share as tangible equity divided by shares of common stock outstanding at the end of the relevant period. The most directly comparable GAAP financial measure for tangible book value per share is book value per share. We calculate tangible assets as total assets less goodwill and other intangible assets, net of accumulated amortization. The most directly comparable GAAP financial measure for tangible equity to tangible assets is total shareholders’ equity to total assets. We believe that tangible book value per share and tangible equity to tangible assets are measures that are important to many investors in the marketplace who are interested in book value per share and total shareholders’ equity to total assets, exclusive of change in intangible assets.

The following tables reconcile, as of the dates set forth below, total shareholders’ equity to tangible equity, total assets to tangible assets and presents book value per share, tangible book value per share, tangible equity to tangible assets and shareholders’ equity to total assets:

12/31/2018

9/30/2018

6/30/2018

3/31/2018

12/31/2017

Tangible Equity

Total shareholders’ equity

$

487,625

$

471,851

$

461,195

$

451,571

$

446,214

Adjustments:

Goodwill

80,950

80,950

80,950

80,950

80,950

Other intangibles

5,775

6,038

6,276

6,521

6,770

Tangible equity

$

400,900

$

384,863

$

373,969

$

364,100

$

358,494

Tangible Assets

Total assets

$

3,279,096

$

3,190,453

$

3,100,760

$

3,074,790

$

3,081,083

Adjustments:

Goodwill

80,950

80,950

80,950

80,950

80,950

Other intangibles

5,775

6,038

6,276

6,521

6,770

Tangible assets

$

3,192,371

$

3,103,465

$

3,013,534

$

2,987,319

$

2,993,363

Common shares outstanding

24,907

24,859

24,859

24,833

24,833

Book value per share

$

19.6

$

19.0

$

18.6

$

18.2

$

18.0

Tangible book value per share

$

16.1

$

15.5

$

15.0

$

14.7

$

14.4

Total shareholders’ equity to total assets

14.9

%

14.8

%

14.9

%

14.7

%

14.5

%

Tangible equity to tangible assets

12.6

%

12.4

%

12.4

%

12.2

%

12.0

%



Investor Relations:

James L. Sturgeon
281.325.5013
investors@CBoTX.com

Media Contact:

Ashley Warren
713.210.7622
awarren@CBoTX.com