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CBTX, Inc. Reports Quarterly Financial Results

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HOUSTON, April 28, 2021 (GLOBE NEWSWIRE) -- CBTX, Inc., or the Company (NASDAQ: CBTX), the bank holding company for CommunityBank of Texas, N.A., or the Bank, today announced its results for the first quarter of 2021.

Robert R. Franklin, Jr., Chairman, CEO and President of the Company stated, “During the first quarter of 2021, our markets continued to improve as companies worked toward returning to pre-pandemic operation. Every day we see more people returning to work as businesses create healthy work environments for both employees and customers. We have seen tremendous liquidity in the system, and our deposits continued to grow through the first quarter of 2021. We anticipate that as the economy recovers, we will see more of that liquidity put to work by our customers and the bank.”

Mr. Franklin concluded, “Our loan portfolio remains strong with little deferral activity remaining. We will continue to work with customers in the hardest hit segments of the economy that will take a little longer to recover. We are also mindful to enhance our shareholders’ return as we increased our quarterly dividend from $0.10 per share to $0.13 per share. We are optimistic about the second half of the year as markets attempt to recapture some of the lost revenues of the last year. Our balance sheet and capital remain strong which gives us many options going forward to drive shareholder value.”

Highlights

  • Net income was $10.0 million for the first quarter of 2021, or $0.41 per diluted share, compared to $10.2 million, or $0.41 per diluted share, for the quarter ended December 31, 2020 and $7.5 million, or $0.30 per diluted share, for the quarter ended March 31, 2020.

  • Total deposits were $3.4 billion at March 31, 2021, an increase of $83.0 million compared to $3.3 billion at December 31, 2020.

  • Maintained a solid net interest margin on a tax equivalent basis of 3.71% for the quarter ended March 31, 2021.

  • Nonperforming assets remained low at 0.59% of total assets at March 31, 2021, compared to 0.61% of total assets at December 31, 2020.

  • Increased quarterly dividend to $0.13 per share from $0.10 per share.

Operating Results

Net Interest Income

Net interest income was $33.1 million for the first quarter of 2021, compared to $32.5 million for the fourth quarter of 2020 and $32.2 million for the first quarter of 2020. Net interest income increased $570,000 during the first quarter of 2021, compared to the fourth quarter of 2020, primarily due to higher loan rates and lower deposit rates, partially offset by the impact of two fewer days and lower average loans in the first quarter of 2021. Net interest income increased $870,000 during the first quarter of 2021, compared to the first quarter of 2020, primarily due to higher average loans, securities and other interest-earning assets and lower deposit rates, partially offset by lower rates on loans, securities and other interest-earning assets and the impact of one less day in the first quarter of 2021.

The yield on interest-earning assets was 3.85% for the first quarter of 2021, compared to 3.79% for the fourth quarter of 2020 and 4.56% for the first quarter of 2020. The cost of interest-bearing liabilities was 0.34% for the first quarter of 2021, 0.39% for the fourth quarter of 2020 and 0.94% for the first quarter of 2020. The Company’s net interest margin on a tax equivalent basis was 3.71% for the first quarter of 2021, compared to 3.62% for the fourth quarter of 2020 and 4.06% for the first quarter of 2020.

Provision/Recapture for Credit Losses

The provision for credit losses was $412,000 for the first quarter of 2021, compared to a credit reserve recapture of $135,000 for the fourth quarter of 2020 and a provision for credit losses of $5.0 million for the first quarter of 2020.

The provision for credit losses for the first quarter of 2021 was primarily due to increases of $237,000 and $126,000 in the ACL for loans and unfunded commitments, respectively, in addition to $49,000 in net loan charge-offs. The recapture in the fourth quarter of 2020 primarily related to a $364,000 recapture for unfunded commitments, partially offset by a provision of $229,000 for loans. The provision for credit losses for the first quarter of 2020 resulted from the impact of the COVID-19 pandemic and the sustained instability of the oil and gas industry which led to the adjustment of certain factors utilized to determine the ACL.

The ACL for loans was $40.9 million, or 1.41% of loans excluding loans held for sale, at March 31, 2021, compared to $40.6 million, or 1.39% of loans excluding loans held for sale, at December 31, 2020 and $31.2 million, or 1.17% of loans excluding loans held for sale, at March 31, 2020. At March 31, 2021, there were minimal adjustments to the qualitative factors utilized in calculating the ACL. The increase in the ACL from December 31, 2020 to March 31, 2021 was primarily due to an increase in specific reserves for loans individually evaluated within the portfolio and a slight increase in the general reserve. Although the collectively evaluated loan portfolio decreased $27.3 million compared to December 31, 2020, the general reserve increased $14,000 because balances in certain portfolio segments with higher historical loss rates and higher qualitative factor rates increased as a component of the overall portfolio resulting in an increase in the ACL. The increase in the ACL from March 31, 2020 to March 31, 2021 was primarily due to the impact of the COVID-19 pandemic and the sustained instability of the oil and gas industry during 2020.

The ACL for unfunded commitments was $4.3 million at March 31, 2021, compared to $4.2 million at December 31, 2020 and $3.7 million at March 31, 2020.

Noninterest Income

Noninterest income was $3.1 million for the first quarter of 2021, $3.5 million for the fourth quarter of 2020 and $4.3 million for the first quarter of 2020. The decrease of $1.2 million for the first quarter of 2021, compared to the first quarter of 2020, was primarily due to swap origination fee income recognized in 2020.

Noninterest Expense

Noninterest expense was $23.3 million for the first quarter of 2021, compared to $23.7 million for the fourth quarter of 2020 and $22.1 million for the first quarter of 2020. The decrease in noninterest expense of $373,000 between the first quarter of 2021 and the fourth quarter of 2020 was primarily due to a $1.5 million decrease in professional and director fees, mainly consulting fees related to Bank Secrecy Act/Anti-Money Laundering, or BSA/AML, compliance matters, partially offset by a $1.3 million increase in salaries and employee benefits reflecting reductions to bonus accruals in the fourth quarter of 2020. Total consulting related fees associated with BSA/AML compliance matters were $661,000 in the first quarter of 2021, compared to $2.4 million in the fourth quarter of 2020.

The increase in noninterest expense of $1.2 million for the first quarter of 2021, compared to the first quarter of 2020, was primarily due to a $551,000 increase in professional and director fees, a $354,000 increase in data processing and software and a $453,000 increase in regulatory fees. The increase in professional and director fees during the first quarter of 2021, compared to the first quarter of 2020, was primarily due to $661,000 in consulting related fees associated with BSA/AML compliance matters recognized in the first quarter of 2021.

Income Taxes

Income tax expense was $2.5 million for the first quarter of 2021, $2.3 million for the fourth quarter of 2020 and $1.9 million for the first quarter of 2020. The effective tax rates were 19.87% for the first quarter of 2021, 18.24% for the fourth quarter of 2020 and 19.85% for the first quarter of 2020. The differences between the federal statutory rate of 21% and the effective tax rates were largely attributable to permanent differences primarily related to tax exempt interest and bank-owned life insurance earnings.

Balance Sheet Highlights

Loans

Loans excluding loans held for sale were $2.9 billion at March 31, 2021, $2.9 billion at December 31, 2020 and $2.7 billion at March 31, 2020.

The increase from March 31, 2020 to March 31, 2021 was impacted by the Company’s participation in the Paycheck Protection Program, or PPP, under the Coronavirus Aid, Relief and Economic Security Act, or CARES Act, which facilitates loans to small businesses. PPP loans, net of deferred fees and unearned discounts, were $268.8 million at March 31, 2021 and $271.2 million at December 31, 2020.

In support of customers impacted by the COVID-19 pandemic, the Company offered relief through payment deferrals during 2020 and the first quarter of 2021. As of March 31, 2021, the Company had 16 loans subject to such deferral arrangements with total outstanding principal balances of $34.3 million and as of December 31, 2020 the Company had 21 loans subject to such deferral arrangements with total outstanding principal balances of $38.4 million.

Asset Quality

Nonperforming assets remain relatively low at $23.6 million, or 0.59% of total assets, at March 31, 2021, $24.0 million, or 0.61% of total assets, at December 31, 2020 and $1.4 million, or 0.04% of total assets, at March 31, 2020.

Annualized net charge-offs (recoveries) to average loans was 0.01% for the first quarter of 2021, 0.49% for the fourth quarter of 2020 and (0.05)% for the first quarter of 2020.

Deposits and Borrowings

Total deposits were $3.4 billion at March 31, 2021, $3.3 billion at December 31, 2020 and $2.8 billion at March 31, 2020. The increase in deposits of $83.0 million between December 31, 2020 and March 31, 2021 was due to net deposit inflows of $145.0 million in noninterest-bearing accounts partially offset by net deposit outflows of $62.0 million in interest-bearing accounts. The increase in deposits of $592.5 million between March 31, 2020 and March 31, 2021 was due to net deposit inflows of $425.9 million and $166.6 million in noninterest-bearing accounts and interest-bearing accounts, respectively.

The Company defines total borrowings as the total of repurchase agreements, Federal Home Loan Bank advances and notes payable. Total borrowings were $50.0 million, $50.0 million and $51.4 million at March 31, 2021, December 31, 2020 and March 31, 2020, respectively.

Capital

At March 31, 2021, the Company continued to be well capitalized and maintained strong capital ratios under bank regulatory requirements. The Company’s total risk-based capital ratio was 17.00% at March 31, 2021, compared to 16.71% at December 31, 2020 and 16.42% at March 31, 2020. The Company’s tier 1 leverage ratio was 11.90% at March 31, 2021, compared to 12.00% at December 31, 2020 and 13.18% at March 31, 2020. The Company’s total shareholders’ equity to total assets ratio was 13.54% at March 31, 2021, 13.84% at December 31, 2020 and 15.67% at March 31, 2020.

The ratio of tangible equity to tangible assets was 11.67% at March 31, 2021, 11.94% at December 31, 2020 and 13.51% at March 31, 2020. Tangible equity to tangible assets is a non-GAAP financial measure. The most directly comparable financial measure calculated in accordance with United States generally accepted accounting principles, or GAAP, to tangible equity to tangible assets is total shareholders’ equity to total assets. See the table captioned “Non‑GAAP to GAAP Reconciliation” at the end of this earnings release.

Non-GAAP Financial Measures

The Company’s accounting and reporting policies conform to GAAP and the prevailing practices in the banking industry. The Company’s management also evaluates performance based on certain non-GAAP financial measures. The Company classifies 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 its statements of income, balance sheets or statements of cash flows.

This earnings release contains certain non-GAAP financial measures including “tangible book value,” “tangible book value per common share,” and “tangible equity to tangible assets,” which are supplemental measures that are not required by, or are not presented in accordance with, GAAP. Non-GAAP financial measures do not include operating, other statistical measures or ratios 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.

Please refer to the table titled “Non-GAAP to GAAP Reconciliation” at the end of this earnings release for a reconciliation of these non-GAAP financial measures.

Conference Call Information

The Company will hold a conference call to discuss results for the quarter ended March 31, 2021 on April 29, 2021 at 8:00 a.m. Central Standard Time. Investors and interested parties may listen to the teleconference via telephone by calling (877) 620-1733 if calling from the U.S. or Canada (or (470) 414-9785 if calling from outside the U.S.). The conference call ID number is 9087182. To access the live webcast of the conference call, individuals can visit the Investor Relations page of the Company’s website: https://ir.cbtxinc.com/events-and-presentations. An archived edition of the earnings webcast will also be posted on the Company’s website later that day and will remain available to interested parties via the same link for one year.

The conference call will contain forward-looking statements in addition to statements of historical fact. The actual achievement of any forecasted results or the unfolding of future economic or business developments in a way anticipated or projected by the Company involves numerous risks and uncertainties that may cause the Company’s actual performance to be materially different from that stated or implied in the forward-looking statements. Such risks and uncertainties include, among other things, risks discussed within the “Risk Factors” section of the Company’s most recent Forms 10-Q and 10-K and subsequent 8-Ks.

About CBTX, Inc.

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

Forward-Looking Statements

This earnings 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: the Company’s ability to manage the economic risks related to the impact of the COVID-19 pandemic and the sustained instability in the oil and gas industry (including risks related to its customers’ credit quality, deferrals and modifications to loans, the Company’s ability to borrow, and the impact of a resultant recession generally); natural disasters and adverse weather (including the effects of recent hurricanes, tropical storms, tropical depressions and winter storms on the Company’s market area), acts of war or terrorism, pandemics, an outbreak of hostilities or other international or domestic calamities and other matters beyond the Company’s control; the geographic concentration of the Company’s markets in Beaumont and Houston, Texas; the Company’s ability to manage changes and the continued health or availability of management personnel; the amount of nonperforming and classified assets that the Company holds and the time and effort necessary to resolve nonperforming assets; deterioration of asset quality; interest rate risk associated with the Company’s business; national business and economic conditions in general and in the financial services industry, and within the Company’s primary markets; volatility and direction of oil prices, including risks related to the collapse and instability in oil prices, and the strength of the energy industry, generally and within Texas; the composition of the Company’s loan portfolio, including the identity of the Company’s borrowers and the concentration of loans in specialized industries, including the creditworthiness of energy company borrowers; changes in the value of collateral securing the Company’s loans; the Company’s ability to maintain important deposit customer relationships and its reputation; the Company’s ability to maintain effective internal control over financial reporting; the Company’s ability to pursue available remedies in the event of a loan default for PPP loans and the risk of holding such loans at unfavorable interest rates and on terms that are less favorable than those with customers to whom the Company would have otherwise lent; the volatility and direction of market interest rates; liquidity risks associated with the Company’s business; systems failures, interruptions or breaches involving the Company’s information technology and telecommunications systems or third‑party servicers; the failure of certain third-party vendors to perform; the initiation and outcome of litigation and other legal proceedings against the Company or to which it may become subject; the operational risks associated with the Company’s business; the costs, effects and results of regulatory examinations, investigations, including the ongoing investigation by the Financial Crimes Enforcement Network of the U.S. Department of Treasury, or FinCEN, or reviews or the ability to obtain the required regulatory approvals; the Company’s ability to meet the requirements of its Formal Agreement with the Office of the Comptroller of the Currency, and the risk that such Formal Agreement may have a negative impact on the Company’s financial performance and results of operations; changes in the laws, rules, regulations, interpretations or policies relating to financial institution, accounting, tax, trade, monetary and fiscal matters; governmental or regulatory responses to the COVID-19 pandemic and newly enacted fiscal stimulus that impact the Company’s loan portfolio and forbearance practice; and further government intervention in the U.S. financial system that may impact how the Company achieves its performance goals. Additionally, many of these risks and uncertainties are currently elevated by and may or will continue to be elevated by the COVID-19 pandemic. 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, or 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
Financial Highlights
(In thousands, except per share data and percentages)

Three Months Ended

3/31/2021

12/31/2020

9/30/2020

6/30/2020

3/31/2020

Profitability:

Net income

$

10,019

$

10,236

$

6,421

$

2,163

$

7,541

Basic earnings per share

$

0.41

$

0.42

$

0.26

$

0.09

$

0.30

Diluted earnings per share

$

0.41

$

0.41

$

0.26

$

0.09

$

0.30

Return on average assets(1)

1.03

%

1.05

%

0.66

%

0.23

%

0.87

%

Return on average shareholders' equity(1)

7.39

%

7.47

%

4.70

%

1.60

%

5.64

%

Net interest margin - tax equivalent(1)

3.71

%

3.62

%

3.55

%

3.68

%

4.06

%

Efficiency ratio(2)

64.32

%

65.64

%

66.77

%

64.15

%

60.44

%

Liquidity and Capital Ratios:

Total shareholders' equity to total assets

13.54

%

13.84

%

14.18

%

13.77

%

15.67

%

Tangible equity to tangible assets(3)

11.67

%

11.94

%

12.22

%

11.84

%

13.51

%

Common equity tier 1 capital ratio

15.75

%

15.45

%

15.41

%

15.30

%

15.23

%

Tier 1 risk-based capital ratio

15.75

%

15.45

%

15.41

%

15.30

%

15.23

%

Total risk-based capital ratio

17.00

%

16.71

%

16.67

%

16.56

%

16.42

%

Tier 1 leverage ratio

11.90

%

12.00

%

11.90

%

11.96

%

13.18

%

Credit Quality:

Allowance for credit losses for loans to loans excluding loans held for sale

1.41

%

1.39

%

1.49

%

1.35

%

1.17

%

Nonperforming assets to total assets

0.59

%

0.61

%

0.41

%

0.29

%

0.04

%

Nonperforming loans to loans excluding loans held for sale

0.81

%

0.82

%

0.53

%

0.38

%

0.05

%

Net charge-offs (recoveries) to average loans(1)

0.01

%

0.49

%

0.02

%

0.01

%

(0.05

)%

Other Data:

Weighted average common shares outstanding - basic

24,508

24,621

24,748

24,752

24,926

Weighted average common shares outstanding - diluted

24,616

24,678

24,770

24,780

25,000

Common shares outstanding at period end

24,442

24,613

24,713

24,755

24,746

Dividends per share

$

0.13

$

0.10

$

0.10

$

0.10

$

0.10

Book value per share

$

22.31

$

22.20

$

21.89

$

21.71

$

21.70

Tangible book value per share(3)

$

18.84

$

18.74

$

18.44

$

18.26

$

18.23

Employees - full-time equivalents

517

511

515

523

512


(1)

Annualized.

(2)

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

(3)

Non‑GAAP financial measure. See the table captioned “Non‑GAAP to GAAP Reconciliation” at the end of this earnings release.



CBTX, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets
(In thousands)

3/31/2021

12/31/2020

9/30/2020

6/30/2020

3/31/2020

Loans excluding loans held for sale

$

2,891,632

$

2,924,117

$

2,964,526

$

2,934,888

$

2,671,587

Allowance for credit losses for loans

(40,874

)

(40,637

)

(44,069

)

(39,678

)

(31,194

)

Loans, net

2,850,758

2,883,480

2,920,457

2,895,210

2,640,393

Cash and equivalents

604,671

538,007

377,572

492,400

284,898

Securities

289,091

237,281

226,101

235,438

234,014

Premises and equipment

60,551

61,152

61,732

50,729

50,243

Goodwill

80,950

80,950

80,950

80,950

80,950

Other intangible assets

3,991

4,171

4,303

4,496

4,700

Loans held for sale

1,005

2,673

1,763

-

882

Operating lease right-to-use asset

12,900

13,285

12,893

14,081

12,577

Other assets

124,722

128,218

128,901

128,421

116,993

Total assets

$

4,028,639

$

3,949,217

$

3,814,672

$

3,901,725

$

3,425,650

Noninterest-bearing deposits

$

1,621,408

$

1,476,425

$

1,460,983

$

1,513,748

$

1,195,541

Interest-bearing deposits

1,763,339

1,825,369

1,709,681

1,740,455

1,596,692

Total deposits

3,384,747

3,301,794

3,170,664

3,254,203

2,792,233

Federal Home Loan Bank advances

50,000

50,000

50,000

50,000

50,000

Repurchase agreements

2,153

2,500

1,415

Operating lease liabilities

16,060

16,447

15,759

16,983

15,356

Other liabilities

32,483

34,525

35,175

40,683

29,772

Total liabilities

3,483,290

3,402,766

3,273,751

3,364,369

2,888,776

Total shareholders’ equity

545,349

546,451

540,921

537,356

536,874

Total liabilities and shareholders’ equity

$

4,028,639

$

3,949,217

$

3,814,672

$

3,901,725

$

3,425,650



CBTX, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Income
(In thousands)

Three Months Ended

3/31/2021

12/31/2020

9/30/2020

6/30/2020

3/31/2020

Interest income

Interest and fees on loans

$

33,165

$

32,886

$

32,318

$

32,857

$

33,617

Securities

1,173

1,070

1,107

1,228

1,363

Other interest-earning assets

177

168

176

169

1,055

Equity investments

146

170

162

171

176

Total interest income

34,661

34,294

33,763

34,425

36,211

Interest expense

Deposits

1,350

1,549

1,831

2,022

3,766

Federal Home Loan Bank advances

221

221

221

240

221

Other interest-bearing liabilities

4

3

5

4

Total interest expense

1,571

1,774

2,055

2,267

3,991

Net interest income

33,090

32,520

31,708

32,158

32,220

Provision (recapture) for credit losses

Provision for credit losses for loans

286

229

4,569

8,537

4,739

Provision (recapture) for credit losses for unfunded commitments

126

(364

)

(461

)

1,333

310

Total provision (recapture) for credit losses

412

(135

)

4,108

9,870

5,049

Net interest income after provision (recapture) for credit losses

32,678

32,655

27,600

22,288

27,171

Noninterest income

Deposit account service charges

1,193

1,270

1,176

1,095

1,485

Card interchange fees

976

999

995

915

922

Earnings on bank-owned life insurance

390

407

1,187

412

416

Net gain on sales of assets

192

379

114

139

123

Other

360

467

551

348

1,381

Total noninterest income

3,111

3,522

4,023

2,909

4,327

Noninterest expense

Salaries and employee benefits

14,188

12,848

14,332

14,012

14,223

Occupancy expense

2,521

2,628

2,496

2,558

2,424

Professional and director fees

1,703

3,209

2,446

1,541

1,152

Data processing and software

1,576

1,330

1,525

1,292

1,222

Regulatory fees

556

748

471

476

103

Advertising, marketing and business development

285

438

429

269

364

Telephone and communications

463

455

486

392

419

Security and protection expense

390

423

299

351

374

Amortization of intangibles

191

197

198

230

221

Other expenses

1,412

1,382

1,176

1,374

1,587

Total noninterest expense

23,285

23,658

23,858

22,495

22,089

Net income before income tax expense

12,504

12,519

7,765

2,702

9,409

Income tax expense

2,485

2,283

1,344

539

1,868

Net income

$

10,019

$

10,236

$

6,421

$

2,163

$

7,541



CBTX, INC. AND SUBSIDIARY
Net Interest Margin
(In thousands, except percentages)

Three Months Ended

3/31/2021

12/31/2020

3/31/2020

Average

Interest

Average

Average

Interest

Average

Average

Interest

Average

Outstanding

Earned/

Yield/

Outstanding

Earned/

Yield/

Outstanding

Earned/

Yield/

Balance

Interest Paid

Rate(1)

Balance

Interest Paid

Rate(1)

Balance

Interest Paid

Rate(1)

Assets

Interest-earning assets:

Total loans(2)

$

2,901,291

$

33,165

4.64

%

$

2,961,622

$

32,886

4.42

%

$

2,634,507

$

33,617

5.13

%

Securities

259,341

1,173

1.84

%

236,233

1,070

1.80

%

233,917

1,363

2.34

%

Other interest-earning assets

475,279

177

0.15

%

388,936

168

0.17

%

315,099

1,055

1.35

%

Equity investments

15,353

146

3.86

%

15,346

170

4.41

%

13,661

176

5.18

%

Total interest-earning assets

3,651,264

$

34,661

3.85

%

3,602,137

$

34,294

3.79

%

3,197,184

$

36,211

4.56

%

Allowance for credit losses for loans

(41,078

)

(44,233

)

(25,831

)

Noninterest-earning assets

321,334

321,303

296,698

Total assets

$

3,931,520

$

3,879,207

$

3,468,051

Liabilities and Shareholders’ Equity

Interest-bearing liabilities:

Interest-bearing deposits

$

1,802,175

$

1,350

0.30

%

$

1,744,557

$

1,549

0.35

%

$

1,650,064

$

3,766

0.92

%

Federal Home Loan Bank advances

50,000

221

1.79

%

50,163

221

1.76

%

50,000

221

1.78

%

Other interest-bearing liabilities

1,426

4

763

4

Total interest-bearing liabilities

1,852,175

$

1,571

0.34

%

1,796,146

$

1,774

0.39

%

1,700,827

$

3,991

0.94

%

Noninterest-bearing liabilities:

Noninterest-bearing deposits

1,478,183

1,482,753

1,184,776

Other liabilities

51,634

55,174

44,620

Total noninterest-bearing liabilities

1,529,817

1,537,927

1,229,396

Shareholders’ equity

549,528

545,134

537,828

Total liabilities and shareholders’ equity

$

3,931,520

$

3,879,207

$

3,468,051

Net interest income

$

33,090

$

32,520

$

32,220

Net interest spread(3)

3.51

%

3.40

%

3.62

%

Net interest margin(4)

3.68

%

3.59

%

4.05

%

Net interest margin - tax equivalent(5)

3.71

%

3.62

%

4.06

%


(1)

Annualized.

(2)

Includes average outstanding balances related to loans held for sale.

(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)

Tax equivalent adjustments of $299,000, $287,000 and $81,000 for the quarters ended March 31, 2021, December 31, 2020 and March 31, 2020, respectively, were computed using a federal income tax rate of 21%.



CBTX, INC. AND SUBSIDIARY
Rate/Volume Analysis
(In thousands)

Three Months Ended March 31, 2021,

Compared to Three Months Ended December 31, 2020

Increase (Decrease) due to

(Dollars in thousands)

Rate

Volume

Days

Total

Interest-earning assets:

Total loans

$

1,667

$

(670

)

$

(718

)

$

279

Securities

23

105

(25

)

103

Other interest-earning assets

(24

)

37

(4

)

9

Equity investments

(21

)

(3

)

(24

)

Total increase (decrease) in interest income

1,645

(528

)

(750

)

367

Interest-bearing liabilities:

Interest-bearing deposits

(216

)

51

(34

)

(199

)

Federal Home Loan Bank advances

6

(1

)

(5

)

Other interest-bearing liabilities

(4

)

(4

)

Total increase (decrease) in interest expense

(214

)

50

(39

)

(203

)

Increase (decrease) in net interest income

$

1,859

$

(578

)

$

(711

)

$

570


Three Months Ended March 31, 2021,

Compared to Three Months Ended March 31, 2020

Increase (Decrease) due to

(Dollars in thousands)

Rate

Volume

Days

Total

Interest-earning assets:

Total loans

$

(3,484

)

$

3,403

$

(371

)

$

(452

)

Securities

)

148

...

(16

)

(190

)

Other interest-earning assets

(1,404

)

538

(12

)

(878

)

Equity investments

(50

)

22

(2

)

(30

)

Total increase (decrease) in interest income

(5,260

)

4,111

(401

)

(1,550

)

Interest-bearing liabilities:

Interest-bearing deposits

(2,722

)

348

(42

)

(2,416

)

Federal Home Loan Bank advances

2

(2

)

Other interest-bearing liabilities

(4

)

(4

)

Total increase (decrease) in interest expense

(2,724

)

348

(44

)

(2,420

)

Increase (decrease) in net interest income

$

(2,536

)

$

3,763

$

(357

)

$

870



CBTX, INC. AND SUBSIDIARY
Yield Trend(1)

Three Months Ended

3/31/2021

12/31/2020

9/30/2020

6/30/2020

3/31/2020

Interest-earning assets:

Total loans

4.64

%

4.42

%

4.37

%

4.54

%

5.13

%

Securities

1.84

%

1.80

%

1.87

%

2.05

%

2.34

%

Other interest-earning assets

0.15

%

0.17

%

0.18

%

0.18

%

1.35

%

Equity investments

3.86

%

4.41

%

4.20

%

4.54

%

5.18

%

Total interest-earning assets

3.85

%

3.79

%

3.75

%

3.91

%

4.56

%

Interest-bearing liabilities:

Interest-bearing deposits

0.30

%

0.35

%

0.42

%

0.48

%

0.92

%

Federal Home Loan Bank advances

1.79

%

1.76

%

1.76

%

1.36

%

1.78

%

Other interest-bearing liabilities

0.19

%

Total interest-bearing liabilities

0.34

%

0.39

%

0.46

%

0.52

%

0.94

%

Net interest spread(2)

3.51

%

3.40

%

3.29

%

3.39

%

3.62

%

Net interest margin(3)

3.68

%

3.59

%

3.52

%

3.65

%

4.05

%

Net interest margin - tax equivalent(4)

3.71

%

3.62

%

3.55

%

3.68

%

4.06

%


(1)

Annualized.

(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)

Tax equivalent adjustments were computed using a federal income tax rate of 21%.



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

Three Months Ended

3/31/2021

12/31/2020

9/30/2020

6/30/2020

3/31/2020

Assets

Interest-earning assets:

Total loans(1)

$

2,901,291

$

2,961,622

$

2,945,320

$

2,908,204

$

2,634,507

Securities

259,341

236,233

236,015

240,343

233,917

Other interest-earning assets

475,279

388,936

383,626

378,405

315,099

Equity investments

15,353

15,346

15,334

15,147

13,661

Total interest-earning assets

3,651,264

3,602,137

3,580,295

3,542,099

3,197,184

Allowance for credit losses for loans

(41,078

)

(44,233

)

(40,135

)

(31,443

)

(25,831

)

Noninterest-earning assets

321,334

321,303

326,590

305,821

296,698

Total assets

$

3,931,520

$

3,879,207

$

3,866,750

$

3,816,477

$

3,468,051

Liabilities and Shareholders’ Equity

Interest-bearing liabilities:

Interest-bearing deposits

$

1,802,175

$

1,744,557

$

1,730,812

$

1,687,991

$

1,650,064

Federal Home Loan Bank advances

50,000

50,163

50,000

70,769

50,000

Other interest-bearing liabilities

1,426

2,230

2,101

763

Total interest-bearing liabilities

1,852,175

1,796,146

1,783,042

1,760,861

1,700,827

Noninterest-bearing liabilities:

Noninterest-bearing deposits

1,478,183

1,482,753

1,484,557

1,462,271

1,184,776

Other liabilities

51,634

55,174

55,386

49,958

44,620

Total noninterest-bearing liabilities

1,529,817

1,537,927

1,539,943

1,512,229

1,229,396

Shareholders’ equity

549,528

545,134

543,765

543,387

537,828

Total liabilities and shareholders’ equity

$

3,931,520

$

3,879,207

$

3,866,750

$

3,816,477

$

3,468,051


(1)

Includes average outstanding balances of loans held for sale.



CBTX, INC. AND SUBSIDIARY
Loans and Deposits Period End Balances
(In thousands, except percentages)

3/31/2021

12/31/2020

9/30/2020

6/30/2020

3/31/2020

Amount

%

Amount

%

Amount

%

Amount

%

Amount

%

Loan Portfolio:

Commercial and industrial

$

756,707

26.1

%

$

742,957

25.3

%

$

832,686

28.0

%

$

837,667

28.4

%

$

542,650

20.3

%

Real estate:

Commercial real estate

1,072,263

36.9

%

1,041,998

35.5

%

949,933

31.9

%

908,027

30.8

%

904,395

33.8

%

Construction and development

464,091

16.0

%

522,705

17.8

%

506,216

17.0

%

552,879

18.8

%

558,343

20.8

%

1-4 family residential

224,880

7.7

%

239,872

8.2

%

253,868

8.5

%

272,253

9.2

%

276,142

10.3

%

Multi-family residential

271,719

9.4

%

258,346

8.8

%

298,733

10.0

%

255,273

8.7

%

267,152

10.0

%

Consumer

32,767

1.1

%

33,884

1.1

%

35,637

1.2

%

36,338

1.2

%

38,133

1.4

%

Agriculture

6,974

0.2

%

8,670

0.3

%

9,753

0.3

%

7,795

0.3

%

7,520

0.3

%

Other

74,387

2.6

%

88,238

3.0

%

91,501

3.1

%

77,535

2.6

%

84,076

3.1

%

Gross loans

2,903,788

100.0

%

2,936,670

100.0

%

2,978,327

100.0

%

2,947,767

100.0

%

2,678,411

100.0

%

Less allowance for credit losses

(40,874

)

(40,637

)

(44,069

)

(39,678

)

(31,194

)

Less deferred fees and unearned discount

(11,151

)

(9,880

)

(12,038

)

(12,879

)

(5,942

)

Less loans held for sale

(1,005

)

(2,673

)

(1,763

)

(882

)

Loans, net

$

2,850,758

$

2,883,480

$

2,920,457

$

2,895,210

$

2,640,393

Deposits:

Interest-bearing demand accounts

$

368,124

10.9

%

$

380,175

11.5

%

$

346,406

10.9

%

$

366,281

11.2

%

$

359,943

12.9

%

Money market accounts

995,945

29.4

%

1,039,617

31.5

%

916,668

28.9

%

878,006

27.0

%

760,036

27.2

%

Savings accounts

112,467

3.3

%

108,167

3.3

%

103,062

3.3

%

98,485

3.0

%

90,227

3.2

%

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

145,762

4.3

%

152,592

4.6

%

171,854

5.4

%

200,505

6.2

%

212,341

7.6

%

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

141,041

4.2

%

144,818

4.4

%

171,691

5.4

%

197,178

6.1

%

174,145

6.3

%

Total interest-bearing deposits

1,763,339

52.1

%

1,825,369

55.3

%

1,709,681

53.9

%

1,740,455

53.5

%

1,596,692

57.2

%

Noninterest-bearing deposits

1,621,408

47.9

%

1,476,425

44.7

%

1,460,983

46.1

%

1,513,748

46.5

%

1,195,541

42.8

%

Total deposits

$

3,384,747

100.0

%

$

3,301,794

100.0

%

$

3,170,664

100.0

%

$

3,254,203

100.0

%

$

2,792,233

100.0

%



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

3/31/2021

12/31/2020

9/30/2020

6/30/2020

3/31/2020

Nonperforming Assets (at period end):

Nonaccrual loans:

Commercial and industrial

$

12,230

$

12,588

$

6,699

$

5,519

$

449

Real estate:

Commercial real estate

10,664

10,665

4,811

4,811

67

Construction and development

236

238

241

506

519

1-4 family residential

378

526

325

332

413

Multi-family residential

Consumer

Agriculture

Other

3,500

Nonaccrual loans

23,508

24,017

15,576

11,168

1,448

Accruing loans 90 or more days past due

Total nonperforming loans

23,508

24,017

15,576

11,168

1,448

Foreclosed assets

106

Total nonperforming assets

$

23,614

$

24,017

$

15,576

$

11,168

$

1,448

Allowance for Credit Losses for Loans (at period end):

Commercial and industrial

$

13,812

$

13,035

$

13,347

$

12,108

$

9,535

Real estate:

Commercial real estate

14,280

13,798

12,745

12,424

9,576

Construction and development

5,445

6,089

6,334

7,050

5,795

1-4 family residential

2,458

2,578

2,871

3,173

2,430

Multi-family residential

2,714

2,513

3,117

2,880

2,413

Consumer

434

440

507

529

477

Agriculture

107

137

164

134

129

Other

1,624

2,047

4,984

1,380

839

Total allowance for credit losses for loans

$

40,874

$

40,637

$

44,069

$

39,678

$

31,194

Credit Quality Ratios (at period end):

Nonperforming assets to total assets

0.59

%

0.61

%

0.41

%

0.29

%

0.04

%

Nonperforming loans to loans excluding loans held for sale

0.81

%

0.82

%

0.53

%

0.38

%

0.05

%

Allowance for credit losses for loans to nonperforming loans

173.87

%

169.20

%

282.93

%

355.28

%

2,154.28

%

Allowance for credit losses for loans to loans excluding loans held for sale

1.41

%

1.39

%

1.49

%

1.35

%

1.17

%



CBTX, INC. AND SUBSIDIARY
Allowance for Credit Losses for Loans
(In thousands, except percentages)

Three Months Ended

3/31/2021

12/31/2020

9/30/2020

6/30/2020

3/31/2020

Beginning balance

$

40,637

$

44,069

$

39,678

$

31,194

$

25,280

Adoption of CECL

874

Provision

286

229

4,569

8,537

4,739

Net (charge-offs) recoveries:

Commercial and industrial

(95

)

(305

)

(31

)

18

398

Real estate:

Commercial real estate

143

(135

)

(24

)

Construction and development

1-4 family residential

(5

)

(66

)

1

Multi-family residential

Consumer

4

1

(7

)

7

(99

)

Agriculture

42

12

Other

(3,500

)

1

Total net (charge-offs) recoveries

(49

)

(3,661

)

(178

)

(53

)

301

Ending balance

$

40,874

$

40,637

$

44,069

$

39,678

$

31,194

Net charge-offs (recoveries) to average loans(1)

0.01

%

0.49

%

0.02

%

0.01

%

(0.05

)%


(1)

Annualized.


CBTX, INC. AND SUBSIDIARY
Non‑GAAP to GAAP Reconciliation
(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, other statistical measures or ratios 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 tangible equity as total shareholders’ equity, less goodwill and other intangible assets, net of accumulated amortization, and 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 table reconciles, 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 total shareholders’ equity to total assets:

3/31/2021

12/31/2020

9/30/2020

6/30/2020

3/31/2020

Tangible Equity

Total shareholders’ equity

$

545,349

$

546,451

$

540,921

$

537,356

$

536,874

Adjustments:

Goodwill

80,950

80,950

80,950

80,950

80,950

Other intangibles

3,991

4,171

4,303

4,496

4,700

Tangible equity

$

460,408

$

461,330

$

455,668

$

451,910

$

451,224

Tangible Assets

Total assets

$

4,028,639

$

3,949,217

$

3,814,672

$

3,901,725

$

3,425,650

Adjustments:

Goodwill

80,950

80,950

80,950

80,950

80,950

Other intangibles

3,991

4,171

4,303

4,496

4,700

Tangible assets

$

3,943,698

$

3,864,096

$

3,729,419

$

3,816,279

$

3,340,000

Common shares outstanding

24,442

24,613

24,713

24,755

24,746

Book value per share

$

22.31

$

22.20

$

21.89

$

21.71

$

21.70

Tangible book value per share

$

18.84

$

18.74

$

18.44

$

18.26

$

18.23

Total shareholders’ equity to total assets

13.54

%

13.84

%

14.18

%

13.77

%

15.67

%

Tangible equity to tangible assets

11.67

%

11.94

%

12.22

%

11.84

%

13.51

%


Investor Relations:

Justin M. Long
281.325.5013
investors@CBoTX.com

Media Contact:

Ashley Warren
713.210.7622
awarren@CBoTX.com