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CBTX, Inc. Reports First Quarter Financial Results

April 26, 2018 at 5:00 PM EDT

HOUSTON, April 26, 2018 (GLOBE NEWSWIRE) --

CBTX, Inc. (the “Company”) (NASDAQ:CBTX), the bank holding company for CommunityBank of Texas N.A., today announced net income of $9.1 million, or $0.37 per diluted share, for the quarter ended March 31, 2018, compared to $6.9 million, or $0.31 per diluted share, for the quarter ended March 31, 2017 and $2.0 million, or $0.08 per diluted share, for the quarter ended December 31, 2017.

Highlights

  • Loans increased $44.5 million during the first quarter of 2018, an 8% annualized growth rate for the quarter.
     
  • Net interest income increased $3.2 million or 12.4%, from the first of quarter 2017 to the first quarter of 2018, primarily due increased average loans and yields on loans.
     
  • Income tax expense decreased $893,000 from the first quarter 2017 to the first quarter of 2018 and $4.2 million from the fourth quarter of 2017 to the first quarter of 2018 due to the reduction of the federal tax rate from 35% to 21% and a fourth quarter 2017 charge of $3.9 million related to the Tax Cuts and Jobs Act (the "Tax Act").

Operating Results:

Net Interest Income

Net interest income was $29.0 million for the first quarter of 2018, compared to $25.8 million for the first quarter of 2017 and $28.2 million for the fourth quarter of 2017. The increase in net interest income in the first quarter of 2018 from the first quarter of 2017, was due to increased average loans and repayment of our note payable in the fourth quarter of 2017 and increased average yields on loans and federal funds sold. The increase in net interest income in the first quarter of 2018 from the fourth quarter of 2017 was due to increased average loans and average loan yields and the impact of the repayment of our note payable.

The yield on interest-earning assets was 4.49% for the first quarter of 2018, compared to 4.26% for the first quarter of 2017 and 4.29% for the fourth quarter of 2017.

The cost of interest-bearing liabilities, including borrowings, was 0.55% for the first quarter of 2018, compared to 0.57% for the first quarter of 2017 and 0.56% for the fourth quarter of 2017.

The net interest margin was 4.19% for the first quarter of 2018 compared to 3.93% for the first quarter of 2017 and 3.98% for the fourth quarter of 2017.

Provision (Recapture) for Loan Losses

Provision for loan loss was $865,000 for the first quarter of 2018, compared to $960,000 for the first quarter of 2017 and $1.1 million for the fourth quarter of 2017.

The allowance for loan losses was $25.3 million, or 1.08% of total loans, at March 31, 2018, compared to $25.9 million, or 1.17% of total loans, at March 31, 2017 and $24.8 million, or 1.07% of total loans, at December 31, 2017.

Noninterest Income

Noninterest income was $3.4 million for the first quarter of 2018, $3.4 million for the first quarter of 2017 and $3.1 million for the fourth quarter of 2017. Although noninterest income was flat between the first quarter 2018 and the first quarter 2017, there was a decrease in gains on sales of assets and an increase in bank-owned life insurance income from the first quarter of 2017 to the first quarter of 2018. The increase in noninterest income from the fourth quarter of 2017 to the first quarter of 2018 was primarily due to higher gains on sales of loans in the first quarter of 2018. 

Noninterest Expense

Noninterest expense increased $1.9 million during the first quarter of 2018 as compared to the first quarter of 2017 and decreased $1.7 million as compared to the fourth quarter of 2017.

The decrease in noninterest expense during the first quarter of 2018 compared to the fourth quarter of 2017 is due primarily to a $2.5 million charge for change of control payments to certain employees triggered by our initial public offering, which is reflected in salaries and employee benefits and increased professional and director fees in the fourth quarter of 2017. Excluding the $2.5 million charge for change of control payments, noninterest expense for the first quarter of 2018 increased $795,000 primarily due to increased salaries and employee benefits due to increases in salaries and incentive compensation and health insurance premiums, partially offset by lower professional and director fees.

The increase in noninterest expense in the first quarter of 2018 compared to the first quarter of 2017 is primarily due to increased salaries and employee benefits due to increases in salaries and incentive compensation, health insurance premiums and stock compensation expense.

Income Taxes

Income tax expense was $2.1 million for the first quarter of 2018, $3.0 million for the first quarter of 2017 and $6.3 million for the fourth quarter of 2017. During the fourth quarter of 2017, the Company recorded a deferred tax asset impairment charge of $3.9 million related to the recent Tax Act.

The effective tax rates were 19.0% for the first quarter of 2018, 30.7% for the first quarter of 2017 and 76.3% for the fourth quarter of 2017. The effective tax rate for the first quarter of 2018 reflects reduction of the federal tax rate from 35% to 21% in the recent Tax Act.

Balance Sheet Highlights:

Loans

Loans were $2.4 billion at March 31, 2018, $2.2 billion at March 31, 2017 and $2.3 billion at December 31, 2017.  The increases from the prior year and linked quarter are primarily due to organic growth.

Asset Quality

Nonperforming assets remain low relative to total assets at $6.1 million, or 0.20% of total assets, at March 31, 2018, $7.2 million, or 0.25% of total assets, at March 31, 2017 and $8.4 million, or 0.27% of total assets at December 31, 2017.

Nonperforming loans were $5.8 million, or 0.24% of total loans, at March 31, 2018, $6.1 million, or 0.27% of total loans, at March 31, 2017 and $7.6 million, or 0.33% of total loans, at December 31, 2017.

Annualized net charge-offs (recoveries) to average loans were 0.05% for the first quarter of 2018, 0.02% for the first quarter of 2017 and 0.00% for the fourth quarter of 2017.

Deposits and Borrowings

Total deposits were $2.6 billion at March 31, 2018, compared to $2.5 billion at March 31, 2017 and $2.6 billion at December 31, 2017.

Total borrowings (excluding junior subordinated debentures) were $861,000 at March 31, 2018, $29.0 million at March 31, 2017 and $1.5 million at December 31, 2017. The decrease in borrowings is due to scheduled payments and our fourth quarter repayment in full of the outstanding balance of our note payable. On December 13, 2017, we entered into a loan agreement providing for a $30 million revolving line of credit and from that date through March 31, 2018, we made no borrowings under that agreement.

Capital

At March 31, 2018, the Company remains well capitalized. Our ratio of total shareholders’ equity to total assets was 14.69% and our tangible equity to total tangible assets was 12.19% at March 31, 2018 and our ratio of total shareholders’ equity to total assets was 12.48% and our tangible equity to total tangible assets was 9.74% at March 31, 2017. Tangible equity to total tangible assets is a non‑GAAP financial measure. See the table captioned “Non‑GAAP to GAAP Reconciliation.”

In November 2017, we completed our initial public offering of our common stock issuing 2,760,000 common shares at $26.00 per share and net proceeds of $64.5 million, which is the primary cause of the increase in these ratios.

About CBTX, Inc.

CBTX, Inc. is the bank holding company for CommunityBank of Texas, N.A., a $3.1 billion asset bank, offering commercial banking solutions to local small and mid-sized businesses and professionals in Houston, 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; 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 its 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.communitybanktx.com under the Investor Relations tab.

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

                               
Balance Sheet Data (at period end):   3/31/2018   12/31/2017   9/30/2017   6/30/2017   3/31/2017
                               
Loans, excluding loans held for sale   $  2,356,053     $  2,311,544     $  2,199,478     $  2,192,443     $  2,217,656  
Allowance for loan losses      (25,349 )      (24,778 )      (23,757 )      (25,187 )      (25,881 )
Loans, net      2,330,704        2,286,766        2,175,721        2,167,256        2,191,775  
                               
Cash and equivalents      279,915        326,199        348,578        307,173        272,355  
Debt securities      221,183        223,208        217,660        220,330        219,978  
Premises and equipment, net      53,135        53,607        54,129        56,609        55,986  
Goodwill      80,950        80,950        80,950        80,950        80,950  
Other intangible assets, net      6,521        6,770        7,031        7,298        7,513  
Repossessed real estate and other assets      295        705        1,136        1,435        1,179  
Loans held for sale      113        1,460        466        559        675  
Other assets      101,974        101,418        104,167        99,267        84,137  
Total Assets   $  3,074,790     $  3,081,083     $  2,989,838     $  2,940,877     $  2,914,548  
                               
Noninterest-bearing deposits   $  1,120,521     $  1,109,789     $  1,051,755     $  1,030,865     $  993,839  
Interest-bearing deposits      1,479,181        1,493,183        1,502,872        1,485,919        1,504,606  
Total deposits      2,599,702        2,602,972        2,554,627        2,516,784        2,498,445  
                               
Note payable      -        -        24,357        25,464        26,571  
Repurchase agreements      861        1,525        2,239        2,179        2,464  
Junior subordinated debt      6,726        6,726        6,726        6,726        6,726  
Other liabilities      15,930        23,646        20,768        17,760        16,699  
Total Liabilities      2,623,219        2,634,869        2,608,717        2,568,913        2,550,905  
                               
Shareholders' Equity      451,571        446,214        381,121        371,964        363,643  
Total Liabilities and Shareholders' Equity   $  3,074,790     $  3,081,083     $  2,989,838     $  2,940,877     $  2,914,548  
                                         

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

                               
    For the Three Months Ended
    3/31/2018   12/31/2017   9/30/2017   6/30/2017   3/31/2017
Interest Income                              
Interest and fees on loans   $  28,462   $  27,726     $  27,129     $  26,560     $  25,953
Securities      1,436      1,357        1,334        1,353        1,303
Federal Funds and interest-bearing deposits      1,187      1,283        1,106        813        742
Total Interest Income      31,085      30,366        29,569        28,726        27,998
Interest Expense                              
Deposits      1,948      1,993        1,964        1,857        1,838
Repurchase agreements      1      —        2        1        2
Note payable      4      122        269        264        251
Junior subordinated debt      93      86        83        79        74
Total Interest Expense      2,046      2,201        2,318        2,201        2,165
Net Interest Income      29,039      28,165        27,251        26,525        25,833
Provision (Recapture) for Loan Losses      865      1,050        (1,654 )      (694 )      960
Net Interest Income After Provision (Recapture) for Loan Losses      28,174      27,115        28,905        27,219        24,873
Noninterest Income                              
Deposit account service charges      1,478      1,388        1,395        1,517        1,500
Net gain (loss) on sale of assets      130      (7 )      828        339        364
Card interchange fees      927      941        803        877        832
Earnings on bank-owned life insurance      451      460        459        335        326
Other      375      362        601        458        426
Total Noninterest Income      3,361      3,144        4,086        3,526        3,448
Noninterest Expense                              
Salaries and employee benefits      12,695      14,021        11,829        11,299        11,424
Net occupancy expense      2,265      2,346        2,221        2,351        2,233
Regulatory fees      545      487        458        621        610
Data processing      683      674        662        651        642
Printing, stationery and office      411      415        348        370        347
Amortization of intangibles      255      263        267        271        278
Professional and director fees      919      1,168        606        706        625
Correspondent bank and customer related transaction expenses      67      67        67        78        74
Loan processing costs      118      141        115        133        72
Advertising, marketing and business development      506      508        266        508        179
Repossessed real estate and other asset expense      57      66        340        85        118
Security and protection expense      302      300        331        352        372
Telephone and communications      386      344        311        307        354
Other expenses      1,075      1,189        1,196        1,127        1,099
Total Noninterest Expense      20,284      21,989        19,017        18,859        18,427
Net Income Before Income Tax Expense      11,251      8,270        13,974        11,886        9,894
Income Tax Expense      2,139      6,313        3,927        3,181        3,032
Net Income   $  9,112   $  1,957     $  10,047     $  8,705     $  6,862
                                     

CBTX, INC. AND SUBSIDIARY
Financial Highlights (Unaudited)
(In thousands, except per share data and percentages)

    For the Three Months Ended  
    3/31/2018   12/31/2017   9/30/2017   6/30/2017   3/31/2017  
Profitability:                                
Net income   $  9,112   $  1,957   $  10,047   $  8,705   $  6,862  
Basic earnings per share   $  0.37   $  0.08   $  0.46   $  0.39   $  0.31  
Diluted earnings per share   $  0.37   $  0.08   $  0.45   $  0.39   $  0.31  
                                 
Return on average assets (1)      1.20 %    0.25 %    1.34 %    1.20 %    0.95 %
Return on average shareholders' equity (1)      8.20 %    1.83 %    10.54 %    9.46 %    7.73 %
Net interest margin- tax equivalent (1)      4.23 %    4.06 %    4.07 %    4.08 %    4.02 %
Efficiency ratio (2)      62.60 %    70.23 %    60.69 %    62.76 %    62.93 %
                                 
Liquidity and Capital Ratios:                                
Total shareholders' equity to total assets      14.69 %    14.48 %    12.75 %    12.65 %    12.48 %
Tangible equity to tangible assets (3)      12.19 %    11.98 %    10.10 %    9.95 %    9.74 %
Common equity tier 1 capital ratio      14.12 %    14.19 %    12.23 %    12.00 %    11.32 %
Tier 1 leverage ratio      12.58 %    12.30 %    10.48 %    10.39 %    10.10 %
Tier 1 risk-based capital ratio      14.37 %    14.44 %    12.49 %    12.26 %    11.58 %
Total risk-based capital ratio      15.35 %    15.42 %    13.48 %    13.33 %    12.64 %
                                 
Other Data:                                
Weighted average common shares outstanding- Basic      24,833      23,629      22,063      22,062      22,062  
Weighted average common shares outstanding- Diluted      24,954      23,742      22,138      22,148      22,162  
Common shares outstanding at period end      24,833      24,833      22,063      22,063      22,062  
Dividends per share   $  0.05   $  0.05   $  0.05   $  0.05   $  0.05  
Book value per share   $  18.18   $  17.97   $  17.27   $  16.86   $  16.48  
Tangible book value per share (3)   $  14.66   $  14.44   $  13.29   $  12.86   $  12.47  
Employees - full-time equivalents      477      462      464      472      479  
                                 

 

(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. See the table captioned “Non‑GAAP to GAAP Reconciliation.”
     

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

    For the Three Months Ended  
    3/31/2018   12/31/2017   3/31/2017  
          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)   $  2,319,463     $  28,462    4.98 $  2,252,735     $  27,726    4.88 $  2,178,626     $  25,953    4.83 %
Debt securities      223,730        1,436    2.60    222,602        1,357    2.42    217,086        1,303    2.43 %
Federal funds sold and other interest-earning assets      252,722        994    1.60    317,484        1,093    1.37    257,152        549    0.87 %
Nonmarketable equity securities      14,701        193    5.32    14,698        190    5.13    14,685        193    5.33 %
Total interest-earning assets      2,810,616     $  31,085    4.49    2,807,519     $  30,366    4.29    2,667,549     $  27,998    4.26 %
Allowance for loan losses      (24,866 )                (24,127 )                (25,419 )            
Noninterest-earnings assets      287,099                  296,108                  273,437              
Total assets   $  3,072,849               $  3,079,500               $  2,915,567              
Liabilities and Shareholders’ Equity                                                  
Interest-bearing liabilities:                                                  
Interest-bearing deposits   $  1,491,613     $  1,948    0.53 $  1,519,631     $  1,993    0.52 $  1,513,348     $  1,838    0.49 %
Repurchase agreements      1,418        1    0.29    1,793        —    —    2,468        2    0.33 %
Note payable      —        4    —    11,252        122    4.30    26,965        251    3.78 %
Junior subordinated debt      10,826        93    3.48    10,826        86    3.15    10,826        74    2.77 %
Total interest-bearing liabilities      1,503,857     $  2,046    0.55    1,543,502     $  2,201    0.56    1,553,607     $  2,165    0.57 %
Noninterest-bearing liabilities:                                                  
Noninterest-bearing deposits      1,097,085                  1,087,416                  985,690              
Other liabilities      21,165                  23,271                  16,421              
Total noninterest-bearing liabilities      1,118,250                  1,110,687                  1,002,111              
Shareholders’ equity      450,742                  425,311                  359,849              
Total liabilities and shareholders’ equity   $  3,072,849               $  3,079,500               $  2,915,567              
Net interest income         $  29,039             $  28,165             $  25,833      
Net interest spread (3)                3.93              3.73              3.69 %
Net interest margin (4)                4.19              3.98              3.93 %
Net interest margin—tax equivalent (5)                4.23              4.06              4.02 %
                                                   

 

(1)   Annualized.
(2)   Includes average outstanding balances of loans held for sale of $544,000, $521,000 and $690,000 for the three months ended March 31, 2018, December 31, 2017 and March 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 $270,000, $549,000 and $614,000 for the three months ended March 31, 2018, December 31, 2017 and March 31, 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  
    3/31/2018   12/31/2017   9/30/2017   6/30/2017   3/31/2017  
Yield Trend - Annualized:                                
Interest-earnings assets:                                
Total loans      4.98 %    4.88 %    4.91 %    4.83 %    4.83 %
Debt securities      2.60 %    2.42 %    2.37 %    2.45 %    2.43 %
Federal funds sold and other interest-earning assets      1.60 %    1.37 %    1.29 %    1.12 %    0.87 %
Nonmarketable equity securities      5.32 %    5.13 %    4.83 %    4.81 %    5.33 %
Total interest-earning assets      4.49 %    4.29 %    4.32 %    4.32 %    4.26 %
                                 
Interest-bearing liabilities:                                
Interest-bearing deposits      0.53 %    0.52 %    0.52 %    0.50 %    0.49 %
Repurchase agreements      0.29 %    — %    0.33 %    0.17 %    0.33 %
Note payable      — %    4.30 %    4.31 %    4.10 %    3.78 %
Junior subordinated debt      3.48 %    3.15 %    3.04 %    2.93 %    2.77 %
Total interest-bearing liabilities      0.55 %    0.56 %    0.60 %    0.58 %    0.57 %
                                 
Net interest spread (1)      3.93 %    3.73 %    3.73 %    3.74 %    3.69 %
Net interest margin (2)      4.19 %    3.98 %    3.98 %    3.99 %    3.93 %
Net interest margin—tax equivalent (3)      4.23 %    4.06 %    4.07 %    4.08 %    4.02 %
                                 

 

(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
    3/31/2018   12/31/2017   9/30/2017   6/30/2017   3/31/2017
Average Outstanding Balances:                              
                               
Assets                              
Interest-earnings assets:                              
Total loans (1)   $  2,319,463     $  2,252,735     $  2,191,016     $  2,203,145     $  2,178,626  
Debt securities      223,730        222,602        223,132        220,905        217,086  
Federal funds sold and other interest-earning assets      252,722        317,484        284,334        228,393        257,152  
Nonmarketable equity securities      14,701        14,698        14,695        14,691        14,685  
Total interest-earning assets      2,810,616        2,807,519        2,713,177        2,667,134        2,667,549  
Allowance for loan losses      (24,866 )      (24,127 )      (25,316 )      (26,424 )      (25,419 )
Noninterest-earnings assets      287,099        296,108        290,767        273,760        273,437  
Total assets   $  3,072,849     $  3,079,500     $  2,978,628     $  2,914,470     $  2,915,567  
                               
Liabilities and Shareholders’ Equity                              
Interest-bearing liabilities:                              
Interest-bearing deposits   $  1,491,613     $  1,519,631     $  1,501,732     $  1,478,579     $  1,513,348  
Repurchase agreements      1,418        1,793        2,404        2,356        2,468  
Note payable      —        11,252        24,742        25,841        26,965  
Junior subordinated debt      10,826        10,826        10,826        10,826        10,826  
Total interest-bearing liabilities      1,503,857        1,543,502        1,539,704        1,517,602        1,553,607  
Noninterest-bearing liabilities:                              
Noninterest-bearing deposits      1,097,085        1,087,416        1,041,731        1,010,823        985,690  
Other liabilities      21,165        23,271        18,844        16,910        16,421  
Total noninterest-bearing liabilities      1,118,250        1,110,687        1,060,575        1,027,733        1,002,111  
Shareholders’ equity      450,742        425,311        378,349        369,135        359,849  
Total liabilities and shareholders’ equity   $  3,072,849     $  3,079,500     $  2,978,628     $  2,914,470     $  2,915,567  
                                         

 

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

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

                                                     
    3/31/2018   12/31/2017   9/30/2017   6/30/2017   3/31/2017  
    Amount     Amount     Amount     Amount     Amount    
Loan Portfolio:                                                    
Commercial and industrial   $  559,070      23.7 $  559,363      24.1 $  548,870      24.9 $  535,116      24.4 $  524,201      23.6 %
Real estate:                                                    
Commercial real estate      767,108      32.5    738,293      31.9    689,501      31.3    690,044      31.4    723,253      32.5 %
Construction and development      436,260      18.5    449,211      19.4    424,489      19.3    433,966      19.8    522,508      23.5 %
1-4 family residential      260,580      11.0    258,584      11.2    246,564      11.2    240,073      10.9    237,218      10.7 %
Multi-family residential      236,000      10.0    220,305      9.5    211,219      9.6    208,222      9.5    124,246      5.6 %
Consumer      40,869      1.7    40,433      1.7    42,772      1.9    41,130      1.9    41,326      1.9 %
Agricultural      8,807      0.4    11,256      0.5    11,424      0.5    10,650      0.4    10,217      0.4 %
Other      52,382      2.2    40,344      1.7    29,684      1.3    38,237      1.7    39,869      1.8 %
Gross loans      2,361,076      100.0    2,317,789      100.0    2,204,523      100.0    2,197,438      100.0    2,222,838      100.0 %
Less deferred fees and unearned discount      (4,910 )          (4,785 )          (4,579 )          (4,436 )          (4,507 )      
Less allowance for loan losses      (25,349 )          (24,778 )          (23,757 )          (25,187 )          (25,881 )      
Less loans held for sale      (113 )          (1,460 )          (466 )          (559 )          (675 )      
Loans, net   $  2,330,704         $  2,286,766         $  2,175,721         $  2,167,256         $  2,191,775        
                                                     
Deposits:                                                    
Interest-bearing demand accounts   $  345,378      13.3 $  363,015      14.0 $  340,627      13.3 $  343,826      13.7 $  355,235      14.2
Money market accounts      717,548      27.6    702,299      27.0    726,903      28.5    698,546      27.7    714,863      28.6
Savings accounts      95,603      3.7    95,842      3.7    88,613      3.5    88,083      3.5    88,360      3.5
Certificates and other time deposits, $100,000 or greater      161,777      6.2    172,469      6.6    179,777      7.0    182,143      7.2    171,147      6.9
Certificates and other time deposits, less than $100,000      158,875      6.1    159,558      6.1    166,952      6.5    173,321      6.9    175,001      7.0
Total interest-bearing deposits      1,479,181      56.9    1,493,183      57.4    1,502,872      58.8    1,485,919      59.0    1,504,606      60.2
Noninterest-bearing deposits      1,120,521      43.1    1,109,789      42.6    1,051,755      41.2    1,030,865      41.0    993,839      39.8
Total deposits   $  2,599,702      100.0 $  2,602,972      100.0 $  2,554,627      100.0 $  2,516,784      100.0 $  2,498,445      100.0
                                                               

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

                                 
    3/31/2018   12/31/2017   9/30/2017   6/30/2017   3/31/2017  
Nonaccrual loans (at period end):                                
Commercial and industrial   $  2,533   $  3,280   $  2,444   $  2,348   $  2,040  
Real estate:                                
Commercial real estate      2,217      3,216      5,038      4,964      2,317  
Construction and development      233      252      265      362      414  
1-4 family residential      765      898      844      578      1,283  
Multi-family residential      —      —      1      3      5  
Consumer      21      —      —      —      —  
Agricultural      —      —      —      —      6  
Total nonaccrual loans   $  5,769   $  7,646   $  8,592   $  8,255   $  6,065  
                                 
Nonperforming assets (at period end):                                
Nonaccrual loans   $  5,769   $  7,646   $  8,592   $  8,255   $  6,065  
Accruing loans 90 or more days past due      —      —      —      —      —  
Total nonperforming loans      5,769      7,646      8,592      8,255      6,065  
Foreclosed assets, including other real estate:                                
Commercial real estate, construction and development, land and land development      295      298      729      1,018      1,179  
Residential real estate      —      407      407      417      —  
Total foreclosed assets      295      705      1,136      1,435      1,179  
Total nonperforming assets   $  6,064   $  8,351   $  9,728   $  9,690   $  7,244  
                                 
Allowance for Loan Losses (at period end):                                
Commercial and industrial   $  7,439   $  7,257   $  7,194   $  8,466   $  7,746  
Real estate:                                
Commercial real estate      10,742      10,375      9,640      10,000      10,507  
Construction and development      3,356      3,482      3,364      3,313      4,145  
1-4 family residential      1,329      1,326      1,282      1,138      1,111  
Multi-family residential      1,520      1,419      1,360      1,341      800  
Consumer      517      566      626      599      615  
Agricultural      53      68      69      64      63  
Other      393      285      222      266      894  
Total allowance for loan losses   $  25,349   $  24,778   $  23,757   $  25,187   $  25,881  
                                 
Credit Quality Ratios (at period end):                                
Nonperforming assets to total assets      0.20    0.27    0.33    0.33    0.25
Nonperforming loans to total loans      0.24    0.33    0.39    0.38    0.27
Allowance for loan losses to nonperforming loans      439.40    324.06    276.50    305.11    426.73
Allowance for loan losses to total loans      1.08    1.07    1.08    1.15    1.17
                                 

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

    For the Three Months Ended
    3/31/2018   12/31/2017   9/30/2017   6/30/2017   3/31/2017
Analysis of Allowance for Loan Losses                              
                               
Allowance for loan losses at beginning of period   $  24,778     $  23,757     $  25,187     $  25,881     $  25,006  
                               
Provision (recapture) for loan losses      865        1,050        (1,654 )      (694 )      960  
                               
Net charge-offs (recoveries)                              
Commercial and industrial      297        (52 )      (205 )      (66 )      117  
Real estate:                              
Commercial real estate      (3 )      118        (2 )      (2 )      (3 )
Construction and development      —        —        —        —        —  
1-4 family residential      2        7        (2 )      (8 )      (2 )
Multi-family residential      —        —        —        —        —  
Consumer      (2 )      (9 )      (4 )      90        (27 )
Agricultural      —        (35 )      (11 )      (6 )      —  
Other      —        —        —        (8 )      —  
Total net charge-offs (recoveries)      294        29        (224 )      —        85  
                               
Allowance for loan losses at end of period   $  25,349     $  24,778     $  23,757     $  25,187     $  25,881  
                               
Net charge-offs (recoveries) to average loans      0.05 %      — %      (0.04 )%      — %      0.02 %
                                         

 

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:

                                 
    3/31/2018   12/31/2017   9/30/2017   6/30/2017   3/31/2017  
Tangible Equity                                
Total shareholders’ equity   $  451,571   $  446,214   $  381,121   $  371,964   $  363,643  
Adjustments:                                
Goodwill      80,950      80,950      80,950      80,950      80,950  
Other intangibles      6,521      6,770      7,031      7,298      7,513  
Tangible equity   $  364,100   $  358,494   $  293,140   $  283,716   $  275,180  
Tangible Assets                                
Total assets   $  3,074,790   $  3,081,083   $  2,989,838   $  2,940,877   $  2,914,548  
Adjustments:                                
Goodwill      80,950      80,950      80,950      80,950      80,950  
Other intangibles      6,521      6,770      7,031      7,298      7,513  
Tangible assets   $  2,987,319   $  2,993,363   $  2,901,857   $  2,852,629   $  2,826,085  
                                 
Common shares outstanding      24,833      24,833      22,063      22,063      22,062  
                                 
Book value per share   $  18.18   $  17.97   $  17.27   $  16.86   $  16.48  
Tangible book value per share   $  14.66   $  14.44   $  13.29   $  12.86   $  12.47  
                                 
Total shareholders’ equity to total assets      14.69    14.48 %    12.75 %    12.65 %    12.48 %
Tangible equity to tangible assets      12.19    11.98 %    10.10 %    9.95 %    9.74 %
                                 
Investor Relations:

James L. Sturgeon
281.325.5013
investors@CBoTX.com

Media Contact:

Ashley Warren
713.210.7622
awarren@CBoTX.com

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Source: CommunityBank of Texas, N.A.