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CBTX, Inc. Reports Fourth Quarter Financial Results

January 30, 2019 at 5:00 PM EST

HOUSTON, Jan. 30, 2019 (GLOBE NEWSWIRE) -- CBTX, Inc. (the “Company”) (NASDAQ: 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

CBTX Inc_RGB.jpg

 

Source: CommunityBank of Texas, N.A.