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CBTX, Inc. Reports First Quarter Financial Results

/EIN News/ -- HOUSTON, April 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 $10.5 million, or $0.42 per diluted share, for the quarter ended March 31, 2019, compared to $14.1 million, or $0.56 per diluted share, for the quarter ended December 31, 2018 and $9.1 million, or $0.37 per diluted share, for the quarter ended March 31, 2018. 

Highlights 

  • Loans, excluding loans held for sale, increased to $2.5 billion at March 31, 2019, compared to $2.4 billion at December 31, 2018 and $2.3 billion at March 31, 2018.
  • Net interest margin on a tax equivalent basis improved to 4.56% for the quarter ended March 31, 2019, compared to 4.42% for the fourth quarter of 2018 and 4.23% for the first quarter of 2018, primarily due to increased yields on loans.
  • The cost of our interest-bearing deposits remains low at 0.94% for the three months ended March 31, 2019, compared to 0.89% for the three months ended December 31, 2018, and 0.53% for the three months ended March 31, 2018.
  • Nonperforming assets remain low relative to total assets at 0.09% at March 31, 2019 compared to 0.11% of total assets at December 31, 2018 and 0.20% of total assets at March 31, 2018.
  • Increased quarterly per share cash dividend to $0.10 in March 2019, payable to shareholders in April 2019, an increase of $0.05 per share.
  • Opened full-service branch in Dallas, Texas market in January 2019.             

“We are pleased with the performance of our ongoing operations during the first quarter of 2019,” said Robert Franklin, Jr., Chairman and Chief Executive Officer of the Company. “Our strong balance sheet and strong relationship funding have given us the ability to increase our net interest margin at a time of continued competitive pressure on deposit rates. We continue to steadily grow loans and our deposits remain strong in what has historically been a quarter with a seasonal outflow of deposits.”

Mr. Franklin added, “The Houston and East Texas markets continue to be strong markets for loans and deposits. We have had success in hiring new lenders and are excited at the quick progress we have made entering the Dallas market with the excellent staff that we have assembled so far, and we are encouraged by the opportunities in the Dallas market. We are excited about the opportunities that we have for the future.”

Operating Results

Net Interest Income

Net interest income was $33.3 million for the first quarter of 2019, compared to $33.2 million for the fourth quarter of 2018 and $29.0 million for the first quarter of 2018. The increase in net interest income in the first quarter of 2019 from the fourth quarter of 2018 was primarily due to higher average loans, higher average yields on loans and federal funds sold and the redemption of junior subordinated debt, partially offset by lower average federal funds sold and other interest-earning assets, short-term advances, higher rates on interest-bearing deposits and the impact of two fewer days in the first quarter of 2019 compared the fourth quarter of 2018.

The increase in net interest income in the first quarter of 2019 from the first quarter of 2018 was primarily due to higher average loans, higher average yields on loans and higher average federal funds sold, which was partially offset by the impact of higher rates on interest-bearing deposits.

Provision (Recapture) for Loan Losses

Provision for loan loss was $1.1 million for the first quarter of 2019, compared to a recapture of $2.2 million for the fourth quarter of 2018 and a provision of $865,000 for the first quarter of 2018. The provision in the first quarter of 2019 and 2018 reflect the increase in loans during those periods.

The allowance for loan losses was $24.6 million, or 0.97% of total loans, at March 31, 2019, compared to $23.7 million, or 0.97% of total loans, at December 31, 2018, and $25.3 million, or 1.08% of total loans, at March 31, 2018.  

Noninterest Income

Noninterest income was $3.5 million for the first quarter of 2019, $3.9 million for the fourth quarter of 2018 and $3.4 million for the first quarter of 2018. Noninterest income was higher in the fourth quarter of 2018 compared to the first quarter of 2019 primarily due to higher deposit account service charges and gains on sales of loans during the fourth quarter of 2018. Noninterest income was $132,000 higher in the first quarter of 2019  compared to the first quarter of 2018 primarily due to increased deposit account service charges.

Noninterest Expense

Noninterest expense was $22.6 million for the first quarter of 2019, $21.8 million for the fourth quarter of 2018 and $20.3 million for the first quarter of 2018. Noninterest expense increased $829,000 during the first quarter of 2019 compared to the fourth quarter of 2018 primarily due to legal fees of $1.1 million included in professional and director fees in the first quarter.

Noninterest expense increased $2.3 million in the first quarter of 2019 compared to the first quarter of 2018. Salaries and benefits increased $1.1 million resulting from annual salary increases in 2019 and increased stock compensation expense due to grants of restricted stock made February 1, 2019. Professional and director fees increased $1.1 million due to increased legal fees referred to above.

Income Taxes

Income tax expense was $2.6 million for the first quarter of 2019, $3.4 million for the fourth quarter of  2018 and $2.1 million for the first quarter of 2018.

The effective tax rates were 19.9% for the first quarter of 2019, 19.3% for the fourth quarter of 2018 and 19.0% for the first quarter of 2018.

Balance Sheet Highlights:

Loans

Loans were $2.5 billion at March 31, 2019, $2.4 billion at December 31, 2018 and $2.3 billion at March 31, 2018. Loans increased 8.1% during the twelve months ended March 31, 2019.

Asset Quality

Nonperforming assets remain low relative to total assets at $3.0 million, or 0.09% of total assets, at March 31, 2019, $3.5 million, or 0.11% of total assets, at December 31, 2018 and $6.1 million, or 0.20% of total assets at March 31, 2018.

Annualized net charge-offs (recoveries) to average loans were 0.03% for the first quarter of 2019, (0.22%) for the fourth quarter of 2018 and 0.05% for the first 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 March 31, 2019 and $2.8 billion at December 31, 2018 and were $2.6 billion at March 31, 2018. Deposits increased 5.8% during the twelve months ended March 31, 2019.

We define total borrowings as the total of repurchase agreements, Federal Home Loan Bank (FHLB) advances and notes payable. Total borrowings were solely comprised of repurchase agreements at March 31, 2019, December 31, 2018 and March 31, 2018 and were $1.6 million, $2.5 million and $861,000, respectively.

Leases

The Company adopted Accounting Standards Update, or ASU 2016-02, Leases (Topic 842) on January 1, 2019, using the effective date as the date of initial adoption. At adoption, we recorded right-of-use assets totaling $13.2 million, which represented our right to use, or control the use of, a specified asset for their lease term and we recorded lease liabilities totaling $15.5 million which represented our liability to make the lease payments under these leases. Accrued lease obligations and lease incentive liabilities totaling $2.3 million that were in other liabilities at December 31, 2018 were reversed as part of the adoption. The ASU 2016-02 standard applied to all leases existing at the date of initial adoption and are comprised of operating leases of office space, stand-alone buildings and land. Our financial information contained in this earnings release was not updated for ASU 2016-02 for dates and periods before the date of adoption.

Capital

At March 31, 2019, the Company remained well capitalized under bank regulatory requirements.

Our ratio of tangible equity to tangible assets was 12.9% at March 31, 2019, 12.6% at December 31, 2018 and 12.2% at March 31, 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 15.2% at March 31, 2019, 14.9% at December 31, 2018 and 14.7% at March 31, 2018. See the table captioned “Non‑GAAP to GAAP Reconciliation” at the end of this earnings release. 

Subsequent Event 

On April 29, 2019, the Company received proceeds in the amount of $1.6 million as the owner and beneficiary under a bank-owned life insurance policy as the result of the death of a former employee. The Company recorded a gain of $1.2 million over the recorded value in April 2019. 

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 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 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; address the costs and effects of regulatory or other government inquiries, the results of regulatory examinations, investigations or reviews or the ability to obtain the required regulatory approvals; 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):   3/31/2019   12/31/2018   9/30/2018   6/30/2018   3/31/2018
                               
Loans, excluding loans held for sale   $  2,544,709     $  2,446,823     $  2,463,197     $  2,404,132     $  2,356,053  
Allowance for loan losses      (24,643 )      (23,693 )      (24,486 )      (25,746 )      (25,349 )
Loans, net      2,520,066        2,423,130        2,438,711        2,378,386        2,330,704  
                               
Cash and equivalents      276,515        382,070        281,640        245,265        279,915  
Debt securities      228,684        229,964        222,493        230,393        221,183  
Premises and equipment, net      51,453        51,622        52,032        52,607        53,135  
Goodwill      80,950        80,950        80,950        80,950        80,950  
Other intangible assets, net      5,538        5,775        6,038        6,276        6,521  
Loans held for sale      852        -        384        560        113  
Operating lease right-to-use asset      12,879        -        -        -        -  
Other assets      106,525        105,585        108,205        106,323        102,269  
Total Assets   $  3,283,462     $  3,279,096     $  3,190,453     $  3,100,760     $  3,074,790  
                               
Noninterest-bearing deposits   $  1,229,172     $  1,183,058     $  1,144,985     $  1,114,155     $  1,120,521  
Interest-bearing deposits      1,521,827        1,583,224        1,545,095        1,447,119        1,479,181  
Total deposits      2,750,999        2,766,282        2,690,080        2,561,274        2,599,702  
                               
Repurchase agreements      1,600        2,498        1,351        1,448        861  
Federal Home Loan Bank advances      -        -        -        50,000        -  
Junior subordinated debt      -        1,571        6,726        6,726        6,726  
Operating lease liabilities      15,134        -        -        -        -  
Other liabilities      17,076        21,120        20,445        20,117        15,930  
Total Liabilities      2,784,809        2,791,471        2,718,602        2,639,565        2,623,219  
                               
Shareholders' Equity      498,653        487,625        471,851        461,195        451,571  
Total Liabilities and Shareholders' Equity   $  3,283,462     $  3,279,096     $  3,190,453     $  3,100,760     $  3,074,790  


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

                                 
    Three Months Ended  
    3/31/2019   12/31/2018   9/30/2018   6/30/2018   3/31/2018  
Interest income                                
Interest and fees on loans   $  33,793   $  33,427     $  31,513     $  30,493   $  28,462  
Securities      1,557      1,542        1,535        1,507      1,436  
Federal Funds and other interest-earning assets      1,483      1,696        1,404        936      994  
Equity investments      152      217        213        191      193  
Total interest income      36,985      36,882        34,665        33,127      31,085  
Interest expense                                
Deposits      3,584      3,551        2,961        2,126      1,948  
FHLB advances and repurchase agreements      65      1        62        13      1  
Note payable and junior subordinated debt      8      110        116        112      97  
Total interest expense      3,657      3,662        3,139        2,251      2,046  
Net interest income      33,328      33,220        31,526        30,876      29,039  
Provision (recapture) for loan losses      1,147      (2,169 )      (1,142 )      690      865  
Net interest income after provision (recapture) for loan losses      32,181      35,389        32,668        30,186      28,174  
Noninterest income                                
Deposit account service charges      1,629      1,709        1,597        1,497      1,478  
Net gain (loss) on sale of assets      88      168        152        210      130  
Card interchange fees      864      921        922        971      927  
Earnings on bank-owned life insurance      430      456        443        465      451  
Other      482      605        412        363      375  
Total noninterest income      3,493      3,859        3,526        3,506      3,361  
Noninterest expense                                
Salaries and employee benefits      13,822      13,834        12,499        12,496      12,695  
Net occupancy expense      2,267      2,268        2,428        2,433      2,265  
Regulatory fees      464      507        488        513      545  
Data processing      714      664        664        666      683  
Software      440      408        400        403      365  
Printing, stationery and office      353      303        291        303      264  
Amortization of intangibles      232      237        245        248      255  
Professional and director fees      2,091      1,123        809        686      919  
Correspondent bank and customer related transaction expenses      65      64        66        68      67  
Loan processing costs      95      153        102        75      118  
Advertising, marketing and business development      440      406        437        475      506  
Repossessed real estate and other asset expense      —      7        3        5      57  
Security and protection expense      323      317        346        311      302  
Telephone and communications      378      408        342        394      386  
Other expenses      901      1,057        844        936      857  
Total noninterest expense      22,585      21,756        19,964        20,012      20,284  
Net income before income tax expense      13,089      17,492        16,230        13,680      11,251  
Income tax expense      2,599      3,380        3,207        2,638      2,139  
Net income   $  10,490   $  14,112     $  13,023     $  11,042   $  9,112  



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

                                 
    Three Months Ended  
    3/31/2019   12/31/2018   9/30/2018   6/30/2018   3/31/2018  
Profitability:                                
Net income   $  10,490     $  14,112     $  13,023     $  11,042     $  9,112    
Basic earnings per share   $  0.42     $  0.57     $  0.52     $  0.44     $  0.37    
Diluted earnings per share   $  0.42     $  0.56     $  0.52     $  0.44     $  0.37    
                                 
Return on average assets (1)     1.3 %     1.7 %     1.6 %     1.4 %     1.2 %  
Return on average shareholders' equity (1)     8.6 %     11.7 %     11.0 %     9.7 %     8.2 %  
Net interest margin- tax equivalent (1)     4.6 %     4.4 %     4.3 %     4.4 %     4.2 %  
Efficiency ratio (2)     61.3 %     58.7 %     57.0 %     58.2 %     62.6 %  
                                 
Liquidity and Capital Ratios:                                
Total shareholders' equity to total assets     15.2 %     14.9 %     14.8 %     14.9 %     14.7 %  
Tangible equity to tangible assets (3)     12.9 %     12.6 %     12.4 %     12.4 %     12.2 %  
Common equity tier 1 capital ratio     14.5 %     14.7 %     14.3 %     14.1 %     14.1 %  
Tier 1 risk-based capital ratio     14.5 %     14.8 %     14.5 %     14.3 %     14.4 %  
Total risk-based capital ratio     15.4 %     15.6 %     15.4 %     15.3 %     15.4 %  
Tier 1 leverage ratio     13.0 %     12.8 %     12.8 %     12.9 %     12.6 %  
                                 
Other Data:                                
Weighted average common shares outstanding- Basic      24,910        24,886        24,859        24,858        24,833    
Weighted average common shares outstanding- Diluted      25,054        25,046        25,060        24,997        24,954    
Common shares outstanding at period end      24,918        24,907        24,859        24,859        24,833    
Dividends per share   $  0.10     $  0.05     $  0.05     $  0.05     $  0.05    
Book value per share   $  20.0     $  19.6     $  19.0     $  18.6     $  18.2    
Tangible book value per share (3)   $  16.5     $  16.1     $  15.5     $  15.0     $  14.7    
Employees - full-time equivalents      494        495        489        488        477    

                                                    
(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)

                                                 
    Three Months Ended
    3/31/2019   12/31/2018   3/31/2018
          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)   $  2,500,788     $  33,793   5.48 %   $  2,468,415     $  33,427   5.37 %   $  2,319,463     $  28,462   4.98 %
Debt securities      231,650        1,557   2.73 %      226,882        1,542   2.70 %      223,730        1,436   2.60 %
Federal funds sold and other interest-earning assets      239,281        1,483   2.51 %      293,299        1,696   2.30 %      252,722        994   1.60 %
Equity investments      12,285        152   5.02 %      14,789        217   5.79 %      14,701        193   5.32 %
Total interest-earning assets      2,984,004     $  36,985   5.03 %      3,003,385     $  36,882   4.87 %      2,810,616     $  31,085   4.49 %
Allowance for loan losses      (24,016 )                (24,305 )                (24,866 )          
Noninterest-earnings assets      302,915                  295,236                  287,099            
Total assets   $  3,262,903               $  3,274,316               $  3,072,849            
Liabilities and Shareholders’ Equity                                                
Interest-bearing liabilities:                                                
Interest-bearing deposits   $  1,544,039     $  3,584   0.94 %   $  1,578,146     $  3,551   0.89 %   $  1,491,613     $  1,948   0.53 %
FHLB advances and repurchase agreements      11,578        65   2.28 %      1,925        1   0.21 %      1,418        1   0.29 %
Note payable and junior subordinated debt      365        8   8.89 %      9,817        110   4.45 %      10,826        97   3.63 %
Total interest-bearing liabilities      1,555,982     $  3,657   0.95 %      1,589,888     $  3,662   0.91 %      1,503,857     $  2,046   0.55 %
Noninterest-bearing liabilities:                                                
Noninterest-bearing deposits      1,177,086                  1,181,035                  1,097,085            
Other liabilities      34,634                  23,083                  21,165            
Total noninterest-bearing liabilities      1,211,720                  1,204,118                  1,118,250            
Shareholders’ equity      495,201                  480,310                  450,742            
Total liabilities and shareholders’ equity   $  3,262,903               $  3,274,316               $  3,072,849            
Net interest income         $  33,328             $  33,220             $  29,039    
Net interest spread (3)               4.07 %               3.96 %               3.93 %
Net interest margin (4)               4.53 %               4.39 %               4.19 %
Net interest margin—tax equivalent (5)               4.56 %               4.42 %               4.23 %

                                                   
(1)   Annualized.
(2)   Includes average outstanding balances of loans held for sale of $144,000, $642,000 and $544,000 for the quarter ended March 31, 2019, December 31, 2018 and March 31, 2018, 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)   Tax equivalent adjustment of $255,000, $257,000 and $270,000 for the quarter ended March 31, 2019, December 31, 2018 and March 31, 2018, respectively, were computed using a federal income tax rate of 21%.


CBTX, INC. AND SUBSIDIARY
Yield Trend (Unaudited)

                     
    Three Months Ended
    3/31/2019   12/31/2018   9/30/2018   6/30/2018   3/31/2018
Yield Trend - Annualized:                    
Interest-earnings assets:                    
Total loans   5.48 %   5.37 %   5.20 %   5.15 %   4.98 %
Debt securities   2.73 %   2.70 %   2.64 %   2.65 %   2.60 %
Federal funds sold and other interest-earning assets   2.51 %   2.30 %   2.04 %   1.86 %   1.60 %
Equity investments   5.02 %   5.79 %   5.01 %   5.17 %   5.32 %
Total interest-earning assets   5.03 %   4.87 %   4.70 %   4.71 %   4.49 %
                     
Interest-bearing liabilities:                    
Interest-bearing deposits   0.94 %   0.89 %   0.77 %   0.58 %   0.53 %
FHLB advances and repurchase agreements   2.28 %   0.21 %   1.94 %   1.39 %   0.29 %
Note payable and junior subordinated debt   8.89 %   4.45 %   4.25 %   4.15 %   3.63 %
Total interest-bearing liabilities   0.95 %   0.91 %   0.80 %   0.60 %   0.55 %
                     
Net interest spread (1)   4.07 %   3.96 %   3.90 %   4.11 %   3.93 %
Net interest margin (2)   4.53 %   4.39 %   4.28 %   4.39 %   4.19 %
Net interest margin—tax equivalent (3)   4.56 %   4.42 %   4.31 %   4.43 %   4.23 %

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


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

                               
    Three Months Ended
    3/31/2019   12/31/2018   9/30/2018   6/30/2018   3/31/2018
Average Outstanding Balances:                              
                               
Assets                              
Interest-earnings assets:                              
Total loans (1)   $  2,500,788     $  2,468,415     $  2,404,491     $  2,375,253     $  2,319,463  
Debt securities      231,650        226,882        230,592        228,262        223,730  
Federal funds sold and other interest-earning assets      239,281        293,299        272,739        201,906        252,722  
Equity investments      12,285        14,789        16,799        14,823        14,701  
Total interest-earning assets      2,984,004        3,003,385        2,924,621        2,820,244        2,810,616  
Allowance for loan losses      (24,016 )      (24,305 )      (25,689 )      (25,392 )      (24,866 )
Noninterest-earnings assets      302,915        295,236        292,598        288,416        287,099  
Total assets   $  3,262,903     $  3,274,316     $  3,191,530     $  3,083,268     $  3,072,849  
                               
Liabilities and Shareholders’ Equity                              
Interest-bearing liabilities:                              
Interest-bearing deposits   $  1,544,039     $  1,578,146     $  1,530,077     $  1,478,016     $  1,491,613  
FHLB advances and repurchase agreements      11,578        1,925        12,657        3,738        1,418  
Note payable and junior subordinated debt      365        9,817        10,826        10,826        10,826  
Total interest-bearing liabilities      1,555,982        1,589,888        1,553,560        1,492,580        1,503,857  
Noninterest-bearing liabilities:                              
Noninterest-bearing deposits      1,177,086        1,181,035        1,145,516        1,111,736        1,097,085  
Other liabilities      34,634        23,083        23,600        20,441        21,165  
Total noninterest-bearing liabilities      1,211,720        1,204,118        1,169,116        1,132,177        1,118,250  
Shareholders’ equity      495,201        480,310        468,854        458,511        450,742  
Total liabilities and shareholders’ equity   $  3,262,903     $  3,274,316     $  3,191,530     $  3,083,268     $  3,072,849  

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


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

                                                   
    3/31/2019   12/31/2018   9/30/2018   6/30/2018   3/31/2018
    Amount     Amount     Amount     Amount     Amount  
                                                   
Loan Portfolio:                                                  
Commercial and industrial   $  559,882     21.9 %   $  519,779     21.2 %   $  569,334     23.1 %   $  565,850     23.5 %   $  559,070     23.7 %
Real estate:                                                  
Commercial real estate      811,742     31.8 %      795,733     32.4 %      776,439     31.4 %      780,224     32.4 %      767,108     32.5 %
Construction and development      572,861     22.5 %      515,533     21.0 %      487,289     19.7 %      449,390     18.6 %      436,260     18.5 %
1-4 family residential      281,502     11.0 %      282,011     11.5 %      288,737     11.7 %      279,227     11.6 %      260,580     11.0 %
Multi-family residential      213,582     8.4 %      221,194     9.0 %      236,907     9.6 %      229,609     9.5 %      236,000     10.0 %
Consumer      39,072     1.5 %      39,421     1.6 %      39,807     1.6 %      41,833     1.7 %      40,869     1.7 %
Agricultural      8,915     0.4 %      11,076     0.5 %      11,609     0.5 %      10,951     0.5 %      8,807     0.4 %
Other      64,215     2.5 %      68,382     2.8 %      59,484     2.4 %      53,376     2.2 %      52,382     2.2 %
Gross loans      2,551,771     100.0 %      2,453,129     100.0 %      2,469,606     100.0 %      2,410,460     100.0 %      2,361,076     100.0 %
Less deferred fees and unearned discount      (6,210 )          (6,306 )          (6,025 )          (5,768 )          (4,910 )    
Less allowance for loan losses      (24,643 )          (23,693 )          (24,486 )          (25,746 )          (25,349 )    
Less loans held for sale      (852 )          —            (384 )          (560 )          (113 )    
Loans, net   $  2,520,066         $  2,423,130         $  2,438,711         $  2,378,386         $  2,330,704      
                                                   
                                                   
Deposits:                                                  
Interest-bearing demand accounts   $  352,623     12.8 %   $  387,457     14.0 %   $  367,120     13.6 %   $  342,890     13.4 %   $  345,378     13.3 %
Money market accounts      695,968     25.3 %      737,770     26.7 %      722,382     26.9 %      650,747     25.4 %      717,548     27.6 %
Savings accounts      96,251     3.5 %      96,962     3.5 %      94,344     3.5 %      97,576     3.8 %      95,603     3.7 %
Certificates and other time deposits, $100,000 or greater      181,507     6.6 %      189,007     6.8 %      182,552     6.8 %      164,464     6.4 %      161,777     6.2 %
Certificates and other time deposits, less than $100,000      195,478     7.1 %      172,028     6.2 %      178,697     6.6 %      191,442     7.5 %      158,875     6.1 %
Total interest-bearing deposits      1,521,827     55.3 %      1,583,224     57.2 %      1,545,095     57.4 %      1,447,119     56.5 %      1,479,181     56.9 %
Noninterest-bearing deposits      1,229,172     44.7 %      1,183,058     42.8 %      1,144,985     42.6 %      1,114,155     43.5 %      1,120,521     43.1 %
Total deposits   $  2,750,999     100.0 %   $  2,766,282     100.0 %   $  2,690,080     100.0 %   $  2,561,274     100.0 %   $  2,599,702     100.0 %


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

                                         
    3/31/2019     12/31/2018     9/30/2018     6/30/2018     3/31/2018  
Nonperforming assets (at period end):                                        
Nonaccrual loans:                                        
Commercial and industrial   $  1,390       $  1,317       $  2,161       $  1,734       $  2,533    
Real estate:                                        
Commercial real estate      862          1,517          2,751          2,092          2,217    
Construction and development      —          —          13          225          233    
1-4 family residential      635          656          677          738          765    
Multi-family residential      —          —          —          —          —    
Consumer      47          —          —          4          21    
Agricultural      —          —          —          —          —    
Nonaccrual loans      2,934          3,490          5,602          4,793          5,769    
Accruing loans 90 or more days past due      —          —          —          —          —    
Total nonperforming loans      2,934          3,490          5,602          4,793          5,769    
Foreclosed assets:                                        
Real estate      —          12          175          —          295    
Other      41          —          —          137          —    
Total foreclosed assets      41          12          175          137          295    
Total nonperforming assets   $  2,975       $  3,502       $  5,777       $  4,930       $  6,064    
                                         
Allowance for Loan Losses (at period end):                                        
Commercial and industrial   $  8,416       $  7,719       $  8,763       $  7,648       $  7,439    
Real estate:                                        
Commercial real estate      6,784          6,730          6,913          10,930          10,742    
Construction and development      4,700          4,298          3,606          3,335          3,356    
1-4 family residential      2,249          2,281          2,454          1,404          1,329    
Multi-family residential      1,457          1,511          1,630          1,479          1,520    
Consumer      357          387          394          479          517    
Agricultural      50          62          71          66          53    
Other      630          705          655          405          393    
Total allowance for loan losses   $  24,643       $  23,693       $  24,486       $  25,746       $  25,349    
                                         
Credit Quality Ratios (at period end):                                        
Nonperforming assets to total assets     0.09 %       0.11 %       0.18 %       0.16 %       0.20 %  
Nonperforming loans to total loans     0.12 %       0.14 %       0.23 %       0.20 %       0.24 %  
Allowance for loan losses to nonperforming loans     839.9 %       678.9 %       437.1 %       537.2 %       439.4 %  
Allowance for loan losses to total loans     0.97 %       0.97 %       0.99 %       1.07 %       1.08 %  


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

                                 
    For the Months Ended  
    3/31/2019   12/31/2018   9/30/2018   6/30/2018   3/31/2018  
Analysis of Allowance for Loan Losses                                
                                 
Allowance for loan losses at beginning of period   $  23,693     $  24,486     $  25,746     $  25,349     $  24,778    
                                 
Provision (recapture) for loan losses      1,147        (2,169 )      (1,142 )      690        865    
                                 
Net (charge-offs) recoveries                                
Commercial and industrial      (206 )      1,521        (114 )      (301 )      (297 )  
Real estate:                                
Commercial real estate      2        (156 )      (3 )      5        3    
Construction and development      —        (1 )      —        —        —    
1-4 family residential      1        —        4        —        (2 )  
Consumer      6        1        (4 )      3        2    
Agricultural      —        10        —        —        —    
Other      —        1        (1 )      —        —    
Total net (charge-offs) recoveries      (197 )      1,376        (118 )      (293 )      (294 )  
                                 
Allowance for loan losses at end of period   $  24,643     $  23,693     $  24,486     $  25,746     $  25,349    
                                 
Net charge-offs (recoveries) to average loans     0.03 %     (0.22 %)     0.02 %     0.05 %     0.05 %  


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:

                                         
    3/31/2019     12/31/2018     9/30/2018     6/30/2018     3/31/2018  
Tangible Equity                                        
Total shareholders’ equity   $  498,653       $  487,625       $  471,851       $  461,195       $  451,571    
Adjustments:                                        
Goodwill      80,950          80,950          80,950          80,950          80,950    
Other intangibles      5,538          5,775          6,038          6,276          6,521    
Tangible equity   $  412,165       $  400,900       $  384,863       $  373,969       $  364,100    
Tangible Assets                                        
Total assets   $  3,283,462       $  3,279,096       $  3,190,453       $  3,100,760       $  3,074,790    
Adjustments:                                        
Goodwill      80,950          80,950          80,950          80,950          80,950    
Other intangibles      5,538          5,775          6,038          6,276          6,521    
Tangible assets   $  3,196,974       $  3,192,371       $  3,103,465       $  3,013,534       $  2,987,319    
                                         
Common shares outstanding      24,918          24,907          24,859          24,859          24,833    
                                         
Book value per share   $  20.0       $  19.6       $  19.0       $  18.6       $  18.2    
Tangible book value per share   $  16.5       $  16.1       $  15.5       $  15.0       $  14.7    
Total shareholders’ equity to total assets     15.2 %       14.9 %       14.8 %       14.9 %       14.7 %  
Tangible equity to tangible assets     12.9 %       12.6 %       12.4 %       12.4 %       12.2 %  

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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