Australia markets closed
  • ALL ORDS

    7,581.10
    -109.60 (-1.43%)
     
  • AUD/USD

    0.7247
    -0.0042 (-0.57%)
     
  • ASX 200

    7,275.60
    -108.60 (-1.47%)
     
  • OIL

    76.26
    +0.81 (+1.07%)
     
  • GOLD

    1,739.80
    -12.20 (-0.70%)
     
  • BTC-AUD

    57,642.36
    -3,290.72 (-5.40%)
     
  • CMC Crypto 200

    1,036.58
    -64.94 (-5.90%)
     

CBTX, Inc. Reports Quarterly Financial Results

  • Oops!
    Something went wrong.
    Please try again later.
·29-min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

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

Robert R. Franklin, Jr., Chairman, CEO and President of the Company stated, “We are proud to present our second quarter financial results which we think are indicative of a transition from a COVID dominated economy to a more robust, growth economy. We have seen credit steadily improve, deposits continue to grow, customers beginning to develop new projects and look to expand their operations, and our local economy rally with improvement in the unemployment picture. We are seeing a more natural flow of payoffs as people sell projects or modify them into more permanent financing.”

Mr. Franklin continued, “Our officers are increasing their pace of in-person meetings, and we are seeing our pipeline expand as we continue into the third quarter. We expect to continue to see new and improved activity through the third and fourth quarter.”

Mr. Franklin added, “We have been provided significant liquidity by our customer base. Our job is to stay focused and disciplined on our credit culture as we put these funds to work. Competition for business is stiff and the rate environment is challenging; however, these are issues we have dealt with since our inception. We are happy to be in a more robust economy and will continue to use that growth to continue to build CBTX for the future.”

Highlights

  • Net income was $11.7 million for the second quarter of 2021, or $0.48 per diluted share, compared to $10.0 million, or $0.41 per diluted share, for the first quarter of 2021 and $2.2 million, or $0.09 per diluted share, for the second quarter of 2020.

  • Recapture of allowance for credit losses, or ACL, of $5.1 million, primarily due to continued improvements in the national economy and forward-looking national economic forecasts, improved loan quality and the reduction of loan balances and unfunded commitments during the second quarter of 2021.

  • Net interest margin on a tax equivalent basis decreased to 3.29% for the second quarter of 2021, compared to 3.71% for the first quarter of 2021, primarily due to lower loan rates and average balances for the loan portfolio.

  • Cash and equivalents increased $183.7 million to $788.4 million during the second quarter of 2021, primarily due to net deposit inflows and loan payments received.

Operating Results

Net Interest Income

Net interest income was $31.0 million for the second quarter of 2021, compared to $33.1 million for the first quarter of 2021 and $32.2 million for the second quarter of 2020. Net interest income decreased $2.1 million during the second quarter of 2021, compared to the first quarter of 2021, primarily due to lower loan rates and lower average loans, partially offset by the impact of one additional day, higher average securities and lower rates on interest-bearing deposits in the second quarter of 2021. Net interest income includes $1.5 million of net fees recognized on Paycheck Protection Program, or PPP, loans in the second quarter of 2021, compared to $3.2 million recognized in the first quarter of 2021.

Net interest income decreased $1.1 million during the second quarter of 2021, compared to the second quarter of 2020, primarily due to lower rates on interest-earning assets, lower average loans and higher average interest-bearing deposits, partially offset by lower rates on interest-bearing deposits and higher average securities and other interest-earning assets.

The yield on interest-earning assets was 3.41% for the second quarter of 2021, compared to 3.85% for the first quarter of 2021 and 3.91% for the second quarter of 2020. The cost of interest-bearing liabilities was 0.32% for the second quarter of 2021, 0.34% for the first quarter of 2021 and 0.52% for the second quarter of 2020. The Company’s net interest margin on a tax equivalent basis was 3.29% for the second quarter of 2021, compared to 3.71% for the first quarter of 2021 and 3.68% for the second quarter of 2020.

Provision (Recapture) for Credit Losses

The provision for credit losses was a recapture of credit losses of $5.1 million for the second quarter of 2021, compared to a provision for credit losses of $412,000 for the first quarter of 2021 and a provision for credit losses of $9.9 million for the second quarter of 2020.

The recapture of credit losses for the second quarter of 2021 includes a recapture of $4.2 million related to the loan portfolio and a recapture of $893,000 related to unfunded commitments and was primarily the result of certain qualitative factor adjustments used to determine the ACL.

The provision for credit losses of $412,000 for the first quarter of 2021 reflected an increase in specific reserves for loans individually evaluated within the portfolio, partially offset by the impact of a reduction in the loan portfolio and minimal adjustments to the qualitative factors utilized to determine the ACL.

The provision for credit losses of $9.9 million for the second quarter of 2020 resulted from the impact of the COVID-19 pandemic and the sustained instability of the oil and gas industry, which led to the adjustment of certain factors utilized to determine the ACL.

At June 30, 2021, the ACL for loans was $37.2 million, or 1.36% to loans excluding loans held for sale, $40.9 million, or 1.41% to loans excluding loans held for sale, at March 31, 2021 and $39.7 million or 1.35% to loans excluding loans held for sale at June 30, 2020. The decrease in the ACL for loans at June 30, 2021 was primarily the result of the assessment of certain qualitative factors utilized in the Company’s ACL estimate. Due to the continued improvements in the national economy, economic forecasts and loan quality, the Company adjusted its economic forecasts and certain loan qualitative factors. A decrease in the collectively evaluated loan portfolio also resulted in a decrease in the ACL at June 30, 2021.

The ACL for unfunded commitments was $3.4 million at June 30, 2021, compared to $4.3 million at March 31, 2021 and $5.0 million at June 30, 2020.

Noninterest Income

Noninterest income was $3.5 million for the second quarter of 2021, $3.1 million for the first quarter of 2021 and $2.9 million for the second quarter of 2020. The increase of $380,000 for the second quarter of 2021, compared to the first quarter of 2021 and the increase of $582,000 for the second quarter of 2021, compared to the second quarter of 2020 were both primarily due to gains on sales of assets and higher card interchange fees during the second quarter of 2021.

Noninterest Expense

Noninterest expense was $25.2 million for the second quarter of 2021, compared to $23.3 million for the first quarter of 2021 and $22.5 million for the second quarter of 2020. The increase in noninterest expense of $1.9 million between the second quarter of 2021 and the first quarter of 2021 was primarily due to a $738,000 increase in professional and director fees, mainly from consulting and legal fees related to Bank Secrecy Act/Anti-Money Laundering, or BSA/AML, compliance matters, a $546,000 increase in salaries and employee benefits, an increase in advertising, marketing and business development expense of $225,000 and a $147,000 increase in security and protection expense.

The increase in noninterest expense of $2.7 million for the second quarter of 2021, compared to the second quarter of 2020, was primarily due to a $900,000 increase in professional and director fees, a $722,000 increase in salaries and employee benefits, a $369,000 increase in data processing and software, a $241,000 increase in advertising, marketing and business development expense and a $186,000 increase in security and protection expense.

Total consulting related fees associated with BSA/AML compliance matters were $796,000 for the second quarter of 2021, compared to $661,000 in the first quarter of 2021 and $214,000 in the second quarter of 2020. Legal fees related to the BSA/AML compliance matters were $592,000 for the second quarter of 2021 compared to $290,000 for the second quarter of 2020. No legal fees related to the BSA/AML compliance matters were recorded in the first quarter of 2021.

Income Taxes

Income tax expense was $2.7 million for the second quarter of 2021, $2.5 million for the first quarter of 2021 and $539,000 for the second quarter of 2020. The effective tax rates were 18.70% for the second quarter of 2021, 19.87% for the first quarter of 2021 and 19.95% for the second quarter of 2020. The differences between the federal statutory rate of 21% and the effective tax rates were largely attributable to permanent differences primarily related to tax exempt interest income and bank-owned life insurance earnings.

Balance Sheet Highlights

Loans

Loans excluding loans held for sale were $2.7 billion at June 30, 2021, $2.9 billion at March 31, 2021 and $2.9 billion at June 30, 2020. The decrease from March 31, 2021 to June 30, 2021 and the decrease from June 30, 2020 to June 30, 2021 were both primarily due to higher loan paydowns versus loan originations.

The decrease in loans was impacted by the Company’s participation in the PPP under the Coronavirus Aid, Relief and Economic Security Act, or CARES Act, which facilitates loans to small businesses. PPP loans, net of deferred fees and unearned discounts, were $179.1 million at June 30, 2021, $268.8 million at March 31, 2021 and $323.7 million at June 30, 2021. During the second quarter of 2021, $20.4 million of PPP loans were originated and payments totaling $110.4 million were received. During the first quarter of 2021, $122.3 million of PPP loans were originated and payments totaling $123.4 million were received.

In support of customers impacted by the COVID-19 pandemic, the Company offered relief through payment deferrals during 2020 and the first and second quarters of 2021. As of June 30, 2021, the Company had 9 loans subject to such deferral arrangements with total outstanding principal balances of $20.5 million, compared to 16 loans totaling $34.3 million as of March 31, 2021 and 689 loans totaling $545.0 million at June 30, 2020.

Deposits and Borrowings

Total deposits were $3.4 billion at June 30, 2021, $3.4 billion at March 31, 2021 and $3.3 billion at June 30, 2020. The increase in deposits of $32.0 million between March 31, 2021 and June 30, 2021 was due to net deposit inflows of $96.7 million in interest-bearing accounts, partially offset by net deposit outflows of $64.6 million in non-interest-bearing accounts. The increase in deposits of $162.6 million between June 30, 2020 and June 30, 2021 was due to net deposit inflows of $119.5 million and $43.0 million in interest-bearing accounts and noninterest-bearing accounts, respectively.

The Company defines total borrowings as the total of repurchase agreements, Federal Home Loan Bank advances and notes payable. Total borrowings were $50.0 million, $50.0 million and $52.5 million at June 30, 2021, March 31, 2021 and June 30, 2020, respectively.

Capital

At June 30, 2021, the Company continued to be well capitalized and maintained strong capital ratios under bank regulatory requirements. The Company’s total risk-based capital ratio was 17.72% at June 30, 2021, compared to 17.00% at March 31, 2021 and 16.56% at June 30, 2020. The Company’s tier 1 leverage ratio was 11.63% at June 30, 2021, compared to 11.90% at March 31, 2021 and 11.96% at June 30, 2020. The Company’s total shareholders’ equity to total assets ratio was 13.68% at June 30, 2021, 13.54% at March 31, 2021 and 13.77% at June 30, 2020.

The ratio of tangible equity to tangible assets was 11.84% at June 30, 2021, 11.67% at March 31, 2021 and 11.84% at June 30, 2020. Tangible equity to tangible assets is a non-GAAP financial measure. The most directly comparable financial measure calculated in accordance with United States generally accepted accounting principles, or GAAP, to tangible equity to tangible assets is total shareholders’ equity to total assets. See the table captioned “Non-GAAP to GAAP Reconciliation” at the end of this earnings release.

Non-GAAP Financial Measures

This earnings release contains certain non-GAAP financial measures including “tangible book value,” “tangible book value per common share,” and “tangible equity to tangible assets,” which are supplemental measures that are not required by, or are not presented in accordance with, GAAP. Please refer to the table titled “Non-GAAP to GAAP Reconciliation” at the end of this earnings release for a reconciliation of these non-GAAP financial measures.

Conference Call Information

The Company will hold a conference call to discuss second quarter 2021 financial results on Thursday, July 29, 2021 at 8:00 a.m. Central Time (9:00 a.m. Eastern Time). Investors and interested parties may listen to the teleconference via telephone by calling (877) 620-1733 if calling from the U.S. or Canada (or (470) 414-9785 if calling from outside the U.S.). The conference call ID number is 1036609. To access the live webcast of the conference call, individuals can visit the Investor Relations page of the Company’s website: https://ir.cbtxinc.com/events-and-presentations. An archived edition of the earnings webcast will also be posted on the Company’s website later that day and will remain available to interested parties via the same link for one year.

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

About CBTX, Inc.

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

Forward-Looking Statements

This earnings release may contain certain forward-looking statements within the meaning of the securities laws that are based on various facts and derived utilizing important assumptions, current expectations, estimates and projections about the Company and its subsidiary. Forward-looking statements include information regarding the Company’s future financial performance, business and growth strategy, projected plans and objectives, as well as projections of macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact economic trends, and any such variations may be material. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing. Further, certain factors that could affect our future results and cause actual results to differ materially from those expressed in the forward-looking statements include, but are not limited to: natural disasters and adverse weather on the Company’s market area, acts of terrorism, pandemics, an outbreak of hostilities or other international or domestic calamities and other matters beyond the Company’s control; the Company’s ability to manage the economic risks related to the impact of the COVID-19 pandemic (including risks related to its customers’ credit quality, deferrals and modifications to loans); the geographic concentration of the Company’s markets in Houston and Beaumont, Texas; the Company’s ability to manage changes and the continued health or availability of management personnel; the amount of nonperforming and classified assets that the Company holds and the time and effort necessary to resolve nonperforming assets; deterioration of asset quality; interest rate risk associated with the Company’s business; national business and economic conditions in general, in the financial services industry and within the Company’s primary markets; sustained instability of the oil and gas industry in general and within Texas; the composition of the Company’s loan portfolio, including the identity of the Company’s borrowers and the concentration of loans in specialized industries; changes in the value of collateral securing the Company’s loans; the Company’s ability to maintain important deposit customer relationships and its reputation; the Company’s ability to maintain effective internal control over financial reporting; the Company’s ability to pursue available remedies in the event of a loan default for PPP loans and the risk of holding such loans at unfavorable interest rates and on terms that are less favorable than those with customers to whom the Company would have otherwise lent; volatility and direction of market interest rates; liquidity risks associated with the Company’s business; systems failures, interruptions or breaches involving the Company’s information technology and telecommunications systems or third-party servicers; the failure of certain third-party vendors to perform; the institution and outcome of litigation and other legal proceedings against the Company or to which it may become subject; the operational risks associated with the Company’s business; the costs, effects and results of regulatory examinations, investigations, including the ongoing investigation by the Financial Crimes Enforcement Network of the U.S. Department of Treasury, or FinCEN, or reviews or the ability to obtain required regulatory approvals; the Company’s ability to meet the requirements of its Formal Agreement with the Office of the Comptroller of the Currency and the risk that such Formal Agreement may have a negative impact on the Company’s financial performance and results of operations; changes in the laws, rules, regulations, interpretations or policies relating to financial institution, accounting, tax, trade, monetary and fiscal matters; governmental or regulatory responses to the COVID-19 pandemic that may impact the Company’s loan portfolio and forbearance practice; further government intervention in the U.S. financial system that may impact how the Company achieves its performance goals; and other risks, uncertainties, and factors that are discussed from time to time in the Company’s reports and documents filed with the SEC. Additionally, many of these risks and uncertainties have been elevated by and may continue to be elevated by the COVID-19 pandemic.

The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission, or SEC, and other reports and statements that the Company has filed with the SEC. If one or more events related to these or other risks or uncertainties materialize, or if the Company’s underlying assumptions prove to be incorrect, actual results may differ materially from what it anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and the Company does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New factors emerge from time to time, and it is not possible for the Company to predict which will arise. In addition, the Company cannot assess the impact of each factor on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Copies of the SEC filings for the Company are available for download free of charge from www.communitybankoftx.com under the Investor Relations tab.


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

Three Months Ended

Six Months Ended

6/30/2021

3/31/2021

12/31/2020

9/30/2020

6/30/2020

6/30/2021

6/30/2020

Profitability:

Net income

$

11,703

$

10,019

$

10,236

$

6,421

$

2,163

$

21,722

$

9,704

Basic earnings per share

$

0.48

$

0.41

$

0.42

$

0.26

$

0.09

$

0.89

$

0.39

Diluted earnings per share

$

0.48

$

0.41

$

0.41

$

0.26

$

0.09

$

0.88

$

0.39

Return on average assets(1)

1.14

%

1.03

%

1.05

%

0.66

%

0.23

%

1.09

%

0.54

%

Return on average shareholders' equity(1)

8.49

%

7.39

%

7.47

%

4.70

%

1.60

%

7.95

%

3.60

%

Net interest margin - tax equivalent(1)

3.29

%

3.71

%

3.62

%

3.55

%

3.68

%

3.49

%

3.87

%

Efficiency ratio(2)

73.02

%

64.32

%

65.64

%

66.77

%

64.15

%

68.56

%

62.26

%

Liquidity and Capital Ratios:

Total shareholders' equity to total assets

13.68

%

13.54

%

13.84

%

14.18

%

13.77

%

13.68

%

13.77

%

Tangible equity to tangible assets(3)

11.84

%

11.67

%

11.94

%

12.22

%

11.84

%

11.84

%

11.84

%

Common equity tier 1 capital ratio

16.46

%

15.75

%

15.45

%

15.41

%

15.30

%

16.46

%

15.30

%

Tier 1 risk-based capital ratio

16.46

%

15.75

%

15.45

%

15.41

%

15.30

%

16.46

%

15.30

%

Total risk-based capital ratio

17.72

%

17.00

%

16.71

%

16.67

%

16.56

%

17.72

%

16.56

%

Tier 1 leverage ratio

11.63

%

11.90

%

12.00

%

11.90

%

11.96

%

11.63

%

11.96

%

Credit Quality:

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

1.36

%

1.41

%

1.39

%

1.49

%

1.35

%

1.36

%

1.35

%

Nonperforming assets to total assets

0.52

%

0.59

%

0.61

%

0.41

%

0.29

%

0.52

%

0.29

%

Nonperforming loans to loans excluding loans held for sale

0.77

%

0.81

%

0.82

%

0.53

%

0.38

%

0.77

%

0.38

%

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

(0.07

)%

0.01

%

0.49

%

0.02

%

0.01

%

(0.03

)%

(0.02

)%

Other Data:

Weighted average common shares outstanding - basic

24,447

24,508

24,621

24,748

24,752

24,477

24,839

Weighted average common shares outstanding - diluted

24,571

24,616

24,678

24,770

24,780

24,591

24,885

Common shares outstanding at period end

24,450

24,442

24,613

24,713

24,755

24,450

24,755

Dividends per share

$

0.13

$

0.13

$

0.10

$

0.10

$

0.10

$

0.26

$

0.20

Book value per share

$

22.75

$

22.31

$

22.20

$

21.89

$

21.71

$

22.75

$

21.71

Tangible book value per share(3)

$

19.28

$

18.84

$

18.74

$

18.44

$

18.26

$

19.28

$

18.26

Employees - full-time equivalents

529

517

511

515

523

529

523


(1) Annualized.
(2) Efficiency ratio represents noninterest expense divided by the sum of net interest income and noninterest income.
(3) Non-GAAP financial measure. See the table captioned “Non-GAAP to GAAP Reconciliation” at the end of this earnings release.


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

6/30/2021

3/31/2021

12/31/2020

9/30/2020

6/30/2020

Loans excluding loans held for sale

$

2,729,496

$

2,891,632

$

2,924,117

$

2,964,526

$

2,934,888

Allowance for credit losses for loans

(37,183

)

(40,874

)

(40,637

)

(44,069

)

(39,678

)

Loans, net

2,692,313

2,850,758

2,883,480

2,920,457

2,895,210

Cash and equivalents

788,409

604,671

538,007

377,572

492,400

Securities

309,233

289,091

237,281

226,101

235,438

Premises and equipment

59,987

60,551

61,152

61,732

50,729

Goodwill

80,950

80,950

80,950

80,950

80,950

Other intangible assets

3,846

3,991

4,171

4,303

4,496

Loans held for sale

808

1,005

2,673

1,763

Operating lease right-to-use asset

12,514

12,900

13,285

12,893

14,081

Other assets

118,474

124,722

128,218

128,901

128,421

Total assets

$

4,066,534

$

4,028,639

$

3,949,217

$

3,814,672

$

3,901,725

Noninterest-bearing deposits

$

1,556,784

$

1,621,408

$

1,476,425

$

1,460,983

$

1,513,748

Interest-bearing deposits

1,860,002

1,763,339

1,825,369

1,709,681

1,740,455

Total deposits

3,416,786

3,384,747

3,301,794

3,170,664

3,254,203

Federal Home Loan Bank advances

50,000

50,000

50,000

50,000

50,000

Repurchase agreements

2,153

2,500

Operating lease liabilities

15,590

16,060

16,447

15,759

16,983

Other liabilities

27,931

32,483

34,525

35,175

40,683

Total liabilities

3,510,307

3,483,290

3,402,766

3,273,751

3,364,369

Total shareholders’ equity

556,227

545,349

546,451

540,921

537,356

Total liabilities and shareholders’ equity

$

4,066,534

$

4,028,639

$

3,949,217

$

3,814,672

$

3,901,725


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

Three Months Ended

Six Months Ended

6/30/2021

3/31/2021

12/31/2020

9/30/2020

6/30/2020

6/30/2021

6/30/2020

Interest income

Interest and fees on loans

$

30,793

$

33,165

$

32,886

$

32,318

$

32,857

$

63,958

$

66,474

Securities

1,332

1,173

1,070

1,107

1,228

2,505

2,591

Interest-bearing deposits at other financial institutions

223

177

168

176

169

400

1,224

Equity investments

158

146

170

162

171

304

347

Total interest income

32,506

34,661

34,294

33,763

34,425

67,167

70,636

Interest expense

Deposits

1,267

1,350

1,549

1,831

2,022

2,617

5,788

Federal Home Loan Bank advances

221

221

221

221

240

442

461

Other interest-bearing liabilities

4

3

5

9

Total interest expense

1,488

1,571

1,774

2,055

2,267

3,059

6,258

Net interest income

31,018

33,090

32,520

31,708

32,158

64,108

64,378

Provision (recapture) for credit losses

Provision for credit losses for loans

(4,190

)

286

229

4,569

8,537

(3,904

)

13,276

Provision (recapture) for credit losses for unfunded commitments

(893

)

126

(364

)

(461

)

1,333

(767

)

1,643

Total provision (recapture) for credit losses

(5,083

)

412

(135

)

4,108

9,870

(4,671

)

14,919

Net interest income after provision (recapture) for credit losses

36,101

32,678

32,655

27,600

22,288

68,779

49,459

Noninterest income

Deposit account service charges

1,167

1,193

1,270

1,176

1,095

2,360

2,580

Card interchange fees

1,095

976

999

995

915

2,071

1,837

Earnings on bank-owned life insurance

390

390

407

1,187

412

780

828

Net gain on sales of assets

366

192

379

114

139

558

262

Other

473

360

467

551

348

833

1,729

Total noninterest income

3,491

3,111

3,522

4,023

2,909

6,602

7,236

Noninterest expense

Salaries and employee benefits

14,734

14,188

12,848

14,332

14,012

28,922

28,235

Occupancy expense

2,597

2,521

2,628

2,496

2,558

5,118

4,982

Professional and director fees

2,441

1,703

3,209

2,446

1,541

4,144

2,693

Data processing and software

1,661

1,576

1,330

1,525

1,292

3,237

2,514

Regulatory fees

501

556

748

471

476

1,057

579

Advertising, marketing and business development

510

285

438

429

269

795

633

Telephone and communications

550

463

455

486

392

1,013

811

Security and protection expense

537

390

423

299

351

927

725

Amortization of intangibles

186

191

197

198

230

377

451

Other expenses

1,480

1,412

1,382

1,176

1,374

2,892

2,961

Total noninterest expense

25,197

23,285

23,658

23,858

22,495

48,482

44,584

Net income before income tax expense

14,395

12,504

12,519

7,765

2,702

26,899

12,111

Income tax expense

2,692

2,485

2,283

1,344

539

5,177

2,407

Net income

$

11,703

$

10,019

$

10,236

$

6,421

$

2,163

$

21,722

$

9,704


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

Three Months Ended

6/30/2021

3/31/2021

6/30/2020

Average

Interest

Average

Average

Interest

Average

Average

Interest

Average

Outstanding

Earned/

Yield/

Outstanding

Earned/

Yield/

Outstanding

Earned/

Yield/

Balance

Interest Paid

Rate(1)

Balance

Interest Paid

Rate(1)

Balance

Interest Paid

Rate(1)

Assets

Interest-earning assets:

Total loans(2)

$

2,835,995

$

30,793

4.36

%

$

2,901,291

$

33,165

4.64

%

$

2,908,204

$

32,857

4.54

%

Securities

302,808

1,332

1.76

%

259,341

1,173

1.84

%

240,343

1,228

2.05

%

Interest-bearing deposits at other financial institutions

670,508

223

0.13

%

475,279

177

0.15

%

378,405

169

0.18

%

Equity investments

15,338

158

4.13

%

15,353

146

3.86

%

15,147

171

4.54

%

Total interest-earning assets

3,824,649

$

32,506

3.41

%

3,651,264

$

34,661

3.85

%

3,542,099

$

34,425

3.91

%

Allowance for credit losses for loans

(40,806

)

(41,078

)

(31,443

)

Noninterest-earning assets

317,115

321,334

305,821

Total assets

$

4,100,958

$

3,931,520

$

3,816,477

Liabilities and Shareholders’ Equity

Interest-bearing liabilities:

Interest-bearing deposits

$

1,839,812

$

1,267

0.28

%

$

1,802,175

$

1,350

0.30

%

$

1,687,991

$

2,022

0.48

%

Federal Home Loan Bank advances

50,000

221

1.77

%

50,000

221

1.79

%

70,769

240

1.36

%

Other interest-bearing liabilities

2,101

5

0.96

%

Total interest-bearing liabilities

1,889,812

$

1,488

0.32

%

1,852,175

$

1,571

0.34

%

1,760,861

$

2,267

0.52

%

Noninterest-bearing liabilities:

Noninterest-bearing deposits

1,611,565

1,478,183

1,462,271

Other liabilities

46,774

51,634

49,958

Total noninterest-bearing liabilities

1,658,339

1,529,817

1,512,229

Shareholders’ equity

552,807

549,528

543,387

Total liabilities and shareholders’ equity

$

4,100,958

$

3,931,520

$

3,816,477

Net interest income

$

31,018

$

33,090

$

32,158

Net interest spread(3)

3.09

%

3.51

%

3.39

%

Net interest margin(4)

3.25

%

3.68

%

3.65

%

Net interest margin - tax equivalent(5)

3.29

%

3.71

%

3.68

%


(1) Annualized.
(2) Includes average outstanding balances related to loans held for sale.
(3) Net interest spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
(4) Net interest margin is equal to net interest income divided by average interest-earning assets.
(5) Tax equivalent adjustments of $321,000, $299,000 and $247,000 for the quarters ended June 30, 2021, March 31, 2021 and June 30, 2020, respectively, were computed using a federal income tax rate of 21%.


CBTX, INC. AND SUBSIDIARY
Net Interest Margin – Year to Date
(In thousands, except percentages)

Six Months Ended June 30,

2021

2020

Average

Interest

Average

Average

Interest

Average

Outstanding

Earned/

Yield/

Outstanding

Earned/

Yield/

(Dollars in thousands)

Balance

Interest Paid

Rate(1)

Balance

Interest Paid

Rate(1)

Assets

Interest-earning assets:

Total loans(2)

$

2,868,463

$

63,958

4.50

%

$

2,771,355

$

66,474

4.82

%

Securities

281,196

2,505

1.80

%

237,130

2,591

4.20

%

Interest-bearing deposits at other financial institutions

573,433

400

0.14

%

346,753

1,224

0.71

%

Equity investments

15,346

304

3.99

%

14,404

347

4.84

%

Total interest-earning assets

3,738,438

$

67,167

3.62

%

3,369,642

$

70,636

4.22

%

Allowance for credit losses for loans

(40,941

)

(28,637

)

Noninterest-earning assets

318,520

301,281

Total assets

$

4,016,017

$

3,642,286

Liabilities and Shareholders’ Equity

Interest-bearing liabilities:

Interest-bearing deposits

$

1,821,098

$

2,617

0.29

%

$

1,669,031

$

5,788

0.70

%

Federal Home Loan Bank advances

50,000

442

1.78

%

60,385

461

1.54

%

Other interest-bearing liabilities

1,432

9

1.26

%

Total interest-bearing liabilities

1,871,098

$

3,059

0.33

%

1,730,848

$

6,258

0.73

%

Noninterest-bearing liabilities:

Noninterest-bearing deposits

1,545,242

1,323,520

Other liabilities

48,503

45,595

Total noninterest-bearing liabilities

1,593,745

1,369,115

Shareholders’ equity

551,174

542,323

Total liabilities and shareholders’ equity

$

4,016,017

$

3,642,286

Net interest income

$

64,108

$

64,378

Net interest spread(3)

3.29

%

3.49

%

Net interest margin(4)

3.46

%

3.84

%

Net interest margin - tax equivalent(5)

3.49

%

3.87

%


(1) Annualized.
(2) Includes average outstanding balances related to loans held for sale.
(3) Net interest spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
(4) Net interest margin is equal to net interest income divided by average interest-earning assets.
(5) Tax equivalent adjustments of $621,000 and $496,000 for the six months ended June 30, 2021 and 2020, respectively, were computed using a federal income tax rate of 21%.


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

Three Months Ended June 30, 2021,

Compared to Three Months Ended March 31, 2021

Increase (Decrease) due to

(Dollars in thousands)

Rate

Volume

Days

Total

Interest-earning assets:

Total loans

$

(1,994

)

$

(747

$

369

$

(2,372

)

Securities

(52

)

197

14

159

Interest-bearing deposits at other financial institutions

(28

)

72

2

46

Equity investments

10

2

12

Total increase (decrease) in interest income

(2,064

)

(478

)

387

(2,155

)

Interest-bearing liabilities:

Interest-bearing deposits

(126

)

28

15

(83

)

Federal Home Loan Bank advances

(2

)

2

Other interest-bearing liabilities

Total increase (decrease) in interest expense

(128

)

28

17

(83

)

Increase (decrease) in net interest income

$

(1,936

)

$

(506

)

$

370

$

(2,072

)


Three Months Ended June 30, 2021,

Compared to Three Months Ended June 30, 2020

Increase (Decrease) due to

(Dollars in thousands)

Rate

Volume

Days

Total

Interest-earning assets:

Total loans

$

(1,249

)

$

(815

)

$

$

(2,064

)

Securities

(214

)

318

104

Interest-bearing deposits at other financial institutions

(77

)

131

54

Equity investments

(15

)

2

(13

)

Total decrease in interest income

(1,555

)

(364

)

(1,919

)

Interest-bearing liabilities:

Interest-bearing deposits

(936

)

181

(755

)

Federal Home Loan Bank advances

51

(70

)

(19

)

Other interest-bearing liabilities

(5

)

(5

)

Total increase (decrease) in interest expense

(890

)

111

(779

)

Decrease in net interest income

$

(665

)

$

(475

)

$

$

(1,140

)


Six Months Ended June 30, 2021,

Compared to Six Months Ended June 30, 2020

Increase (Decrease) due to

(Dollars in thousands)

Rate

Volume

Days

Total

Interest-earning assets:

Total loans

$

(4,478

)

$

2,328

$

(366

)

$

(2,516

)

Securities

(554

)

482

(14

)

(86

)

Interest-bearing deposits at other financial institutions

(1,618

)

800

(6

)

(824

)

Equity investments

(64

)

23

(2

)

(43

)

Total increase (decrease) in interest income

(6,714

)

3,633

(388

)

(3,469

)

Interest-bearing liabilities:

Interest-bearing deposits

(3,669

)

529

(31

)

(3,171

)

Federal Home Loan Bank advances

64

(80

)

(3

)

(19

)

Other interest-bearing liabilities

(9

)

(9

)

Total increase (decrease) in interest expense

(3,605

)

440

(34

)

(3,199

)

Increase (decrease) in net interest income

$

(3,109

)

$

3,193

$

(354

)

$

(270

)


CBTX, INC. AND SUBSIDIARY
Yield Trend(1)

Three Months Ended

6/30/2021

3/31/2021

12/31/2020

9/30/2020

6/30/2020

Interest-earning assets:

Total loans

4.36

%

4.64

%

4.42

%

4.37

%

4.54

%

Securities

1.76

%

1.84

%

1.80

%

1.87

%

2.05

%

Interest-bearing deposits at other financial institutions

0.13

%

0.15

%

0.17

%

0.18

%

0.18

%

Equity investments

4.13

%

3.86

%

4.41

%

4.20

%

4.54

%

Total interest-earning assets

3.41

%

3.85

%

3.79

%

3.75

%

3.91

%

Interest-bearing liabilities:

Interest-bearing deposits

0.28

%

0.30

%

0.35

%

0.42

%

0.48

%

Federal Home Loan Bank advances

1.77

%

1.79

%

1.76

%

1.76

%

1.36

%

Other interest-bearing liabilities

0.96

%

Total interest-bearing liabilities

0.32

%

0.34

%

0.39

%

0.46

%

0.52

%

Net interest spread(2)

3.09

%

3.51

%

3.40

%

3.29

%

3.39

%

Net interest margin(3)

3.25

%

3.68

%

3.59

%

3.52

%

3.65

%

Net interest margin - tax equivalent(4)

3.29

%

3.71

%

3.62

%

3.55

%

3.68

%


(1) Annualized.
(2) Net interest spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
(3) Net interest margin is equal to net interest income divided by average interest-earning assets.
(4) Tax equivalent adjustments were computed using a federal income tax rate of 21%.


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

Three Months Ended

6/30/2021

3/31/2021

12/31/2020

9/30/2020

6/30/2020

Assets

Interest-earning assets:

Total loans(1)

$

2,835,995

$

2,901,291

$

2,961,622

$

2,945,320

$

2,908,204

Securities

302,808

259,341

236,233

236,015

240,343

Interest-bearing deposits at other financial institutions

670,508

475,279

388,936

383,626

378,405

Equity investments

15,338

15,353

15,346

15,334

15,147

Total interest-earning assets

3,824,649

3,651,264

3,602,137

3,580,295

3,542,099

Allowance for credit losses for loans

(40,806

)

(41,078

)

(44,233

)

(40,135

)

(31,443

)

Noninterest-earning assets

317,115

321,334

321,303

326,590

305,821

Total assets

$

4,100,958

$

3,931,520

$

3,879,207

$

3,866,750

$

3,816,477

Liabilities and Shareholders’ Equity

Interest-bearing liabilities:

Interest-bearing deposits

$

1,839,812

$

1,802,175

$

1,744,557

$

1,730,812

$

1,687,991

Federal Home Loan Bank advances

50,000

50,000

50,163

50,000

70,769

Other interest-bearing liabilities

1,426

2,230

2,101

Total interest-bearing liabilities

1,889,812

1,852,175

1,796,146

1,783,042

1,760,861

Noninterest-bearing liabilities:

Noninterest-bearing deposits

1,611,565

1,478,183

1,482,753

1,484,557

1,462,271

Other liabilities

46,774

51,634

55,174

55,386

49,958

Total noninterest-bearing liabilities

1,658,339

1,529,817

1,537,927

1,539,943

1,512,229

Shareholders’ equity

552,807

549,528

545,134

543,765

543,387

Total liabilities and shareholders’ equity

$

4,100,958

$

3,931,520

$

3,879,207

$

3,866,750

$

3,816,477


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


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

6/30/2021

3/31/2021

12/31/2020

9/30/2020

6/30/2020

Amount

%

Amount

%

Amount

%

Amount

%

Amount

%

Loan Portfolio:

Commercial and industrial

$

658,733

24.0

%

$

756,707

26.1

%

$

742,957

25.3

%

$

832,686

28.0

%

$

837,667

28.4

%

Real estate:

Commercial real estate

1,060,968

38.7

%

1,072,263

36.9

%

1,041,998

35.5

%

949,933

31.9

%

908,027

30.8

%

Construction and development

426,007

15.5

%

464,091

16.0

%

522,705

17.8

%

506,216

17.0

%

552,879

18.8

%

1-4 family residential

211,328

7.7

%

224,880

7.7

%

239,872

8.2

%

253,868

8.5

%

272,253

9.2

%

Multi-family residential

265,252

9.7

%

271,719

9.4

%

258,346

8.8

%

298,733

10.0

%

255,273

8.7

%

Consumer

31,444

1.1

%

32,767

1.1

%

33,884

1.1

%

35,637

1.2

%

36,338

1.2

%

Agriculture

8,283

0.4

%

6,974

0.2

%

8,670

0.3

%

9,753

0.3

%

7,795

0.3

%

Other

78,607

2.9

%

74,387

2.6

%

88,238

3.0

%

91,501

3.1

%

77,535

2.6

%

Gross loans

2,740,622

100.0

%

2,903,788

100.0

%

2,936,670

100.0

%

2,978,327

100.0

%

2,947,767

100.0

%

Less allowance for credit losses

(37,183

)

(40,874

)

(40,637

)

(44,069

)

(39,678

)

Less deferred fees and unearned discount

(10,318

)

(11,151

)

(9,880

)

(12,038

)

(12,879

)

Less loans held for sale

(808

)

(1,005

)

(2,673

)

(1,763

)

Loans, net

$

2,692,313

$

2,850,758

$

2,883,480

$

2,920,457

$

2,895,210

Deposits:

Interest-bearing demand accounts

$

375,543

11.0

%

$

368,124

10.9

%

$

380,175

11.5

%

$

346,406

10.9

%

$

366,281

11.2

%

Money market accounts

1,101,091

32.2

%

995,945

29.4

%

1,039,617

31.5

%

916,668

28.9

%

878,006

27.0

%

Savings accounts

115,823

3.4

%

112,467

3.3

%

108,167

3.3

%

103,062

3.3

%

98,485

3.0

%

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

142,343

4.2

%

145,762

4.3

%

152,592

4.6

%

171,854

5.4

%

200,505

6.2

%

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

125,202

3.6

%

141,041

4.2

%

144,818

4.4

%

171,691

5.4

%

197,178

6.1

%

Total interest-bearing deposits

1,860,002

54.4

%

1,763,339

52.1

%

1,825,369

55.3

%

1,709,681

53.9

%

1,740,455

53.5

%

Noninterest-bearing deposits

1,556,784

45.6

%

1,621,408

47.9

%

1,476,425

44.7

%

1,460,983

46.1

%

1,513,748

46.5

%

Total deposits

$

3,416,786

100.0

%

$

3,384,747

100.0

%

$

3,301,794

100.0

%

$

3,170,664

100.0

%

$

3,254,203

100.0

%


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

6/30/2021

3/31/2021

12/31/2020

9/30/2020

6/30/2020

Nonperforming Assets (at period end):

Nonaccrual loans:

Commercial and industrial

$

10,038

$

12,230

$

12,588

$

6,699

$

5,519

Real estate:

Commercial real estate

10,572

10,664

10,665

4,811

4,811

Construction and development

236

238

241

506

1-4 family residential

363

378

526

325

332

Multi-family residential

Consumer

Agriculture

Other

3,500

Nonaccrual loans

20,973

23,508

24,017

15,576

11,168

Accruing loans 90 or more days past due

Total nonperforming loans

20,973

23,508

24,017

15,576

11,168

Foreclosed assets

106

Total nonperforming assets

$

20,973

$

23,614

$

24,017

$

15,576

$

11,168

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

Commercial and industrial

$

12,260

$

13,812

$

13,035

$

13,347

$

12,108

Real estate:

Commercial real estate

13,260

14,280

13,798

12,745

12,424

Construction and development

4,453

5,445

6,089

6,334

7,050

1-4 family residential

2,172

2,458

2,578

2,871

3,173

Multi-family residential

2,382

2,714

2,513

3,117

2,880

Consumer

494

434

440

507

529

Agriculture

115

107

137

164

134

Other

2,047

1,624

2,047

4,984

1,380

Total allowance for credit losses for loans

$

37,183

$

40,874

$

40,637

$

44,069

$

39,678

Credit Quality Ratios (at period end):

Nonperforming assets to total assets

0.52

%

0.59

%

0.61

%

0.41

%

0.29

%

Nonperforming loans to loans excluding loans held for sale

0.77

%

0.81

%

0.82

%

0.53

%

0.38

%

Allowance for credit losses for loans to nonperforming loans

177.29

%

173.87

%

169.20

%

282.93

%

355.28

%

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

1.36

%

1.41

%

1.39

%

1.49

%

1.35

%


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

Three Months Ended

6/30/2021

3/31/2021

12/31/2020

9/30/2020

6/30/2020

Beginning balance

$

40,874

$

40,637

$

44,069

$

39,678

$

31,194

Provision (recapture):

Commercial and industrial

(1,955

)

872

(7

)

1,270

2,555

Real estate:

Commercial real estate

(1,020

)

482

910

456

2,872

Construction and development

(992

)

(644

)

(245

)

(716

)

1,255

1-4 family residential

(286

)

(120

)

(293

)

(297

)

809

Multi-family residential

(332

)

201

(604

)

237

467

Consumer

(36

)

(10

)

(68

)

(15

)

45

Agriculture

8

(72

)

(27

)

30

(7

)

Other

423

(423

)

563

3,604

541

Total provision (recapture)

(4,190

)

286

229

4,569

8,537

Net (charge-offs) recoveries:

Commercial and industrial

403

(95

)

(305

)

(31

)

18

Real estate:

Commercial real estate

143

(135

)

(24

)

Construction and development

1-4 family residential

(5

)

(66

)

Multi-family residential

Consumer

96

4

1

(7

)

7

Agriculture

42

12

Other

(3,500

)

Total net (charge-offs) recoveries

499

(49

)

(3,661

)

(178

)

(53

)

Ending balance

$

37,183

$

40,874

$

40,637

$

44,069

$

39,678

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

(0.07

)%

0.01

%

0.49

%

0.02

%

0.01

%


(1) Annualized.


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

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

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

We calculate tangible equity as total shareholders’ equity, less goodwill and other intangible assets, net of accumulated amortization, and tangible book value per share as tangible equity divided by shares of common stock outstanding at the end of the relevant period. The most directly comparable GAAP financial measure for tangible book value per share is book value per share.

We calculate tangible assets as total assets less goodwill and other intangible assets, net of accumulated amortization. The most directly comparable GAAP financial measure for tangible equity to tangible assets is total shareholders’ equity to total assets.

We believe that tangible book value per share and tangible equity to tangible assets are measures that are important to many investors in the marketplace who are interested in book value per share and total shareholders’ equity to total assets, exclusive of change in intangible assets.

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

6/30/2021

3/31/2021

12/31/2020

9/30/2020

6/30/2020

Tangible Equity

Total shareholders’ equity

$

556,227

$

545,349

$

546,451

$

540,921

$

537,356

Adjustments:

Goodwill

80,950

80,950

80,950

80,950

80,950

Other intangibles

3,846

3,991

4,171

4,303

4,496

Tangible equity

$

471,431

$

460,408

$

461,330

$

455,668

$

451,910

Tangible Assets

Total assets

$

4,066,534

$

4,028,639

$

3,949,217

$

3,814,672

$

3,901,725

Adjustments:

Goodwill

80,950

80,950

80,950

80,950

80,950

Other intangibles

3,846

3,991

4,171

4,303

4,496

Tangible assets

$

3,981,738

$

3,943,698

$

3,864,096

$

3,729,419

$

3,816,279

Common shares outstanding

24,450

24,442

24,613

24,713

24,755

Book value per share

$

22.75

$

22.31

$

22.20

$

21.89

$

21.71

Tangible book value per share

$

19.28

$

18.84

$

18.74

$

18.44

$

18.26

Total shareholders’ equity to total assets

13.68

%

13.54

%

13.84

%

14.18

%

13.77

%

Tangible equity to tangible assets

11.84

%

11.67

%

11.94

%

12.22

%

11.84

%


Investor Relations:

Justin M. Long
281.325.5013
investors@CBoTX.com

Media Contact:

Ashley K. Warren
713.210.7622
awarren@CBoTX.com



Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting