HOUSTON, April 26, 2018 (GLOBE NEWSWIRE) --
CBTX, Inc. (the “Company”) (NASDAQ:CBTX), the bank holding company for CommunityBank of Texas N.A., today announced net income of $9.1 million, or $0.37 per diluted share, for the quarter ended March 31, 2018, compared to $6.9 million, or $0.31 per diluted share, for the quarter ended March 31, 2017 and $2.0 million, or $0.08 per diluted share, for the quarter ended December 31, 2017.
Highlights
- Loans increased $44.5 million during the first quarter of 2018, an 8% annualized growth rate for the quarter.
- Net interest income increased $3.2 million or 12.4%, from the first of quarter 2017 to the first quarter of 2018, primarily due increased average loans and yields on loans.
- Income tax expense decreased $893,000 from the first quarter 2017 to the first quarter of 2018 and $4.2 million from the fourth quarter of 2017 to the first quarter of 2018 due to the reduction of the federal tax rate from 35% to 21% and a fourth quarter 2017 charge of $3.9 million related to the Tax Cuts and Jobs Act (the "Tax Act").
Operating Results:
Net Interest Income
Net interest income was $29.0 million for the first quarter of 2018, compared to $25.8 million for the first quarter of 2017 and $28.2 million for the fourth quarter of 2017. The increase in net interest income in the first quarter of 2018 from the first quarter of 2017, was due to increased average loans and repayment of our note payable in the fourth quarter of 2017 and increased average yields on loans and federal funds sold. The increase in net interest income in the first quarter of 2018 from the fourth quarter of 2017 was due to increased average loans and average loan yields and the impact of the repayment of our note payable.
The yield on interest-earning assets was 4.49% for the first quarter of 2018, compared to 4.26% for the first quarter of 2017 and 4.29% for the fourth quarter of 2017.
The cost of interest-bearing liabilities, including borrowings, was 0.55% for the first quarter of 2018, compared to 0.57% for the first quarter of 2017 and 0.56% for the fourth quarter of 2017.
The net interest margin was 4.19% for the first quarter of 2018 compared to 3.93% for the first quarter of 2017 and 3.98% for the fourth quarter of 2017.
Provision (Recapture) for Loan Losses
Provision for loan loss was $865,000 for the first quarter of 2018, compared to $960,000 for the first quarter of 2017 and $1.1 million for the fourth quarter of 2017.
The allowance for loan losses was $25.3 million, or 1.08% of total loans, at March 31, 2018, compared to $25.9 million, or 1.17% of total loans, at March 31, 2017 and $24.8 million, or 1.07% of total loans, at December 31, 2017.
Noninterest Income
Noninterest income was $3.4 million for the first quarter of 2018, $3.4 million for the first quarter of 2017 and $3.1 million for the fourth quarter of 2017. Although noninterest income was flat between the first quarter 2018 and the first quarter 2017, there was a decrease in gains on sales of assets and an increase in bank-owned life insurance income from the first quarter of 2017 to the first quarter of 2018. The increase in noninterest income from the fourth quarter of 2017 to the first quarter of 2018 was primarily due to higher gains on sales of loans in the first quarter of 2018.
Noninterest Expense
Noninterest expense increased $1.9 million during the first quarter of 2018 as compared to the first quarter of 2017 and decreased $1.7 million as compared to the fourth quarter of 2017.
The decrease in noninterest expense during the first quarter of 2018 compared to the fourth quarter of 2017 is due primarily to a $2.5 million charge for change of control payments to certain employees triggered by our initial public offering, which is reflected in salaries and employee benefits and increased professional and director fees in the fourth quarter of 2017. Excluding the $2.5 million charge for change of control payments, noninterest expense for the first quarter of 2018 increased $795,000 primarily due to increased salaries and employee benefits due to increases in salaries and incentive compensation and health insurance premiums, partially offset by lower professional and director fees.
The increase in noninterest expense in the first quarter of 2018 compared to the first quarter of 2017 is primarily due to increased salaries and employee benefits due to increases in salaries and incentive compensation, health insurance premiums and stock compensation expense.
Income Taxes
Income tax expense was $2.1 million for the first quarter of 2018, $3.0 million for the first quarter of 2017 and $6.3 million for the fourth quarter of 2017. During the fourth quarter of 2017, the Company recorded a deferred tax asset impairment charge of $3.9 million related to the recent Tax Act.
The effective tax rates were 19.0% for the first quarter of 2018, 30.7% for the first quarter of 2017 and 76.3% for the fourth quarter of 2017. The effective tax rate for the first quarter of 2018 reflects reduction of the federal tax rate from 35% to 21% in the recent Tax Act.
Balance Sheet Highlights:
Loans
Loans were $2.4 billion at March 31, 2018, $2.2 billion at March 31, 2017 and $2.3 billion at December 31, 2017. The increases from the prior year and linked quarter are primarily due to organic growth.
Asset Quality
Nonperforming assets remain low relative to total assets at $6.1 million, or 0.20% of total assets, at March 31, 2018, $7.2 million, or 0.25% of total assets, at March 31, 2017 and $8.4 million, or 0.27% of total assets at December 31, 2017.
Nonperforming loans were $5.8 million, or 0.24% of total loans, at March 31, 2018, $6.1 million, or 0.27% of total loans, at March 31, 2017 and $7.6 million, or 0.33% of total loans, at December 31, 2017.
Annualized net charge-offs (recoveries) to average loans were 0.05% for the first quarter of 2018, 0.02% for the first quarter of 2017 and 0.00% for the fourth quarter of 2017.
Deposits and Borrowings
Total deposits were $2.6 billion at March 31, 2018, compared to $2.5 billion at March 31, 2017 and $2.6 billion at December 31, 2017.
Total borrowings (excluding junior subordinated debentures) were $861,000 at March 31, 2018, $29.0 million at March 31, 2017 and $1.5 million at December 31, 2017. The decrease in borrowings is due to scheduled payments and our fourth quarter repayment in full of the outstanding balance of our note payable. On December 13, 2017, we entered into a loan agreement providing for a $30 million revolving line of credit and from that date through March 31, 2018, we made no borrowings under that agreement.
Capital
At March 31, 2018, the Company remains well capitalized. Our ratio of total shareholders’ equity to total assets was 14.69% and our tangible equity to total tangible assets was 12.19% at March 31, 2018 and our ratio of total shareholders’ equity to total assets was 12.48% and our tangible equity to total tangible assets was 9.74% at March 31, 2017. Tangible equity to total tangible assets is a non‑GAAP financial measure. See the table captioned “Non‑GAAP to GAAP Reconciliation.”
In November 2017, we completed our initial public offering of our common stock issuing 2,760,000 common shares at $26.00 per share and net proceeds of $64.5 million, which is the primary cause of the increase in these ratios.
About CBTX, Inc.
CBTX, Inc. is the bank holding company for CommunityBank of Texas, N.A., a $3.1 billion asset bank, offering commercial banking solutions to local small and mid-sized businesses and professionals in Houston, Beaumont and surrounding communities in southeast Texas. Visit www.communitybankoftx.com for more information.
Forward-Looking Statements
This release may contain certain forward-looking statements within the meaning of the securities laws that are based on various facts and derived utilizing important assumptions, current expectations, estimates and projections about the Company and its subsidiary. Forward-looking statements include information regarding the Company’s future financial performance, business and growth strategy, projected plans and objectives, as well as projections of macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact economic trends, and any such variations may be material. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing. Further, certain factors that could affect our future results and cause actual results to differ materially from those expressed in the forward-looking statements include, but are not limited to whether the Company can: prudently manage and execute its growth strategy; manage risks associated with its acquisition and de novo branching strategy; maintain its asset quality; address the volatility and direction of market interest rates; continue to have access to debt and equity capital markets; and achieve its performance goals. The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (‘SEC”) and other reports and statements that the Company has filed with the SEC. If one or more events related to these or other risks or uncertainties materialize, or if the Company’s underlying assumptions prove to be incorrect, actual results may differ materially from what its anticipates. Accordingly, you should not place undue reliance on any such forward looking statements. Any forward-looking statement speaks only as of the date on which it is made, and the Company does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New factors emerge from time to time, and it is not possible for the Company to predict which will arise. In addition, the Company cannot assess the impact of each factor on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Copies of the SEC filings for the Company are available for download free of charge from www.communitybanktx.com under the Investor Relations tab.
CBTX, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands)
| Balance Sheet Data (at period end): | 3/31/2018 | 12/31/2017 | 9/30/2017 | 6/30/2017 | 3/31/2017 | |||||||||||||||
| Loans, excluding loans held for sale | $ | 2,356,053 | $ | 2,311,544 | $ | 2,199,478 | $ | 2,192,443 | $ | 2,217,656 | ||||||||||
| Allowance for loan losses | (25,349 | ) | (24,778 | ) | (23,757 | ) | (25,187 | ) | (25,881 | ) | ||||||||||
| Loans, net | 2,330,704 | 2,286,766 | 2,175,721 | 2,167,256 | 2,191,775 | |||||||||||||||
| Cash and equivalents | 279,915 | 326,199 | 348,578 | 307,173 | 272,355 | |||||||||||||||
| Debt securities | 221,183 | 223,208 | 217,660 | 220,330 | 219,978 | |||||||||||||||
| Premises and equipment, net | 53,135 | 53,607 | 54,129 | 56,609 | 55,986 | |||||||||||||||
| Goodwill | 80,950 | 80,950 | 80,950 | 80,950 | 80,950 | |||||||||||||||
| Other intangible assets, net | 6,521 | 6,770 | 7,031 | 7,298 | 7,513 | |||||||||||||||
| Repossessed real estate and other assets | 295 | 705 | 1,136 | 1,435 | 1,179 | |||||||||||||||
| Loans held for sale | 113 | 1,460 | 466 | 559 | 675 | |||||||||||||||
| Other assets | 101,974 | 101,418 | 104,167 | 99,267 | 84,137 | |||||||||||||||
| Total Assets | $ | 3,074,790 | $ | 3,081,083 | $ | 2,989,838 | $ | 2,940,877 | $ | 2,914,548 | ||||||||||
| Noninterest-bearing deposits | $ | 1,120,521 | $ | 1,109,789 | $ | 1,051,755 | $ | 1,030,865 | $ | 993,839 | ||||||||||
| Interest-bearing deposits | 1,479,181 | 1,493,183 | 1,502,872 | 1,485,919 | 1,504,606 | |||||||||||||||
| Total deposits | 2,599,702 | 2,602,972 | 2,554,627 | 2,516,784 | 2,498,445 | |||||||||||||||
| Note payable | - | - | 24,357 | 25,464 | 26,571 | |||||||||||||||
| Repurchase agreements | 861 | 1,525 | 2,239 | 2,179 | 2,464 | |||||||||||||||
| Junior subordinated debt | 6,726 | 6,726 | 6,726 | 6,726 | 6,726 | |||||||||||||||
| Other liabilities | 15,930 | 23,646 | 20,768 | 17,760 | 16,699 | |||||||||||||||
| Total Liabilities | 2,623,219 | 2,634,869 | 2,608,717 | 2,568,913 | 2,550,905 | |||||||||||||||
| Shareholders' Equity | 451,571 | 446,214 | 381,121 | 371,964 | 363,643 | |||||||||||||||
| Total Liabilities and Shareholders' Equity | $ | 3,074,790 | $ | 3,081,083 | $ | 2,989,838 | $ | 2,940,877 | $ | 2,914,548 | ||||||||||
CBTX, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Income (Unaudited)
(In thousands)
| For the Three Months Ended | ||||||||||||||||||
| 3/31/2018 | 12/31/2017 | 9/30/2017 | 6/30/2017 | 3/31/2017 | ||||||||||||||
| Interest Income | ||||||||||||||||||
| Interest and fees on loans | $ | 28,462 | $ | 27,726 | $ | 27,129 | $ | 26,560 | $ | 25,953 | ||||||||
| Securities | 1,436 | 1,357 | 1,334 | 1,353 | 1,303 | |||||||||||||
| Federal Funds and interest-bearing deposits | 1,187 | 1,283 | 1,106 | 813 | 742 | |||||||||||||
| Total Interest Income | 31,085 | 30,366 | 29,569 | 28,726 | 27,998 | |||||||||||||
| Interest Expense | ||||||||||||||||||
| Deposits | 1,948 | 1,993 | 1,964 | 1,857 | 1,838 | |||||||||||||
| Repurchase agreements | 1 | — | 2 | 1 | 2 | |||||||||||||
| Note payable | 4 | 122 | 269 | 264 | 251 | |||||||||||||
| Junior subordinated debt | 93 | 86 | 83 | 79 | 74 | |||||||||||||
| Total Interest Expense | 2,046 | 2,201 | 2,318 | 2,201 | 2,165 | |||||||||||||
| Net Interest Income | 29,039 | 28,165 | 27,251 | 26,525 | 25,833 | |||||||||||||
| Provision (Recapture) for Loan Losses | 865 | 1,050 | (1,654 | ) | (694 | ) | 960 | |||||||||||
| Net Interest Income After Provision (Recapture) for Loan Losses | 28,174 | 27,115 | 28,905 | 27,219 | 24,873 | |||||||||||||
| Noninterest Income | ||||||||||||||||||
| Deposit account service charges | 1,478 | 1,388 | 1,395 | 1,517 | 1,500 | |||||||||||||
| Net gain (loss) on sale of assets | 130 | (7 | ) | 828 | 339 | 364 | ||||||||||||
| Card interchange fees | 927 | 941 | 803 | 877 | 832 | |||||||||||||
| Earnings on bank-owned life insurance | 451 | 460 | 459 | 335 | 326 | |||||||||||||
| Other | 375 | 362 | 601 | 458 | 426 | |||||||||||||
| Total Noninterest Income | 3,361 | 3,144 | 4,086 | 3,526 | 3,448 | |||||||||||||
| Noninterest Expense | ||||||||||||||||||
| Salaries and employee benefits | 12,695 | 14,021 | 11,829 | 11,299 | 11,424 | |||||||||||||
| Net occupancy expense | 2,265 | 2,346 | 2,221 | 2,351 | 2,233 | |||||||||||||
| Regulatory fees | 545 | 487 | 458 | 621 | 610 | |||||||||||||
| Data processing | 683 | 674 | 662 | 651 | 642 | |||||||||||||
| Printing, stationery and office | 411 | 415 | 348 | 370 | 347 | |||||||||||||
| Amortization of intangibles | 255 | 263 | 267 | 271 | 278 | |||||||||||||
| Professional and director fees | 919 | 1,168 | 606 | 706 | 625 | |||||||||||||
| Correspondent bank and customer related transaction expenses | 67 | 67 | 67 | 78 | 74 | |||||||||||||
| Loan processing costs | 118 | 141 | 115 | 133 | 72 | |||||||||||||
| Advertising, marketing and business development | 506 | 508 | 266 | 508 | 179 | |||||||||||||
| Repossessed real estate and other asset expense | 57 | 66 | 340 | 85 | 118 | |||||||||||||
| Security and protection expense | 302 | 300 | 331 | 352 | 372 | |||||||||||||
| Telephone and communications | 386 | 344 | 311 | 307 | 354 | |||||||||||||
| Other expenses | 1,075 | 1,189 | 1,196 | 1,127 | 1,099 | |||||||||||||
| Total Noninterest Expense | 20,284 | 21,989 | 19,017 | 18,859 | 18,427 | |||||||||||||
| Net Income Before Income Tax Expense | 11,251 | 8,270 | 13,974 | 11,886 | 9,894 | |||||||||||||
| Income Tax Expense | 2,139 | 6,313 | 3,927 | 3,181 | 3,032 | |||||||||||||
| Net Income | $ | 9,112 | $ | 1,957 | $ | 10,047 | $ | 8,705 | $ | 6,862 | ||||||||
CBTX, INC. AND SUBSIDIARY
Financial Highlights (Unaudited)
(In thousands, except per share data and percentages)
| For the Three Months Ended | ||||||||||||||||
| 3/31/2018 | 12/31/2017 | 9/30/2017 | 6/30/2017 | 3/31/2017 | ||||||||||||
| Profitability: | ||||||||||||||||
| Net income | $ | 9,112 | $ | 1,957 | $ | 10,047 | $ | 8,705 | $ | 6,862 | ||||||
| Basic earnings per share | $ | 0.37 | $ | 0.08 | $ | 0.46 | $ | 0.39 | $ | 0.31 | ||||||
| Diluted earnings per share | $ | 0.37 | $ | 0.08 | $ | 0.45 | $ | 0.39 | $ | 0.31 | ||||||
| Return on average assets (1) | 1.20 | % | 0.25 | % | 1.34 | % | 1.20 | % | 0.95 | % | ||||||
| Return on average shareholders' equity (1) | 8.20 | % | 1.83 | % | 10.54 | % | 9.46 | % | 7.73 | % | ||||||
| Net interest margin- tax equivalent (1) | 4.23 | % | 4.06 | % | 4.07 | % | 4.08 | % | 4.02 | % | ||||||
| Efficiency ratio (2) | 62.60 | % | 70.23 | % | 60.69 | % | 62.76 | % | 62.93 | % | ||||||
| Liquidity and Capital Ratios: | ||||||||||||||||
| Total shareholders' equity to total assets | 14.69 | % | 14.48 | % | 12.75 | % | 12.65 | % | 12.48 | % | ||||||
| Tangible equity to tangible assets (3) | 12.19 | % | 11.98 | % | 10.10 | % | 9.95 | % | 9.74 | % | ||||||
| Common equity tier 1 capital ratio | 14.12 | % | 14.19 | % | 12.23 | % | 12.00 | % | 11.32 | % | ||||||
| Tier 1 leverage ratio | 12.58 | % | 12.30 | % | 10.48 | % | 10.39 | % | 10.10 | % | ||||||
| Tier 1 risk-based capital ratio | 14.37 | % | 14.44 | % | 12.49 | % | 12.26 | % | 11.58 | % | ||||||
| Total risk-based capital ratio | 15.35 | % | 15.42 | % | 13.48 | % | 13.33 | % | 12.64 | % | ||||||
| Other Data: | ||||||||||||||||
| Weighted average common shares outstanding- Basic | 24,833 | 23,629 | 22,063 | 22,062 | 22,062 | |||||||||||
| Weighted average common shares outstanding- Diluted | 24,954 | 23,742 | 22,138 | 22,148 | 22,162 | |||||||||||
| Common shares outstanding at period end | 24,833 | 24,833 | 22,063 | 22,063 | 22,062 | |||||||||||
| Dividends per share | $ | 0.05 | $ | 0.05 | $ | 0.05 | $ | 0.05 | $ | 0.05 | ||||||
| Book value per share | $ | 18.18 | $ | 17.97 | $ | 17.27 | $ | 16.86 | $ | 16.48 | ||||||
| Tangible book value per share (3) | $ | 14.66 | $ | 14.44 | $ | 13.29 | $ | 12.86 | $ | 12.47 | ||||||
| Employees - full-time equivalents | 477 | 462 | 464 | 472 | 479 | |||||||||||
| (1) | Quarterly ratios are annualized. | |
| (2) | Efficiency ratio represents noninterest expense divided by the sum of net interest income and noninterest income. | |
| (3) | Non‑GAAP financial measure. See the table captioned “Non‑GAAP to GAAP Reconciliation.” | |
CBTX, INC. AND SUBSIDIARY
Net Interest Margin (Unaudited)
(In thousands, except percentages)
| For the Three Months Ended | ||||||||||||||||||||||||||||
| 3/31/2018 | 12/31/2017 | 3/31/2017 | ||||||||||||||||||||||||||
| Interest | Interest | Interest | ||||||||||||||||||||||||||
| Average | Earned/ | Average | Average | Earned/ | Average | Average | Earned/ | Average | ||||||||||||||||||||
| Outstanding | Interest | Yield/ | Outstanding | Interest | Yield/ | Outstanding | Interest | Yield/ | ||||||||||||||||||||
| Balance | Paid | Rate (1) | Balance | Paid | Rate (1) | Balance | Paid | Rate (1) | ||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||
| Interest-earnings assets: | ||||||||||||||||||||||||||||
| Total loans (2) | $ | 2,319,463 | $ | 28,462 | 4.98 | % | $ | 2,252,735 | $ | 27,726 | 4.88 | % | $ | 2,178,626 | $ | 25,953 | 4.83 | % | ||||||||||
| Debt securities | 223,730 | 1,436 | 2.60 | % | 222,602 | 1,357 | 2.42 | % | 217,086 | 1,303 | 2.43 | % | ||||||||||||||||
| Federal funds sold and other interest-earning assets | 252,722 | 994 | 1.60 | % | 317,484 | 1,093 | 1.37 | % | 257,152 | 549 | 0.87 | % | ||||||||||||||||
| Nonmarketable equity securities | 14,701 | 193 | 5.32 | % | 14,698 | 190 | 5.13 | % | 14,685 | 193 | 5.33 | % | ||||||||||||||||
| Total interest-earning assets | 2,810,616 | $ | 31,085 | 4.49 | % | 2,807,519 | $ | 30,366 | 4.29 | % | 2,667,549 | $ | 27,998 | 4.26 | % | |||||||||||||
| Allowance for loan losses | (24,866 | ) | (24,127 | ) | (25,419 | ) | ||||||||||||||||||||||
| Noninterest-earnings assets | 287,099 | 296,108 | 273,437 | |||||||||||||||||||||||||
| Total assets | $ | 3,072,849 | $ | 3,079,500 | $ | 2,915,567 | ||||||||||||||||||||||
| Liabilities and Shareholders’ Equity | ||||||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||||||
| Interest-bearing deposits | $ | 1,491,613 | $ | 1,948 | 0.53 | % | $ | 1,519,631 | $ | 1,993 | 0.52 | % | $ | 1,513,348 | $ | 1,838 | 0.49 | % | ||||||||||
| Repurchase agreements | 1,418 | 1 | 0.29 | % | 1,793 | — | — | % | 2,468 | 2 | 0.33 | % | ||||||||||||||||
| Note payable | — | 4 | — | % | 11,252 | 122 | 4.30 | % | 26,965 | 251 | 3.78 | % | ||||||||||||||||
| Junior subordinated debt | 10,826 | 93 | 3.48 | % | 10,826 | 86 | 3.15 | % | 10,826 | 74 | 2.77 | % | ||||||||||||||||
| Total interest-bearing liabilities | 1,503,857 | $ | 2,046 | 0.55 | % | 1,543,502 | $ | 2,201 | 0.56 | % | 1,553,607 | $ | 2,165 | 0.57 | % | |||||||||||||
| Noninterest-bearing liabilities: | ||||||||||||||||||||||||||||
| Noninterest-bearing deposits | 1,097,085 | 1,087,416 | 985,690 | |||||||||||||||||||||||||
| Other liabilities | 21,165 | 23,271 | 16,421 | |||||||||||||||||||||||||
| Total noninterest-bearing liabilities | 1,118,250 | 1,110,687 | 1,002,111 | |||||||||||||||||||||||||
| Shareholders’ equity | 450,742 | 425,311 | 359,849 | |||||||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 3,072,849 | $ | 3,079,500 | $ | 2,915,567 | ||||||||||||||||||||||
| Net interest income | $ | 29,039 | $ | 28,165 | $ | 25,833 | ||||||||||||||||||||||
| Net interest spread (3) | 3.93 | % | 3.73 | % | 3.69 | % | ||||||||||||||||||||||
| Net interest margin (4) | 4.19 | % | 3.98 | % | 3.93 | % | ||||||||||||||||||||||
| Net interest margin—tax equivalent (5) | 4.23 | % | 4.06 | % | 4.02 | % | ||||||||||||||||||||||
| (1) | Annualized. | |
| (2) | Includes average outstanding balances of loans held for sale of $544,000, $521,000 and $690,000 for the three months ended March 31, 2018, December 31, 2017 and March 31, 2017, respectively. | |
| (3) | Net interest spread is the average yield on interest‑earning assets minus the average rate on interest‑bearing liabilities. | |
| (4) | Net interest margin is equal to net interest income divided by average interest‑earning assets. | |
| (5) | To make pre‑tax income and resultant yields on tax‑exempt investments and loans comparable to those on taxable investments and loans, a tax equivalent adjustment of $270,000, $549,000 and $614,000 for the three months ended March 31, 2018, December 31, 2017 and March 31, 2017, respectively, has been computed using a federal income tax rate of 21% for 2018 and 35% for 2017. | |
CBTX, INC. AND SUBSIDIARY
Yield Trend (Unaudited)
| For the Three Months Ended | ||||||||||||||||
| 3/31/2018 | 12/31/2017 | 9/30/2017 | 6/30/2017 | 3/31/2017 | ||||||||||||
| Yield Trend - Annualized: | ||||||||||||||||
| Interest-earnings assets: | ||||||||||||||||
| Total loans | 4.98 | % | 4.88 | % | 4.91 | % | 4.83 | % | 4.83 | % | ||||||
| Debt securities | 2.60 | % | 2.42 | % | 2.37 | % | 2.45 | % | 2.43 | % | ||||||
| Federal funds sold and other interest-earning assets | 1.60 | % | 1.37 | % | 1.29 | % | 1.12 | % | 0.87 | % | ||||||
| Nonmarketable equity securities | 5.32 | % | 5.13 | % | 4.83 | % | 4.81 | % | 5.33 | % | ||||||
| Total interest-earning assets | 4.49 | % | 4.29 | % | 4.32 | % | 4.32 | % | 4.26 | % | ||||||
| Interest-bearing liabilities: | ||||||||||||||||
| Interest-bearing deposits | 0.53 | % | 0.52 | % | 0.52 | % | 0.50 | % | 0.49 | % | ||||||
| Repurchase agreements | 0.29 | % | — | % | 0.33 | % | 0.17 | % | 0.33 | % | ||||||
| Note payable | — | % | 4.30 | % | 4.31 | % | 4.10 | % | 3.78 | % | ||||||
| Junior subordinated debt | 3.48 | % | 3.15 | % | 3.04 | % | 2.93 | % | 2.77 | % | ||||||
| Total interest-bearing liabilities | 0.55 | % | 0.56 | % | 0.60 | % | 0.58 | % | 0.57 | % | ||||||
| Net interest spread (1) | 3.93 | % | 3.73 | % | 3.73 | % | 3.74 | % | 3.69 | % | ||||||
| Net interest margin (2) | 4.19 | % | 3.98 | % | 3.98 | % | 3.99 | % | 3.93 | % | ||||||
| Net interest margin—tax equivalent (3) | 4.23 | % | 4.06 | % | 4.07 | % | 4.08 | % | 4.02 | % | ||||||
| (1) | Net interest spread is the average yield on interest‑earning assets minus the average rate on interest‑bearing liabilities. | |
| (2) | Net interest margin is equal to net interest income divided by average interest‑earning assets. | |
| (3) | To make pre‑tax income and resultant yields on tax‑exempt investments and loans comparable to those on taxable investments and loans, a tax equivalent adjustment has been computed using a federal income tax rate of 21% for 2018 and 35% for 2017. | |
CBTX, INC. AND SUBSIDIARY
Average Outstanding Balances (Unaudited)
(In thousands)
| For the Three Months Ended | ||||||||||||||||||||
| 3/31/2018 | 12/31/2017 | 9/30/2017 | 6/30/2017 | 3/31/2017 | ||||||||||||||||
| Average Outstanding Balances: | ||||||||||||||||||||
| Assets | ||||||||||||||||||||
| Interest-earnings assets: | ||||||||||||||||||||
| Total loans (1) | $ | 2,319,463 | $ | 2,252,735 | $ | 2,191,016 | $ | 2,203,145 | $ | 2,178,626 | ||||||||||
| Debt securities | 223,730 | 222,602 | 223,132 | 220,905 | 217,086 | |||||||||||||||
| Federal funds sold and other interest-earning assets | 252,722 | 317,484 | 284,334 | 228,393 | 257,152 | |||||||||||||||
| Nonmarketable equity securities | 14,701 | 14,698 | 14,695 | 14,691 | 14,685 | |||||||||||||||
| Total interest-earning assets | 2,810,616 | 2,807,519 | 2,713,177 | 2,667,134 | 2,667,549 | |||||||||||||||
| Allowance for loan losses | (24,866 | ) | (24,127 | ) | (25,316 | ) | (26,424 | ) | (25,419 | ) | ||||||||||
| Noninterest-earnings assets | 287,099 | 296,108 | 290,767 | 273,760 | 273,437 | |||||||||||||||
| Total assets | $ | 3,072,849 | $ | 3,079,500 | $ | 2,978,628 | $ | 2,914,470 | $ | 2,915,567 | ||||||||||
| Liabilities and Shareholders’ Equity | ||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||
| Interest-bearing deposits | $ | 1,491,613 | $ | 1,519,631 | $ | 1,501,732 | $ | 1,478,579 | $ | 1,513,348 | ||||||||||
| Repurchase agreements | 1,418 | 1,793 | 2,404 | 2,356 | 2,468 | |||||||||||||||
| Note payable | — | 11,252 | 24,742 | 25,841 | 26,965 | |||||||||||||||
| Junior subordinated debt | 10,826 | 10,826 | 10,826 | 10,826 | 10,826 | |||||||||||||||
| Total interest-bearing liabilities | 1,503,857 | 1,543,502 | 1,539,704 | 1,517,602 | 1,553,607 | |||||||||||||||
| Noninterest-bearing liabilities: | ||||||||||||||||||||
| Noninterest-bearing deposits | 1,097,085 | 1,087,416 | 1,041,731 | 1,010,823 | 985,690 | |||||||||||||||
| Other liabilities | 21,165 | 23,271 | 18,844 | 16,910 | 16,421 | |||||||||||||||
| Total noninterest-bearing liabilities | 1,118,250 | 1,110,687 | 1,060,575 | 1,027,733 | 1,002,111 | |||||||||||||||
| Shareholders’ equity | 450,742 | 425,311 | 378,349 | 369,135 | 359,849 | |||||||||||||||
| Total liabilities and shareholders’ equity | $ | 3,072,849 | $ | 3,079,500 | $ | 2,978,628 | $ | 2,914,470 | $ | 2,915,567 | ||||||||||
| (1) | Includes average outstanding balances of loans held for sale. | |
CBTX, INC. AND SUBSIDIARY
Period End Balances (Unaudited)
(In thousands, except percentages)
| 3/31/2018 | 12/31/2017 | 9/30/2017 | 6/30/2017 | 3/31/2017 | |||||||||||||||||||||||||||
| Amount | % | Amount | % | Amount | % | Amount | % | Amount | % | ||||||||||||||||||||||
| Loan Portfolio: | |||||||||||||||||||||||||||||||
| Commercial and industrial | $ | 559,070 | 23.7 | % | $ | 559,363 | 24.1 | % | $ | 548,870 | 24.9 | % | $ | 535,116 | 24.4 | % | $ | 524,201 | 23.6 | % | |||||||||||
| Real estate: | |||||||||||||||||||||||||||||||
| Commercial real estate | 767,108 | 32.5 | % | 738,293 | 31.9 | % | 689,501 | 31.3 | % | 690,044 | 31.4 | % | 723,253 | 32.5 | % | ||||||||||||||||
| Construction and development | 436,260 | 18.5 | % | 449,211 | 19.4 | % | 424,489 | 19.3 | % | 433,966 | 19.8 | % | 522,508 | 23.5 | % | ||||||||||||||||
| 1-4 family residential | 260,580 | 11.0 | % | 258,584 | 11.2 | % | 246,564 | 11.2 | % | 240,073 | 10.9 | % | 237,218 | 10.7 | % | ||||||||||||||||
| Multi-family residential | 236,000 | 10.0 | % | 220,305 | 9.5 | % | 211,219 | 9.6 | % | 208,222 | 9.5 | % | 124,246 | 5.6 | % | ||||||||||||||||
| Consumer | 40,869 | 1.7 | % | 40,433 | 1.7 | % | 42,772 | 1.9 | % | 41,130 | 1.9 | % | 41,326 | 1.9 | % | ||||||||||||||||
| Agricultural | 8,807 | 0.4 | % | 11,256 | 0.5 | % | 11,424 | 0.5 | % | 10,650 | 0.4 | % | 10,217 | 0.4 | % | ||||||||||||||||
| Other | 52,382 | 2.2 | % | 40,344 | 1.7 | % | 29,684 | 1.3 | % | 38,237 | 1.7 | % | 39,869 | 1.8 | % | ||||||||||||||||
| Gross loans | 2,361,076 | 100.0 | % | 2,317,789 | 100.0 | % | 2,204,523 | 100.0 | % | 2,197,438 | 100.0 | % | 2,222,838 | 100.0 | % | ||||||||||||||||
| Less deferred fees and unearned discount | (4,910 | ) | (4,785 | ) | (4,579 | ) | (4,436 | ) | (4,507 | ) | |||||||||||||||||||||
| Less allowance for loan losses | (25,349 | ) | (24,778 | ) | (23,757 | ) | (25,187 | ) | (25,881 | ) | |||||||||||||||||||||
| Less loans held for sale | (113 | ) | (1,460 | ) | (466 | ) | (559 | ) | (675 | ) | |||||||||||||||||||||
| Loans, net | $ | 2,330,704 | $ | 2,286,766 | $ | 2,175,721 | $ | 2,167,256 | $ | 2,191,775 | |||||||||||||||||||||
| Deposits: | |||||||||||||||||||||||||||||||
| Interest-bearing demand accounts | $ | 345,378 | 13.3 | % | $ | 363,015 | 14.0 | % | $ | 340,627 | 13.3 | % | $ | 343,826 | 13.7 | % | $ | 355,235 | 14.2 | % | |||||||||||
| Money market accounts | 717,548 | 27.6 | % | 702,299 | 27.0 | % | 726,903 | 28.5 | % | 698,546 | 27.7 | % | 714,863 | 28.6 | % | ||||||||||||||||
| Savings accounts | 95,603 | 3.7 | % | 95,842 | 3.7 | % | 88,613 | 3.5 | % | 88,083 | 3.5 | % | 88,360 | 3.5 | % | ||||||||||||||||
| Certificates and other time deposits, $100,000 or greater | 161,777 | 6.2 | % | 172,469 | 6.6 | % | 179,777 | 7.0 | % | 182,143 | 7.2 | % | 171,147 | 6.9 | % | ||||||||||||||||
| Certificates and other time deposits, less than $100,000 | 158,875 | 6.1 | % | 159,558 | 6.1 | % | 166,952 | 6.5 | % | 173,321 | 6.9 | % | 175,001 | 7.0 | % | ||||||||||||||||
| Total interest-bearing deposits | 1,479,181 | 56.9 | % | 1,493,183 | 57.4 | % | 1,502,872 | 58.8 | % | 1,485,919 | 59.0 | % | 1,504,606 | 60.2 | % | ||||||||||||||||
| Noninterest-bearing deposits | 1,120,521 | 43.1 | % | 1,109,789 | 42.6 | % | 1,051,755 | 41.2 | % | 1,030,865 | 41.0 | % | 993,839 | 39.8 | % | ||||||||||||||||
| Total deposits | $ | 2,599,702 | 100.0 | % | $ | 2,602,972 | 100.0 | % | $ | 2,554,627 | 100.0 | % | $ | 2,516,784 | 100.0 | % | $ | 2,498,445 | 100.0 | % | |||||||||||
CBTX, INC. AND SUBSIDIARY
Credit Quality (Unaudited)
(In thousands, except percentages)
| 3/31/2018 | 12/31/2017 | 9/30/2017 | 6/30/2017 | 3/31/2017 | ||||||||||||
| Nonaccrual loans (at period end): | ||||||||||||||||
| Commercial and industrial | $ | 2,533 | $ | 3,280 | $ | 2,444 | $ | 2,348 | $ | 2,040 | ||||||
| Real estate: | ||||||||||||||||
| Commercial real estate | 2,217 | 3,216 | 5,038 | 4,964 | 2,317 | |||||||||||
| Construction and development | 233 | 252 | 265 | 362 | 414 | |||||||||||
| 1-4 family residential | 765 | 898 | 844 | 578 | 1,283 | |||||||||||
| Multi-family residential | — | — | 1 | 3 | 5 | |||||||||||
| Consumer | 21 | — | — | — | — | |||||||||||
| Agricultural | — | — | — | — | 6 | |||||||||||
| Total nonaccrual loans | $ | 5,769 | $ | 7,646 | $ | 8,592 | $ | 8,255 | $ | 6,065 | ||||||
| Nonperforming assets (at period end): | ||||||||||||||||
| Nonaccrual loans | $ | 5,769 | $ | 7,646 | $ | 8,592 | $ | 8,255 | $ | 6,065 | ||||||
| Accruing loans 90 or more days past due | — | — | — | — | — | |||||||||||
| Total nonperforming loans | 5,769 | 7,646 | 8,592 | 8,255 | 6,065 | |||||||||||
| Foreclosed assets, including other real estate: | ||||||||||||||||
| Commercial real estate, construction and development, land and land development | 295 | 298 | 729 | 1,018 | 1,179 | |||||||||||
| Residential real estate | — | 407 | 407 | 417 | — | |||||||||||
| Total foreclosed assets | 295 | 705 | 1,136 | 1,435 | 1,179 | |||||||||||
| Total nonperforming assets | $ | 6,064 | $ | 8,351 | $ | 9,728 | $ | 9,690 | $ | 7,244 | ||||||
| Allowance for Loan Losses (at period end): | ||||||||||||||||
| Commercial and industrial | $ | 7,439 | $ | 7,257 | $ | 7,194 | $ | 8,466 | $ | 7,746 | ||||||
| Real estate: | ||||||||||||||||
| Commercial real estate | 10,742 | 10,375 | 9,640 | 10,000 | 10,507 | |||||||||||
| Construction and development | 3,356 | 3,482 | 3,364 | 3,313 | 4,145 | |||||||||||
| 1-4 family residential | 1,329 | 1,326 | 1,282 | 1,138 | 1,111 | |||||||||||
| Multi-family residential | 1,520 | 1,419 | 1,360 | 1,341 | 800 | |||||||||||
| Consumer | 517 | 566 | 626 | 599 | 615 | |||||||||||
| Agricultural | 53 | 68 | 69 | 64 | 63 | |||||||||||
| Other | 393 | 285 | 222 | 266 | 894 | |||||||||||
| Total allowance for loan losses | $ | 25,349 | $ | 24,778 | $ | 23,757 | $ | 25,187 | $ | 25,881 | ||||||
| Credit Quality Ratios (at period end): | ||||||||||||||||
| Nonperforming assets to total assets | 0.20 | % | 0.27 | % | 0.33 | % | 0.33 | % | 0.25 | % | ||||||
| Nonperforming loans to total loans | 0.24 | % | 0.33 | % | 0.39 | % | 0.38 | % | 0.27 | % | ||||||
| Allowance for loan losses to nonperforming loans | 439.40 | % | 324.06 | % | 276.50 | % | 305.11 | % | 426.73 | % | ||||||
| Allowance for loan losses to total loans | 1.08 | % | 1.07 | % | 1.08 | % | 1.15 | % | 1.17 | % | ||||||
CBTX, INC. AND SUBSIDIARY
Allowance for Loan Losses (Unaudited)
(In thousands, except percentages)
| For the Three Months Ended | ||||||||||||||||||||
| 3/31/2018 | 12/31/2017 | 9/30/2017 | 6/30/2017 | 3/31/2017 | ||||||||||||||||
| Analysis of Allowance for Loan Losses | ||||||||||||||||||||
| Allowance for loan losses at beginning of period | $ | 24,778 | $ | 23,757 | $ | 25,187 | $ | 25,881 | $ | 25,006 | ||||||||||
| Provision (recapture) for loan losses | 865 | 1,050 | (1,654 | ) | (694 | ) | 960 | |||||||||||||
| Net charge-offs (recoveries) | ||||||||||||||||||||
| Commercial and industrial | 297 | (52 | ) | (205 | ) | (66 | ) | 117 | ||||||||||||
| Real estate: | ||||||||||||||||||||
| Commercial real estate | (3 | ) | 118 | (2 | ) | (2 | ) | (3 | ) | |||||||||||
| Construction and development | — | — | — | — | — | |||||||||||||||
| 1-4 family residential | 2 | 7 | (2 | ) | (8 | ) | (2 | ) | ||||||||||||
| Multi-family residential | — | — | — | — | — | |||||||||||||||
| Consumer | (2 | ) | (9 | ) | (4 | ) | 90 | (27 | ) | |||||||||||
| Agricultural | — | (35 | ) | (11 | ) | (6 | ) | — | ||||||||||||
| Other | — | — | — | (8 | ) | — | ||||||||||||||
| Total net charge-offs (recoveries) | 294 | 29 | (224 | ) | — | 85 | ||||||||||||||
| Allowance for loan losses at end of period | $ | 25,349 | $ | 24,778 | $ | 23,757 | $ | 25,187 | $ | 25,881 | ||||||||||
| Net charge-offs (recoveries) to average loans | 0.05 | % | — | % | (0.04 | )% | — | % | 0.02 | % | ||||||||||
CBTX, INC. AND SUBSIDIARY
Non‑GAAP to GAAP Reconciliation (Unaudited)
(In thousands, except per share data and percentages)
Our accounting and reporting policies conform to GAAP and the prevailing practices in the banking industry. However, we also evaluate our performance based on certain additional non‑GAAP financial measures. We classify a financial measure as being a non‑GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are not included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP as in effect from time to time in the United States in our statements of income, balance sheets or statements of cash flows. Non‑GAAP financial measures do not include operating and other statistical measures or ratios or statistical measures calculated using exclusively financial measures calculated in accordance with GAAP. Non‑GAAP financial measures should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the way we calculate the non‑GAAP financial measures may differ from that of other companies reporting measures with similar names.
We calculate (1) tangible equity as total shareholders’ equity, less goodwill and other intangible assets, net of accumulated amortization, and (2) tangible book value per share as tangible equity divided by shares of common stock outstanding at the end of the relevant period. The most directly comparable GAAP financial measure for tangible book value per share is book value per share. We calculate tangible assets as total assets less goodwill and other intangible assets, net of accumulated amortization. The most directly comparable GAAP financial measure for tangible equity to tangible assets is total shareholders’ equity to total assets. We believe that tangible book value per share and tangible equity to tangible assets are measures that are important to many investors in the marketplace who are interested in book value per share and total shareholders’ equity to total assets, exclusive of change in intangible assets.
The following tables reconcile, as of the dates set forth below, total shareholders’ equity to tangible equity, total assets to tangible assets and presents book value per share, tangible book value per share, tangible equity to tangible assets and shareholders’ equity to total assets:
| 3/31/2018 | 12/31/2017 | 9/30/2017 | 6/30/2017 | 3/31/2017 | ||||||||||||
| Tangible Equity | ||||||||||||||||
| Total shareholders’ equity | $ | 451,571 | $ | 446,214 | $ | 381,121 | $ | 371,964 | $ | 363,643 | ||||||
| Adjustments: | ||||||||||||||||
| Goodwill | 80,950 | 80,950 | 80,950 | 80,950 | 80,950 | |||||||||||
| Other intangibles | 6,521 | 6,770 | 7,031 | 7,298 | 7,513 | |||||||||||
| Tangible equity | $ | 364,100 | $ | 358,494 | $ | 293,140 | $ | 283,716 | $ | 275,180 | ||||||
| Tangible Assets | ||||||||||||||||
| Total assets | $ | 3,074,790 | $ | 3,081,083 | $ | 2,989,838 | $ | 2,940,877 | $ | 2,914,548 | ||||||
| Adjustments: | ||||||||||||||||
| Goodwill | 80,950 | 80,950 | 80,950 | 80,950 | 80,950 | |||||||||||
| Other intangibles | 6,521 | 6,770 | 7,031 | 7,298 | 7,513 | |||||||||||
| Tangible assets | $ | 2,987,319 | $ | 2,993,363 | $ | 2,901,857 | $ | 2,852,629 | $ | 2,826,085 | ||||||
| Common shares outstanding | 24,833 | 24,833 | 22,063 | 22,063 | 22,062 | |||||||||||
| Book value per share | $ | 18.18 | $ | 17.97 | $ | 17.27 | $ | 16.86 | $ | 16.48 | ||||||
| Tangible book value per share | $ | 14.66 | $ | 14.44 | $ | 13.29 | $ | 12.86 | $ | 12.47 | ||||||
| Total shareholders’ equity to total assets | 14.69 | % | 14.48 | % | 12.75 | % | 12.65 | % | 12.48 | % | ||||||
| Tangible equity to tangible assets | 12.19 | % | 11.98 | % | 10.10 | % | 9.95 | % | 9.74 | % | ||||||