CBTX, Inc. Reports Quarterly Financial Results

Rhea-AI Summary

CBTX, Inc. (NASDAQ: CBTX) reported net income of $10.0 million for Q1 2021, equivalent to $0.41 per diluted share, showing stability compared to $10.2 million in Q4 2020 and an increase from $7.5 million in Q1 2020. Total deposits rose to $3.4 billion, up $83 million from the previous quarter. The bank maintained a solid net interest margin of 3.71% and low nonperforming assets at 0.59% of total assets. Additionally, CBTX increased its quarterly dividend to $0.13 per share. Overall, the company anticipates continued economic recovery and strong balance sheet performance.

Positive

• Increased quarterly dividend from $0.10 to $0.13 per share.
• Net income of $10.0 million in Q1 2021, stable from Q4 2020.
• Total deposits grew to $3.4 billion, an increase of $83 million from Q4 2020.
• Low nonperforming assets at 0.59% of total assets.
• Solid net interest margin of 3.71%.

Negative

• Noninterest income decreased to $3.1 million from $4.3 million in Q1 2020.
• Provision for credit losses of $412,000 in Q1 2021.

HOUSTON, April 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 first quarter of 2021.

Robert R. Franklin, Jr., Chairman, CEO and President of the Company stated, “During the first quarter of 2021, our markets continued to improve as companies worked toward returning to pre-pandemic operation. Every day we see more people returning to work as businesses create healthy work environments for both employees and customers. We have seen tremendous liquidity in the system, and our deposits continued to grow through the first quarter of 2021. We anticipate that as the economy recovers, we will see more of that liquidity put to work by our customers and the bank.”

Mr. Franklin concluded, “Our loan portfolio remains strong with little deferral activity remaining. We will continue to work with customers in the hardest hit segments of the economy that will take a little longer to recover. We are also mindful to enhance our shareholders’ return as we increased our quarterly dividend from $0.10 per share to $0.13 per share. We are optimistic about the second half of the year as markets attempt to recapture some of the lost revenues of the last year. Our balance sheet and capital remain strong which gives us many options going forward to drive shareholder value.”

Highlights

• Net income was $10.0 million for the first quarter of 2021, or $0.41 per diluted share, compared to $10.2 million, or $0.41 per diluted share, for the quarter ended December 31, 2020 and $7.5 million, or $0.30 per diluted share, for the quarter ended March 31, 2020.
  
  
• Total deposits were $3.4 billion at March 31, 2021, an increase of $83.0 million compared to $3.3 billion at December 31, 2020. 
  
  
• Maintained a solid net interest margin on a tax equivalent basis of 3.71% for the quarter ended March 31, 2021.
  
  
• Nonperforming assets remained low at 0.59% of total assets at March 31, 2021, compared to 0.61% of total assets at December 31, 2020.
  
  
• Increased quarterly dividend to $0.13 per share from $0.10 per share.

Operating Results

Net Interest Income

Net interest income was $33.1 million for the first quarter of 2021, compared to $32.5 million for the fourth quarter of 2020 and $32.2 million for the first quarter of 2020. Net interest income increased $570,000 during the first quarter of 2021, compared to the fourth quarter of 2020, primarily due to higher loan rates and lower deposit rates, partially offset by the impact of two fewer days and lower average loans in the first quarter of 2021. Net interest income increased $870,000 during the first quarter of 2021, compared to the first quarter of 2020, primarily due to higher average loans, securities and other interest-earning assets and lower deposit rates, partially offset by lower rates on loans, securities and other interest-earning assets and the impact of one less day in the first quarter of 2021.

The yield on interest-earning assets was 3.85% for the first quarter of 2021, compared to 3.79% for the fourth quarter of 2020 and 4.56% for the first quarter of 2020. The cost of interest-bearing liabilities was 0.34% for the first quarter of 2021, 0.39% for the fourth quarter of 2020 and 0.94% for the first quarter of 2020. The Company’s net interest margin on a tax equivalent basis was 3.71% for the first quarter of 2021, compared to 3.62% for the fourth quarter of 2020 and 4.06% for the first quarter of 2020.

Provision/Recapture for Credit Losses

The provision for credit losses was $412,000 for the first quarter of 2021, compared to a credit reserve recapture of $135,000 for the fourth quarter of 2020 and a provision for credit losses of $5.0 million for the first quarter of 2020.

The provision for credit losses for the first quarter of 2021 was primarily due to increases of $237,000 and $126,000 in the ACL for loans and unfunded commitments, respectively, in addition to $49,000 in net loan charge-offs. The recapture in the fourth quarter of 2020 primarily related to a $364,000 recapture for unfunded commitments, partially offset by a provision of $229,000 for loans. The provision for credit losses for the first 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.  

The ACL for loans was $40.9 million, or 1.41% of loans excluding loans held for sale, at March 31, 2021, compared to $40.6 million, or 1.39% of loans excluding loans held for sale, at December 31, 2020 and $31.2 million, or 1.17% of loans excluding loans held for sale, at March 31, 2020.  At March 31, 2021, there were minimal adjustments to the qualitative factors utilized in calculating the ACL. The increase in the ACL from December 31, 2020 to March 31, 2021 was primarily due to an increase in specific reserves for loans individually evaluated within the portfolio and a slight increase in the general reserve. Although the collectively evaluated loan portfolio decreased $27.3 million compared to December 31, 2020, the general reserve increased $14,000 because balances in certain portfolio segments with higher historical loss rates and higher qualitative factor rates increased as a component of the overall portfolio resulting in an increase in the ACL. The increase in the ACL from March 31, 2020 to March 31, 2021 was primarily due to the impact of the COVID-19 pandemic and the sustained instability of the oil and gas industry during 2020.

The ACL for unfunded commitments was $4.3 million at March 31, 2021, compared to $4.2 million at December 31, 2020 and $3.7 million at March 31, 2020.

Noninterest Income

Noninterest income was $3.1 million for the first quarter of 2021, $3.5 million for the fourth quarter of 2020 and $4.3 million for the first quarter of 2020. The decrease of $1.2 million for the first quarter of 2021, compared to the first quarter of 2020, was primarily due to swap origination fee income recognized in 2020.

Noninterest Expense

Noninterest expense was $23.3 million for the first quarter of 2021, compared to $23.7 million for the fourth quarter of 2020 and $22.1 million for the first quarter of 2020. The decrease in noninterest expense of $373,000 between the first quarter of 2021 and the fourth quarter of 2020 was primarily due to a $1.5 million decrease in professional and director fees, mainly consulting fees related to Bank Secrecy Act/Anti-Money Laundering, or BSA/AML, compliance matters, partially offset by a $1.3 million increase in salaries and employee benefits reflecting reductions to bonus accruals in the fourth quarter of 2020. Total consulting related fees associated with BSA/AML compliance matters were $661,000 in the first quarter of 2021, compared to $2.4 million in the fourth quarter of 2020.

The increase in noninterest expense of $1.2 million for the first quarter of 2021, compared to the first quarter of 2020, was primarily due to a $551,000 increase in professional and director fees, a $354,000 increase in data processing and software and a $453,000 increase in regulatory fees. The increase in professional and director fees during the first quarter of 2021, compared to the first quarter of 2020, was primarily due to $661,000 in consulting related fees associated with BSA/AML compliance matters recognized in the first quarter of 2021.

Income Taxes

Income tax expense was $2.5 million for the first quarter of 2021, $2.3 million for the fourth quarter of 2020 and $1.9 million for the first quarter of 2020. The effective tax rates were 19.87% for the first quarter of 2021, 18.24% for the fourth quarter of 2020 and 19.85% for the first 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 and bank-owned life insurance earnings.

Balance Sheet Highlights

Loans

Loans excluding loans held for sale were $2.9 billion at March 31, 2021, $2.9 billion at December 31, 2020 and $2.7 billion at March 31, 2020.

The increase from March 31, 2020 to March 31, 2021 was impacted by the Company’s participation in the Paycheck Protection Program, or 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 $268.8 million at March 31, 2021 and $271.2 million at December 31, 2020.

In support of customers impacted by the COVID-19 pandemic, the Company offered relief through payment deferrals during 2020 and the first quarter of 2021. As of March 31, 2021, the Company had 16 loans subject to such deferral arrangements with total outstanding principal balances of $34.3 million and as of December 31, 2020 the Company had 21 loans subject to such deferral arrangements with total outstanding principal balances of $38.4 million.

Asset Quality

Nonperforming assets remain relatively low at $23.6 million, or 0.59% of total assets, at March 31, 2021, $24.0 million, or 0.61% of total assets, at December 31, 2020 and $1.4 million, or 0.04% of total assets, at March 31, 2020.

Annualized net charge-offs (recoveries) to average loans was 0.01% for the first quarter of 2021, 0.49% for the fourth quarter of 2020 and (0.05)% for the first quarter of 2020.

Deposits and Borrowings

Total deposits were $3.4 billion at March 31, 2021, $3.3 billion at December 31, 2020 and $2.8 billion at March 31, 2020. The increase in deposits of $83.0 million between December 31, 2020 and March 31, 2021 was due to net deposit inflows of $145.0 million in noninterest-bearing accounts partially offset by net deposit outflows of $62.0 million in interest-bearing accounts. The increase in deposits of $592.5 million between March 31, 2020 and March 31, 2021 was due to net deposit inflows of $425.9 million and $166.6 million in noninterest-bearing accounts and interest-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 $51.4 million at March 31, 2021, December 31, 2020 and March 31, 2020, respectively.

Capital

At March 31, 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 17.00% at March 31, 2021, compared to 16.71% at December 31, 2020 and 16.42% at March 31, 2020. The Company’s tier 1 leverage ratio was 11.90% at March 31, 2021, compared to 12.00% at December 31, 2020 and 13.18% at March 31, 2020. The Company’s total shareholders’ equity to total assets ratio was 13.54% at March 31, 2021, 13.84% at December 31, 2020 and 15.67% at March 31, 2020.

The ratio of tangible equity to tangible assets was 11.67% at March 31, 2021, 11.94% at December 31, 2020 and 13.51% at March 31, 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

The Company’s accounting and reporting policies conform to GAAP and the prevailing practices in the banking industry. The Company’s management also evaluates performance based on certain non-GAAP financial measures. The Company classifies 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 its statements of income, balance sheets or statements of cash flows.

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. 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.

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 results for the quarter ended March 31, 2021 on April 29, 2021 at 8:00 a.m. Central Standard 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 9087182. 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: the Company’s ability to manage the economic risks related to the impact of the COVID-19 pandemic and the sustained instability in the oil and gas industry (including risks related to its customers’ credit quality, deferrals and modifications to loans, the Company’s ability to borrow, and the impact of a resultant recession generally); natural disasters and adverse weather (including the effects of recent hurricanes, tropical storms, tropical depressions and winter storms on the Company’s market area), acts of war or terrorism, pandemics, an outbreak of hostilities or other international or domestic calamities and other matters beyond the Company’s control; the geographic concentration of the Company’s markets in Beaumont and Houston, 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 and in the financial services industry, and within the Company’s primary markets; volatility and direction of oil prices, including risks related to the collapse and instability in oil prices, and the strength of the energy industry, generally 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, including the creditworthiness of energy company borrowers; 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; the 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 initiation 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 the 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 and newly enacted fiscal stimulus that impact the Company’s loan portfolio and forbearance practice; and further government intervention in the U.S. financial system that may impact how the Company achieves its performance goals. Additionally, many of these risks and uncertainties are currently elevated by and may or will 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
		3/31/2021				12/31/2020				9/30/2020				6/30/2020				3/31/2020
Profitability:
Net income		$	10,019			$	10,236			$	6,421			$	2,163			$	7,541
Basic earnings per share		$	0.41			$	0.42			$	0.26			$	0.09			$	0.30
Diluted earnings per share		$	0.41			$	0.41			$	0.26			$	0.09			$	0.30
Return on average assets(1)			1.03	%			1.05	%			0.66	%			0.23	%			0.87	%
Return on average shareholders' equity(1)			7.39	%			7.47	%			4.70	%			1.60	%			5.64	%
Net interest margin - tax equivalent(1)			3.71	%			3.62	%			3.55	%			3.68	%			4.06	%
Efficiency ratio(2)			64.32	%			65.64	%			66.77	%			64.15	%			60.44	%
Liquidity and Capital Ratios:
Total shareholders' equity to total assets			13.54	%			13.84	%			14.18	%			13.77	%			15.67	%
Tangible equity to tangible assets(3)			11.67	%			11.94	%			12.22	%			11.84	%			13.51	%
Common equity tier 1 capital ratio			15.75	%			15.45	%			15.41	%			15.30	%			15.23	%
Tier 1 risk-based capital ratio			15.75	%			15.45	%			15.41	%			15.30	%			15.23	%
Total risk-based capital ratio			17.00	%			16.71	%			16.67	%			16.56	%			16.42	%
Tier 1 leverage ratio			11.90	%			12.00	%			11.90	%			11.96	%			13.18	%
Credit Quality:
Allowance for credit losses for loans to loans excluding loans held for sale			1.41	%			1.39	%			1.49	%			1.35	%			1.17	%
Nonperforming assets to total assets			0.59	%			0.61	%			0.41	%			0.29	%			0.04	%
Nonperforming loans to loans excluding loans held for sale			0.81	%			0.82	%			0.53	%			0.38	%			0.05	%
Net charge-offs (recoveries) to average loans(1)			0.01	%			0.49	%			0.02	%			0.01	%			(0.05	)%
Other Data:
Weighted average common shares outstanding - basic			24,508				24,621				24,748				24,752				24,926
Weighted average common shares outstanding - diluted			24,616				24,678				24,770				24,780				25,000
Common shares outstanding at period end			24,442				24,613				24,713				24,755				24,746
Dividends per share		$	0.13			$	0.10			$	0.10			$	0.10			$	0.10
Book value per share		$	22.31			$	22.20			$	21.89			$	21.71			$	21.70
Tangible book value per share(3)		$	18.84			$	18.74			$	18.44			$	18.26			$	18.23
Employees - full-time equivalents			517				511				515				523				512

(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)

		3/31/2021				12/31/2020				9/30/2020				6/30/2020				3/31/2020
Loans excluding loans held for sale		$	2,891,632			$	2,924,117			$	2,964,526			$	2,934,888			$	2,671,587
Allowance for credit losses for loans			(40,874	)			(40,637	)			(44,069	)			(39,678	)			(31,194	)
Loans, net			2,850,758				2,883,480				2,920,457				2,895,210				2,640,393
Cash and equivalents			604,671				538,007				377,572				492,400				284,898
Securities			289,091				237,281				226,101				235,438				234,014
Premises and equipment			60,551				61,152				61,732				50,729				50,243
Goodwill			80,950				80,950				80,950				80,950				80,950
Other intangible assets			3,991				4,171				4,303				4,496				4,700
Loans held for sale			1,005				2,673				1,763				-				882
Operating lease right-to-use asset			12,900				13,285				12,893				14,081				12,577
Other assets			124,722				128,218				128,901				128,421				116,993
Total assets		$	4,028,639			$	3,949,217			$	3,814,672			$	3,901,725			$	3,425,650
Noninterest-bearing deposits		$	1,621,408			$	1,476,425			$	1,460,983			$	1,513,748			$	1,195,541
Interest-bearing deposits			1,763,339				1,825,369				1,709,681				1,740,455				1,596,692
Total deposits			3,384,747				3,301,794				3,170,664				3,254,203				2,792,233
Federal Home Loan Bank advances			50,000				50,000				50,000				50,000				50,000
Repurchase agreements			—				—				2,153				2,500				1,415
Operating lease liabilities			16,060				16,447				15,759				16,983				15,356
Other liabilities			32,483				34,525				35,175				40,683				29,772
Total liabilities			3,483,290				3,402,766				3,273,751				3,364,369				2,888,776
Total shareholders’ equity			545,349				546,451				540,921				537,356				536,874
Total liabilities and shareholders’ equity		$	4,028,639			$	3,949,217			$	3,814,672			$	3,901,725			$	3,425,650

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

		Three Months Ended
		3/31/2021				12/31/2020				9/30/2020				6/30/2020				3/31/2020
Interest income
Interest and fees on loans		$	33,165			$	32,886			$	32,318			$	32,857			$	33,617
Securities			1,173				1,070				1,107				1,228				1,363
Other interest-earning assets			177				168				176				169				1,055
Equity investments			146				170				162				171				176
Total interest income			34,661				34,294				33,763				34,425				36,211
Interest expense
Deposits			1,350				1,549				1,831				2,022				3,766
Federal Home Loan Bank advances			221				221				221				240				221
Other interest-bearing liabilities			—				4				3				5				4
Total interest expense			1,571				1,774				2,055				2,267				3,991
Net interest income			33,090				32,520				31,708				32,158				32,220
Provision (recapture) for credit losses
Provision for credit losses for loans			286				229				4,569				8,537				4,739
Provision (recapture) for credit losses for unfunded commitments			126				(364	)			(461	)			1,333				310
Total provision (recapture) for credit losses			412				(135	)			4,108				9,870				5,049
Net interest income after provision (recapture) for credit losses			32,678				32,655				27,600				22,288				27,171
Noninterest income
Deposit account service charges			1,193				1,270				1,176				1,095				1,485
Card interchange fees			976				999				995				915				922
Earnings on bank-owned life insurance			390				407				1,187				412				416
Net gain on sales of assets			192				379				114				139				123
Other			360				467				551				348				1,381
Total noninterest income			3,111				3,522				4,023				2,909				4,327
Noninterest expense
Salaries and employee benefits			14,188				12,848				14,332				14,012				14,223
Occupancy expense			2,521				2,628				2,496				2,558				2,424
Professional and director fees			1,703				3,209				2,446				1,541				1,152
Data processing and software			1,576				1,330				1,525				1,292				1,222
Regulatory fees			556				748				471				476				103
Advertising, marketing and business development			285				438				429				269				364
Telephone and communications			463				455				486				392				419
Security and protection expense			390				423				299				351				374
Amortization of intangibles			191				197				198				230				221
Other expenses			1,412				1,382				1,176				1,374				1,587
Total noninterest expense			23,285				23,658				23,858				22,495				22,089
Net income before income tax expense			12,504				12,519				7,765				2,702				9,409
Income tax expense			2,485				2,283				1,344				539				1,868
Net income		$	10,019			$	10,236			$	6,421			$	2,163			$	7,541

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

		Three Months Ended
		3/31/2021											12/31/2020											3/31/2020
		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)		$	2,901,291			$	33,165			4.64	%		$	2,961,622			$	32,886			4.42	%		$	2,634,507			$	33,617			5.13	%
Securities			259,341				1,173			1.84	%			236,233				1,070			1.80	%			233,917				1,363			2.34	%
Other interest-earning assets			475,279				177			0.15	%			388,936				168			0.17	%			315,099				1,055			1.35	%
Equity investments			15,353				146			3.86	%			15,346				170			4.41	%			13,661				176			5.18	%
Total interest-earning assets			3,651,264			$	34,661			3.85	%			3,602,137			$	34,294			3.79	%			3,197,184			$	36,211			4.56	%
Allowance for credit losses for loans			(41,078	)										(44,233	)										(25,831	)
Noninterest-earning assets			321,334											321,303											296,698
Total assets		$	3,931,520										$	3,879,207										$	3,468,051
Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
Interest-bearing deposits		$	1,802,175			$	1,350			0.30	%		$	1,744,557			$	1,549			0.35	%		$	1,650,064			$	3,766			0.92	%
Federal Home Loan Bank advances			50,000				221			1.79	%			50,163				221			1.76	%			50,000				221			1.78	%
Other interest-bearing liabilities			—				—			—				1,426				4			—				763				4			—
Total interest-bearing liabilities			1,852,175			$	1,571			0.34	%			1,796,146			$	1,774			0.39	%			1,700,827			$	3,991			0.94	%
Noninterest-bearing liabilities:
Noninterest-bearing deposits			1,478,183											1,482,753											1,184,776
Other liabilities			51,634											55,174											44,620
Total noninterest-bearing liabilities			1,529,817											1,537,927											1,229,396
Shareholders’ equity			549,528											545,134											537,828
Total liabilities and shareholders’ equity		$	3,931,520										$	3,879,207										$	3,468,051
Net interest income						$	33,090										$	32,520										$	32,220
Net interest spread(3)										3.51	%										3.40	%										3.62	%
Net interest margin(4)										3.68	%										3.59	%										4.05	%
Net interest margin - tax equivalent(5)										3.71	%										3.62	%										4.06	%

(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 $299,000, $287,000 and $81,000 for the quarters ended March 31, 2021, December 31, 2020 and March 31, 2020, respectively, were computed using a federal income tax rate of 21%.

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

		Three Months Ended March 31, 2021,
		Compared to Three Months Ended December 31, 2020
		Increase (Decrease) due to
(Dollars in thousands)		Rate				Volume				Days				Total
Interest-earning assets:
Total loans		$	1,667			$	(670	)		$	(718	)		$	279
Securities			23				105				(25	)			103
Other interest-earning assets			(24	)			37				(4	)			9
Equity investments			(21	)			—				(3	)			(24	)
Total increase (decrease) in interest income			1,645				(528	)			(750	)			367
Interest-bearing liabilities:
Interest-bearing deposits			(216	)			51				(34	)			(199	)
Federal Home Loan Bank advances			6				(1	)			(5	)			—
Other interest-bearing liabilities			(4	)			—				—				(4	)
Total increase (decrease) in interest expense			(214	)			50				(39	)			(203	)
Increase (decrease) in net interest income		$	1,859			$	(578	)		$	(711	)		$	570

		Three Months Ended March 31, 2021,
		Compared to Three Months Ended March 31, 2020
		Increase (Decrease) due to
(Dollars in thousands)		Rate				Volume					Days			Total
Interest-earning assets:
Total loans		$	(3,484	)		$	3,403			$	(371	)		$	(452	)
Securities			(322	)			148				(16	)			(190	)
Other interest-earning assets			(1,404	)			538				(12	)			(878	)
Equity investments			(50	)			22				(2	)			(30	)
Total increase (decrease) in interest income			(5,260	)			4,111				(401	)			(1,550	)
Interest-bearing liabilities:
Interest-bearing deposits			(2,722	)			348				(42	)			(2,416	)
Federal Home Loan Bank advances			2				—				(2	)			—
Other interest-bearing liabilities			(4	)			—				—				(4	)
Total increase (decrease) in interest expense			(2,724	)			348				(44	)			(2,420	)
Increase (decrease) in net interest income		$	(2,536	)		$	3,763			$	(357	)		$	870

CBTX, INC. AND SUBSIDIARY
Yield Trend⁽¹⁾

		Three Months Ended
		3/31/2021			12/31/2020			9/30/2020			6/30/2020			3/31/2020
Interest-earning assets:
Total loans		4.64	%		4.42	%		4.37	%		4.54	%		5.13	%
Securities		1.84	%		1.80	%		1.87	%		2.05	%		2.34	%
Other interest-earning assets		0.15	%		0.17	%		0.18	%		0.18	%		1.35	%
Equity investments		3.86	%		4.41	%		4.20	%		4.54	%		5.18	%
Total interest-earning assets		3.85	%		3.79	%		3.75	%		3.91	%		4.56	%
Interest-bearing liabilities:
Interest-bearing deposits		0.30	%		0.35	%		0.42	%		0.48	%		0.92	%
Federal Home Loan Bank advances		1.79	%		1.76	%		1.76	%		1.36	%		1.78	%
Other interest-bearing liabilities		—			—			—			0.19	%		—
Total interest-bearing liabilities		0.34	%		0.39	%		0.46	%		0.52	%		0.94	%
Net interest spread(2)		3.51	%		3.40	%		3.29	%		3.39	%		3.62	%
Net interest margin(3)		3.68	%		3.59	%		3.52	%		3.65	%		4.05	%
Net interest margin - tax equivalent(4)		3.71	%		3.62	%		3.55	%		3.68	%		4.06	%

(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
		3/31/2021				12/31/2020				9/30/2020				6/30/2020				3/31/2020
Assets
Interest-earning assets:
Total loans(1)		$	2,901,291			$	2,961,622			$	2,945,320			$	2,908,204			$	2,634,507
Securities			259,341				236,233				236,015				240,343				233,917
Other interest-earning assets			475,279				388,936				383,626				378,405				315,099
Equity investments			15,353				15,346				15,334				15,147				13,661
Total interest-earning assets			3,651,264				3,602,137				3,580,295				3,542,099				3,197,184
Allowance for credit losses for loans			(41,078	)			(44,233	)			(40,135	)			(31,443	)			(25,831	)
Noninterest-earning assets			321,334				321,303				326,590				305,821				296,698
Total assets		$	3,931,520			$	3,879,207			$	3,866,750			$	3,816,477			$	3,468,051
Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
Interest-bearing deposits		$	1,802,175			$	1,744,557			$	1,730,812			$	1,687,991			$	1,650,064
Federal Home Loan Bank advances			50,000				50,163				50,000				70,769				50,000
Other interest-bearing liabilities			—				1,426				2,230				2,101				763
Total interest-bearing liabilities			1,852,175				1,796,146				1,783,042				1,760,861				1,700,827
Noninterest-bearing liabilities:
Noninterest-bearing deposits			1,478,183				1,482,753				1,484,557				1,462,271				1,184,776
Other liabilities			51,634				55,174				55,386				49,958				44,620
Total noninterest-bearing liabilities			1,529,817				1,537,927				1,539,943				1,512,229				1,229,396
Shareholders’ equity			549,528				545,134				543,765				543,387				537,828
Total liabilities and shareholders’ equity		$	3,931,520			$	3,879,207			$	3,866,750			$	3,816,477			$	3,468,051

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

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

		3/31/2021							12/31/2020							9/30/2020							6/30/2020							3/31/2020
		Amount				%			Amount				%			Amount				%			Amount				%			Amount				%
Loan Portfolio:
Commercial and industrial		$	756,707			26.1	%		$	742,957			25.3	%		$	832,686			28.0	%		$	837,667			28.4	%		$	542,650			20.3	%
Real estate:
Commercial real estate			1,072,263			36.9	%			1,041,998			35.5	%			949,933			31.9	%			908,027			30.8	%			904,395			33.8	%
Construction and development			464,091			16.0	%			522,705			17.8	%			506,216			17.0	%			552,879			18.8	%			558,343			20.8	%
1-4 family residential			224,880			7.7	%			239,872			8.2	%			253,868			8.5	%			272,253			9.2	%			276,142			10.3	%
Multi-family residential			271,719			9.4	%			258,346			8.8	%			298,733			10.0	%			255,273			8.7	%			267,152			10.0	%
Consumer			32,767			1.1	%			33,884			1.1	%			35,637			1.2	%			36,338			1.2	%			38,133			1.4	%
Agriculture			6,974			0.2	%			8,670			0.3	%			9,753			0.3	%			7,795			0.3	%			7,520			0.3	%
Other			74,387			2.6	%			88,238			3.0	%			91,501			3.1	%			77,535			2.6	%			84,076			3.1	%
Gross loans			2,903,788			100.0	%			2,936,670			100.0	%			2,978,327			100.0	%			2,947,767			100.0	%			2,678,411			100.0	%
Less allowance for credit losses			(40,874	)						(40,637	)						(44,069	)						(39,678	)						(31,194	)
Less deferred fees and unearned discount			(11,151	)						(9,880	)						(12,038	)						(12,879	)						(5,942	)
Less loans held for sale			(1,005	)						(2,673	)						(1,763	)						—							(882	)
Loans, net		$	2,850,758						$	2,883,480						$	2,920,457						$	2,895,210						$	2,640,393
Deposits:
Interest-bearing demand accounts		$	368,124			10.9	%		$	380,175			11.5	%		$	346,406			10.9	%		$	366,281			11.2	%		$	359,943			12.9	%
Money market accounts			995,945			29.4	%			1,039,617			31.5	%			916,668			28.9	%			878,006			27.0	%			760,036			27.2	%
Savings accounts			112,467			3.3	%			108,167			3.3	%			103,062			3.3	%			98,485			3.0	%			90,227			3.2	%
Certificates and other time deposits, $100,000 or greater			145,762			4.3	%			152,592			4.6	%			171,854			5.4	%			200,505			6.2	%			212,341			7.6	%
Certificates and other time deposits, less than $100,000			141,041			4.2	%			144,818			4.4	%			171,691			5.4	%			197,178			6.1	%			174,145			6.3	%
Total interest-bearing deposits			1,763,339			52.1	%			1,825,369			55.3	%			1,709,681			53.9	%			1,740,455			53.5	%			1,596,692			57.2	%
Noninterest-bearing deposits			1,621,408			47.9	%			1,476,425			44.7	%			1,460,983			46.1	%			1,513,748			46.5	%			1,195,541			42.8	%
Total deposits		$	3,384,747			100.0	%		$	3,301,794			100.0	%		$	3,170,664			100.0	%		$	3,254,203			100.0	%		$	2,792,233			100.0	%

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

		3/31/2021				12/31/2020				9/30/2020				6/30/2020				3/31/2020
Nonperforming Assets (at period end):
Nonaccrual loans:
Commercial and industrial		$	12,230			$	12,588			$	6,699			$	5,519			$	449
Real estate:
Commercial real estate			10,664				10,665				4,811				4,811				67
Construction and development			236				238				241				506				519
1-4 family residential			378				526				325				332				413
Multi-family residential			—				—				—				—				—
Consumer			—				—				—				—				—
Agriculture			—				—				—				—				—
Other			—				—				3,500				—				—
Nonaccrual loans			23,508				24,017				15,576				11,168				1,448
Accruing loans 90 or more days past due			—				—				—				—				—
Total nonperforming loans			23,508				24,017				15,576				11,168				1,448
Foreclosed assets			106				—				—				—				—
Total nonperforming assets		$	23,614			$	24,017			$	15,576			$	11,168			$	1,448
Allowance for Credit Losses for Loans (at period end):
Commercial and industrial		$	13,812			$	13,035			$	13,347			$	12,108			$	9,535
Real estate:
Commercial real estate			14,280				13,798				12,745				12,424				9,576
Construction and development			5,445				6,089				6,334				7,050				5,795
1-4 family residential			2,458				2,578				2,871				3,173				2,430
Multi-family residential			2,714				2,513				3,117				2,880				2,413
Consumer			434				440				507				529				477
Agriculture			107				137				164				134				129
Other			1,624				2,047				4,984				1,380				839
Total allowance for credit losses for loans		$	40,874			$	40,637			$	44,069			$	39,678			$	31,194
Credit Quality Ratios (at period end):
Nonperforming assets to total assets			0.59	%			0.61	%			0.41	%			0.29	%			0.04	%
Nonperforming loans to loans excluding loans held for sale			0.81	%			0.82	%			0.53	%			0.38	%			0.05	%
Allowance for credit losses for loans to nonperforming loans			173.87	%			169.20	%			282.93	%			355.28	%			2,154.28	%
Allowance for credit losses for loans to loans excluding loans held for sale			1.41	%			1.39	%			1.49	%			1.35	%			1.17	%

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

		Three Months Ended
		3/31/2021				12/31/2020				9/30/2020				6/30/2020				3/31/2020
Beginning balance		$	40,637			$	44,069			$	39,678			$	31,194			$	25,280
Adoption of CECL			—				—				—				—				874
Provision			286				229				4,569				8,537				4,739
Net (charge-offs) recoveries:
Commercial and industrial			(95	)			(305	)			(31	)			18				398
Real estate:
Commercial real estate			—				143				(135	)			(24	)			—
Construction and development			—				—				—				—				—
1-4 family residential			—				—				(5	)			(66	)			1
Multi-family residential			—				—				—				—				—
Consumer			4				1				(7	)			7				(99	)
Agriculture			42				—				—				12				—
Other			—				(3,500	)			—				—				1
Total net (charge-offs) recoveries			(49	)			(3,661	)			(178	)			(53	)			301
Ending balance		$	40,874			$	40,637			$	44,069			$	39,678			$	31,194
Net charge-offs (recoveries) to average loans(1)			0.01	%			0.49	%			0.02	%			0.01	%			(0.05	)%

(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 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, 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.

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:

		3/31/2021				12/31/2020				9/30/2020				6/30/2020				3/31/2020
Tangible Equity
Total shareholders’ equity		$	545,349			$	546,451			$	540,921			$	537,356			$	536,874
Adjustments:
Goodwill			80,950				80,950				80,950				80,950				80,950
Other intangibles			3,991				4,171				4,303				4,496				4,700
Tangible equity		$	460,408			$	461,330			$	455,668			$	451,910			$	451,224
Tangible Assets
Total assets		$	4,028,639			$	3,949,217			$	3,814,672			$	3,901,725			$	3,425,650
Adjustments:
Goodwill			80,950				80,950				80,950				80,950				80,950
Other intangibles			3,991				4,171				4,303				4,496				4,700
Tangible assets		$	3,943,698			$	3,864,096			$	3,729,419			$	3,816,279			$	3,340,000
Common shares outstanding			24,442				24,613				24,713				24,755				24,746
Book value per share		$	22.31			$	22.20			$	21.89			$	21.71			$	21.70
Tangible book value per share		$	18.84			$	18.74			$	18.44			$	18.26			$	18.23
Total shareholders’ equity to total assets			13.54	%			13.84	%			14.18	%			13.77	%			15.67	%
Tangible equity to tangible assets			11.67	%			11.94	%			12.22	%			11.84	%			13.51	%

Investor Relations:

Justin M. Long
281.325.5013
investors@CBoTX.com

Media Contact:

Ashley Warren
713.210.7622
awarren@CBoTX.com

FAQ

What were CBTX's earnings for Q1 2021?

CBTX reported net income of $10.0 million or $0.41 per diluted share for Q1 2021.

How much did CBTX increase its quarterly dividend?

CBTX increased its quarterly dividend from $0.10 to $0.13 per share.

What is CBTX's total deposit amount as of March 31, 2021?

Total deposits for CBTX reached $3.4 billion as of March 31, 2021.

What is CBTX's net interest margin for Q1 2021?

The net interest margin for CBTX in Q1 2021 was 3.71%.

How did CBTX's noninterest income change compared to Q1 2020?

CBTX's noninterest income decreased to $3.1 million in Q1 2021, down from $4.3 million in Q1 2020.