CBTX, Inc. First Quarter 2022 \ Investor Presentation NASDAQ: CBTX |
2 SAFE HARBOR STATEMENT AND NON - GAAP FINANCIAL MEASURES NON - GAAP FINANCIAL MEASURES This presentation contains certain non - GAAP (generally accepted accounting principles) financial measures, including tangible equity, tangible assets, tangible book value per share, tangible equity to tangible assets, return on average tangible equity, and pre - provision net revenue .. The non - GAAP financial measures that CBTX, Inc .. (the “Company”) discusses in this presentation should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP .. A reconciliation of the non - GAAP financial measures used in this presentation to the most directly comparable GAAP measures is provided at the end of this presentation .. FORWARD - LOOKING STATEMENTS This presentation 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 ongoing 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 ; 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 - or fourth - party servicers ; the failure of certain third - or fourth - 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, or reviews or the ability to obtain required regulatory approvals ; changes in the laws, rules, regulations, interpretations or policies relating to financial institution, accounting, tax, trade, monetary and fiscal matters ; further government intervention in the U .. S .. financial system that may impact how the Company achieves its performance goals ; the risk that the cost savings and any revenue synergies from the pending merger with Allegiance Bancshares, Inc .. , or Allegiance, may not be fully realized or may take longer than anticipated to be realized ; disruption to the parties’ businesses as a result of the announcement and pendency of the merge r ; the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement ; the risk that the integration of each party’s operations will be materially delayed or will be more costly or difficult than expected or that the parties are otherwise unable to successfully integrate each party’s businesses into the other’s businesses ; the failure to obtain the necessary approvals by the shareholders of Allegiance or the Company ; the amount of the costs, fees, expenses and charges related to the merger ; the ability by each of Allegiance and the Company to obtain required governmental approvals of the merger (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the transaction) ; reputational risk and the reaction of each company’s customers, suppliers, employees or other business partners to the merger ; the failure of the closing conditions in the merger agreement to be satisfied, or any unexpected delay in closing the merger ; the possibility that the merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events ; the dilution caused by the Company’s issuance of additional shares of its common stock in the merger ; general competitive, economic, political and market conditions ; and other factors that may affect future results of the Company and Allegiance including changes in asset quality and credit risk ; the inability to sustain revenue and earnings growth ; changes in interest rates and capital markets ; inflation ; customer borrowing, repayment, investment and deposit practices ; the impact, extent and timing of technological changes ; capital management activities ; and other actions of the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation and OCC and legislative and regulatory actions and reforms ; 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 .. |
3 SAFE HARBOR STATEMENT AND NON - GAAP FINANCIAL MEASURES 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 .. Allegiance and the Company disclaim any obligation and do not intend to update or revise any forward - looking statements contained in this communication, which speak only as of the date hereof, whether as a result of new information, future events or otherwise, except as required by federal securities laws .. As forward - looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements .. Information about the Merger and Where to Find It This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval .. In connection with the proposed merger, the Company filed a registration statement on Form S - 4 (Registration No .. 333 - 262322 ) with the SEC to register the shares of the Company’s common stock that will be issued to Allegiance shareholders in connection with the merger .. The registration statement on Form S - 4 , as amended, was declared effective by the SEC on April 7 , 2022 .. The registration statement includes a joint proxy statement/prospectus and other relevant materials in connection with the proposed merger .. The Company and Allegiance commenced mailing the definitive joint proxy statement/prospectus to their respective shareholders on or about April 15 , 2022 .. WE URGE INVESTORS AND SECURITY HOLDERS TO READ THE REGISTRATION STATEMENT ON FORM S - 4 , THE JOINT PROXY STATEMENT/PROSPECTUS INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM S - 4 AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED MERGER BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT CBTX, ALLEGIANCE AND THE PROPOSED MERGER .. Investors and security holders may obtain free copies of these documents and other documents filed with the SEC by Allegiance or the Company through the website maintained by the SEC at https : //www .. sec .. gov .. Documents filed with the SEC by the Company are available free of charge by accessing the Company’s website at www .. communitybankoftx .. com under the heading “Investor Relations” or, alternatively, by directing a request by mail or telephone to CBTX, Inc .. , 9 Greenway Plaza, Suite 110 , Houston, Texas 77046 , Attn : Investor Relations, ( 713 ) 210 - 7600 , and documents filed with the SEC by Allegiance are available free of charge by accessing Allegiance’s website at www .. allegiancebank .. com under the heading “Investor Relations” or, alternatively, by directing a request by mail or telephone to Allegiance Bancshares, Inc .. , 8847 West Sam Houston Parkway, N .. , Suite 200 , Houston, Texas 77040 , ( 281 ) 894 - 3200 .. Participants in the Solicitation The Company, Allegiance and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of CBTX and Allegiance in connection with the proposed merger .. Certain information regarding the interests of these participants and a description of their direct or indirect interests, by security holdings or otherwise, are included in the joint proxy statement/prospectus regarding the proposed merger .. Additional information about the directors and executive officers of the Company and their ownership of the Company’s common stock is set forth in the Company’s annual report on Form 10 - K, filed with the SEC on February 25 , 2022 .. Additional information about the directors and executive officers of Allegiance and their ownership of Allegiance’s common stock is set forth in Allegiance’s proxy statement for its annual meeting of shareholders, filed with the SEC on March 10 , 2022 .. These documents can be obtained free of charge from the sources described above .. |
4 COMPANY SNAPSHOT • Founded in 2007 and completed IPO in November 2017 • On 11/5/2021, entered into a definitive merger agreement with Allegiance Bancshares, Inc. • Resolved outstanding regulatory matters associated with BSA/AML program in December 2021 • Primarily a business bank with 34 banking centers located across Houston, East Texas and Dallas • Strong credit culture and experienced management team with deep ties in the markets served • Low - cost core funding - total deposits of $3.8 billion as of 3/31/2022 • Strong insider ownership of 26% as of 3/31/2022 • Strong capital levels with total risk - based capital ratio of 16.06%, tier 1 risk - based and common equity tier 1 capital ratios of 14.97% of 3/31/2022 |
5 ANNOUNCED MERGER WITH ABTX, INC. • Creates a premier Texas financial institution by combining two of the largest Houston - focused banks • Generates significant shareholder value through materially enhanced metrics • True merger - of - equals – combined management team and equal board contribution • Complementary branch network, with meaningful overlap to support cost savings • Shared vision, community focus, and commitment to clients and employees |
6 FINANCIAL HIGHLIGHTS (1) Loans originated under the Paycheck Protection Program, or PPP, net of related fees are included in Loans, Net above. See pag e 1 2. (2) See Appendix for reconciliation of non - GAAP financial measures. (3) Pre - provision net revenue is net income, with the provision for credit losses and income tax expense added back. Financial Highlights Balance Sheet (000) Total Assets $ 4,445,977 $ 4,486,001 $ 4,209,119 $ 4,066,534 $ 4,028,639 Loans, Net 2,848,438 2,836,179 2,576,194 2,692,313 2,850,758 PPP Loans 17,970 54,262 103,721 184,286 274,336 PPP Deferred Fees / Unearned Discount (484) (1,473) (2,954) (5,207) (5,560) PPP Loans, Net (1) 17,486 52,789 100,767 179,079 268,776 Unfunded Loan Commitments 907,092 774,960 772,469 692,581 724,042 Securities 547,979 425,046 359,539 309,233 289,091 Total Deposits 3,821,225 3,831,284 3,531,635 3,416,786 3,384,747 Book Value per Share 22.03 22.96 23.12 22.75 22.31 Tangible Book Value per Share (2) 18.58 19.50 19.65 19.28 18.84 Income Statement (000) Net Interest Income $ 32,630 $ 30,810 $ 31,249 $ 31,018 $ 33,090 Provision (Recapture) for Credit Losses 435 (1,207) (4,895) (5,038) 412 Noninterest Income 5,329 4,100 5,562 3,491 3,111 Noninterest Expense 24,652 34,832 24,372 25,197 23,285 Net Income (Loss) 10,595 (545) 14,421 11,703 10,019 Pre-Provision Net Revenue (2)(3) 13,307 78 12,439 9,312 12,916 Diluted Earnings (Loss) per Share 0.43 (0.02) 0.59 0.48 0.41 Capital Ratios Total Shareholders' Equity to Total Assets 12.14 % 12.53 % 13.41 % 13.68 % 13.54 % Tangible Equity to Tangible Assets (2) 10.44 10.85 11.64 11.84 11.67 Common Equity Tier 1 Capital Ratio 14.97 15.31 16.87 16.46 15.75 Tier 1 Risk-Based Capital Ratio 14.97 15.31 16.87 16.46 15.75 Total Risk-Based Capital Ratio 16.06 16.42 18.12 17.72 17.00 Tier 1 Leverage Ratio 11.08 11.22 11.69 11.63 11.90 Q1 2022 Q4 2021 Q3 2021 Q1 2021 Q2 2021 |
7 FINANCIAL HIGHLIGHTS (Continued) (1) Annualized. (2) See Appendix for reconciliation of non - GAAP financial measures. (3) Efficiency ratio is calculated by dividing noninterest expense by the sum of the net interest income and noninterest income. (4) Allowance for credit losses, or ACL .. (5) Held for sale, or HFS .. Financial Highlights Q4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020 Financial Highlights Profitability Return on Average Assets (1) 0.97 % (0.05) % 1.37 % 1.14 % 1.03 % Return on Average Shareholders' Equity (1) 7.67 (0.38) 10.15 8.49 7.39 Return on Average Tangible Equity (1)(2) 9.03 (0.45) 11.95 10.03 8.75 Net Interest Margin - Tax Equivalent (1) 3.22 3.07 3.22 3.29 3.71 Cost of Total Deposits (1) 0.12 0.13 0.14 0.15 0.17 Efficiency Ratio (3) 64.94 99.78 66.21 73.02 64.32 Credit Quality ACL (4) / Loans Excluding Loans HFS (5) 1.09 % 1.09 % 1.23 % 1.36 % 1.41 % ACL (4) / Loans Excluding Loans HFS (5) and PPP Loans 1.10 1.11 1.29 1.46 1.56 Nonperforming Assets / Total Assets 0.50 0.50 0.49 0.52 0.59 Nonperforming Loans / Loans Excluding Loans HFS (5) 0.77 0.79 0.79 0.77 0.81 Net Charge-offs (Recoveries) / Average Loans (1) (0.01) (0.01) (0.01) (0.07) 0.01 Q1 2022 Q4 2021 Q3 2021 Q1 2021 Q2 2021 |
8 DEPOSITS • Proven ability to generate low - cost core deposits (1) to fund loan growth • Total deposits decreased $10.1 million, or 0.3%, from 12/31/2021 to 3/31/2022 and the cost of total deposits was 0.12% for Q1 2022 • Noninterest - bearing demand deposits were 47.1% of total deposits as of 3/31/2022 • Core deposits (1) were 96.7% of total deposits with minimal reliance on time deposits as of 3/31/2022 • Relationship based ~ 79.7% of loan customers also had a deposit relationship as of 3/31/2022 • Loan to deposit ratio was 75.4% as of 3/31/2022 Stable Core Deposits (1)(2) (1) Core deposits defined as total deposits less time deposits over $100,000. (2) 2019 – 2021 figures as of year end 12/31. 41.5% 44.7% 46.6% 47.1% 51.2% 50.7% 50.6% 49.5% 7.3% 4.6% 2.8% 3.4% 2019 2020 2021 3/31/2022 Noninterest-Bearing Deposits Other Core Deposits Time Deposits > $100K (%) Noninterest-bearing Demand Accounts $ 1,801,323 47.1% Interest-bearing Demand Accounts 444,571 11.6% Money Market Accounts 1,218,082 31.9% Savings Accounts 130,218 3.4% Certificates and Other Time Deposits > $100K 127,798 3.4% Certificates and Other Time Deposits < $100K 99,233 2.6% Total Deposits $ 3,821,225 100.0% Cost of Interest-bearing Deposits - Q1 2022 0.23% (000) Deposits 3/31/2022 |
9 LOAN PORTFOLIO (1) Commercial loans defined as total loans less 1 - 4 Family Residential, Consumer, Agriculture and Other Loans. See page 10. (2) 2019 – 2021 figures as of year end 12/31. (3) See page 11 for information about how the Company classifies its direct and indirect oil and gas loans. • Loans excluding loans held for sale increased $12.4 million from 12/31/2021 to 3/31/2022 primarily due to increased loan originations • Average yield on loans was 4.39%, 4.39% and 4.64% for Q1 2022, Q4 2021 and Q1 2021, respectively, and average yield on loans excluding PPP loans was 4.29%, 4.26% and 4.49% for the same periods • Remaining deferral arrangements provided to customers through the COVID - 19 pandemic were down to 4 loans with an outstanding aggregate principal amount of $15.1 million at 3/31/2022 • As of 3/31/2022, 76.8% of loans were Houston - based and 6.4% of gross loans were related to oil and gas (3) Loan Portfolio Composition (2) (000) (%) Commercial and Industrial $ 600,990 20.8% Real Estate: Commercial Real Estate 1,142,646 39.5% Construction and Development 473,326 16.4% 1-4 Family Residential 263,213 9.1% Multi-family Residential 279,099 9.7% Consumer, Agriculture and Other 129,704 4.5% Gross Loans $ 2,888,978 100.0% Less deferred fees and unearned discounts (8,350) Less loans held for sale (748) Loans excluding loans held for sale $ 2,879,880 Average yield on loans - Q1 2022 4.39% Loan Portfolio 3/31/2022 84.4% 87.4% 86.0% 86.4% 15.6% 12.6% 14.0% 13.6% 2019 2020 2021 3/31/2022 Total 1-4 Family Residential, Consumer, Agriculture and Other Loans Total Commercial Loans(1) |
10 COMMERCIAL LOANS • Well - diversified commercial loan portfolio totaled 86.4% of gross loans as of 3/31/2022 and 86.0% as of 12/31/2021 • Multi - family community development loans are Texas - based projects promoting affordable housing and totaled $343.3 million ($229.1 million permanent and $114.2 million construction) as of 3/31/2022 • Non - owner occupied commercial real estate loans are predominantly local investor projects (i.e., industrial, office and retail buildings) with investors or developers with long - term CBTX relationships • Owner - occupied commercial real estate loans are term financing of real estate facilities for businesses and clients (1) Includes 1 - 4 Family Residential, Consumer, Agriculture and Other Loans. See page 9. Loan Components - 3/31/2022 T Commercial and Industrial: Oil and Gas $ 117,902 4.7% Industrial Construction 71,264 2.9% Equipment Rental 65,092 2.6% Professional/Medical 59,886 2.4% Manufacturing 31,949 1.3% PPP Loans 17,970 0.7% Other 236,927 9.5% Total Commercial and Industrial 600,990 16.5% Commercial Real Estate: Non-owner Occupied 620,515 24.9% Owner Occupied 457,334 18.3% Oil and Gas 64,797 2.6% Total Commercial Real Estate 1,142,646 20.9% Construction and Development: Land and Development 175,604 7.0% Commercial 119,979 4.8% Multi-family Community Development 114,156 4.6% 1-4 Family - Commercial 42,313 1.7% 1-4 Family - Primary 18,715 0.7% Oil and Gas 2,559 0.1% Total Construction and Development 473,326 19.0% Multi-family Residential: Multi-family Community Development 229,119 9.2% Other 49,980 2.0% Total Multi-family Residential 279,099 11.2% Total Commercial Loans 2,496,061 100.0% Other Loans (1) 392,609 Other Oil and Gas Loans 308 Total Gross Loans $ 2,888,978 Balance (000) % Commercial |
11 CONSTRUCTION / OIL AND GAS LOANS (1) Total capital of CommunityBank of Texas, N.A., the wholly - owned subsidiary of the Company. Construction Loans • As of 3/31/2022 and 12/31/2021, construction loans were 96.3% and 95.5% of capital (1) , respectively, and unfunded commitments were $323.3 million and $236.7 million, respectively • Oil and gas loans are loans with revenue related to well - head, oil in the ground or extracting oil or gas, including any activity, product or service related to the oil and gas industry, such as exploration and production, drilling, equipment, services, midstream companies, service companies and commercial real estate companies with significant reliance on oil and gas companies • Direct loans oil and gas loans are loans to an entity with more than 50% of its revenue from the type of companies defined above and indirect loans are loans to an entity with between 20% - 50% of its revenue from the type of companies defined above Oil and Gas Loans Percentage of Capital (1) UnFunded Commitments (000) $ 175,604 35.7% $ 78,752 119,979 24.4% 135,560 114,156 23.2% 63,843 42,313 8.6% 27,870 18,715 3.8% 15,908 2,559 0.5% 1,375 $ 473,326 96.3% $ 323,308 Direct: Exploration and Production $ 33,712 $ 35,631 $ 36,894 Oil Field Services 55,095 70,147 45,910 Midstream 41,674 43,688 44,350 130,481 149,466 127,154 Indirect: Oil Field Services 27,534 29,100 27,710 Midstream 27,551 26,305 30,559 55,085 55,405 58,269 Total: Exploration and Production 33,712 35,631 36,894 Oil Field Services 82,629 99,247 73,620 Midstream 69,225 69,993 74,909 $ 185,566 $ 204,871 $ 185,423 Components: Lines of Credit $ 77,644 $ 92,629 $ 67,139 Secured by Real Estate and Equipment 74,210 76,611 81,390 Production Secured by Mineral Rights 33,712 35,631 36,894 $ 185,566 $ 204,871 $ 185,423 Balance (000) 3/31/2022 12/31/2021 9/30/2021 Construction Loans - 3/31/2022 Oil and Gas Loans (000) Land and Development Commercial Multi-family Community Development 1-4 Family - Commercial 1-4 Family - Primary Oil and Gas |
• PPP program closed to further borrowings and no PPP loans originated since Q2 2021 • As of 3/31/2022, the PPP portfolio included 79 loans with an aggregate outstanding principal balance of $10.0 million which qualified for the simplified forgiveness application • Interest earned on PPP loans for Q1 2022 and Q4 2021 included the recognition of $989,000 and $1.5 million, respectively, of net loan fees • Received payments totaling $36.3 million and $49.5 million related to forgiveness or payments by customers during Q1 2022 and Q4 2021, respectively 12 PAYCHECK PROTECTION PROGRAM (1) PPP loans are classified as Commercial and Industrial loans per regulatory guidelines. (2) Annualized. PPP Loans (1) - 3/31/2022 Principal Amount (000) Number of PPP Loans Loans $0 - $350,000 8,497 $ 103 Loans $350,000 - $2 million 9,437 18 Loans over $2 million 36 1 Gross PPP loans 17,970 122 Deferred loan fees and costs (484) Net PPP loan 17,486 $ Yield Analysis Q1 2022 Average Outstanding Balance (000) Interest Earned (000) Average Yield (2) Total Loans 2,886,765 $ 31,221 $ 4.39% Less PPP Loans (34,976) (1,076) 12.48% Adjusted Total Loans 2,851,789 $ 30,145 $ 4.29% Yield Analysis Q4 2021 Average Outstanding Balance (000) Interest Earned (000) Average Yield (2) Total Loans 2,701,211 $ 29,882 $ 4.39% Less PPP Loans (76,897) (1,677) 8.65% Adjusted Total Loans 2,624,314 $ 28,205 $ 4.26% |
• Allowance for credit losses, or ACL, increased $97,000 from 12/31/2021 to 3/31/2022 due to an increase in collectively evaluated loans resulting from growth in the loan portfolio and adjustments to certain qualitative factors, which was partially offset by a decrease in the ACL related to individually evaluated loans resulting from a reduction in the associated principal balances • Decrease in ACL for loans from 3/31/2021 to 3/31/2022 resulted from improvements in the national and local economies and forecast assumptions between those periods • The Company’s ACL for unfunded commitments (letters of credit and commitments to extend credit) increased $415,000 from 12/31/2021 to $3.7 million at 3/31/2022, primarily due to an increase in commitments to extend credit 13 ALLOWANCE FOR CREDIT LOSSES ACL - Loans by Classification (000) ` Commercial and Industrial $ 10,895 $ 11,214 $ 11,401 $ 12,260 $ 13,812 Real Estate: Commercial Real Estate 11,297 11,015 11,744 13,260 14,280 Construction 3,429 3,310 3,334 4,453 5,445 1-4 Family Residential 2,025 2,105 1,700 2,172 2,458 Multi-family Residential 1,770 1,781 2,156 2,382 2,714 Consumer 403 406 449 494 434 Agriculture 70 88 109 115 107 Other 1,553 1,426 1,315 2,047 1,624 Total ACL - Loans $ 31,442 $ 31,345 $ 32,208 $ 37,183 $ 40,874 General Reserves $ 27,539 $ 26,625 $ 27,064 $ 31,502 $ 35,118 Specific Reserves 3,903 4,720 5,144 5,681 5,756 ACL / Loans Excluding Loans Held for Sale 1.09% 1.09% 1.23% 1.36% 1.41% ACL Activity (000) Beginning Balance $ 31,345 $ 32,208 $ 37,183 $ 40,874 $ 40,637 Provision (Recapture) 20 (901) (5,057) (4,190) 286 Net (Charge-offs) Recoveries 77 38 82 499 (49) Ending Balance $ 31,442 $ 31,345 $ 32,208 $ 37,183 $ 40,874 Q1 2021 3/31/2021 3/31/2022 Q4 2021 Q3 2021 12/31/2021 9/30/2021 6/30/2021 Q2 2021 Q1 2022 |
14 NPA AND NET CHARGE - OFFS (1) USA and Texas figures are from SNL Financial aggregates and Q4 2021 is the latest period available for these comparative figu res .. Nonperforming Assets • Nonperforming assets, or NPA, remained low relative to total assets at $22.1 million, or 0.50% of total assets, as of 3/31/2022 compared to $22.6 million, or 0.50% of total assets, as of 12/31/2021 • NPA to total assets improved to 0.50% of total assets at 3/31/2022 from 0.59% of total assets at 3/31/2021 due to the $417.3 million increase in total assets and the $1.5 million decrease in NPA between those periods • Q1 2022 recoveries exceeded charge - offs resulting in a net recovery of $77,000, or 0.01% of average loans, on an annualized basis Net Charge - Offs Nonperforming Assets / Total Assets (1) Net Charge - Offs (Recoveries) /Average Loans ( 1) 0.70% 0.59% 0.62% 0.46% 0.50% 0.48% 0.31% 0.19% 0.11% 0.03% 0.61% 0.50% 2018 2019 2020 2021 USA TX CBTX 0.50% 0.52% 0.49% 0.21% 0.17% 0.17% 0.26% 0.06% (0.03%) 0.03% 0.13% (0.02%) 2018 2019 2020 2021 USA TX CBTX |
15 REVENUE AND EFFICIENCY (1) 2019 – 2021 figures as of year end 12/31. Q1 2022 figures annualized as of 3/31/2022. (2) Efficiency ratio is calculated by dividing noninterest expense by the sum of the net interest and noninterest income. Revenue Efficiency • Net interest margin, or NIM, on a tax equivalent basis was 3.22% for Q1 2022, 3.07% for Q4 2021 and 3.71% for Q1 2021 • Cost of interest - bearing liabilities was 0.27% for Q1 2022, down from 0.28% for Q4 2021 and 0.34% for Q1 2021 • At 3/31/2022, 51.3% of loans excluding PPP loans were variable rate and 72.4% of these variable rate loans had floors • Efficiency ratio was 64.94% for Q1 2022, 99.78% for Q4 2021 and 64.32% for Q1 2021 • Fluctuations in the efficiency ratio from Q4 2021 to Q1 2022 primarily resulted from lower noninterest expense in Q1 2022 primarily due to the $8.0 million regulatory civil money penalty paid in Q4 2021 Revenue and NIM (1) Efficiency (1)(2) $155 $143 $142 $154 4.42% 3.73% 3.31% 3.22% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00% $0 $20 $40 $60 $80 $100 $120 $140 $160 2019 2020 2021 Q1 2022 Net Int Inc & Noninterest Income NIM, tax equivalent basis 58.30% 64.23% 75.61% 64.94% 2.67% 2.45% 2.61% 2.25% 2019 2020 2021 1.80% 2.00% 2.20% 2.40% 2.60% 2.80% 0% 20% 40% 60% 80% 2019 2020 2021 Q1 2022 Axis Title Axis Title Axis Title Axis Title Efficiency Ratio NI Exp. / Avg. Assets |
16 At CommunityBank of Texas, we’re committed to building strong, honest relationships. We strive to keep our clients’ and partners’ needs at the forefront of everything we do. And we measure our success by the success we help create for them. OUR VISION Here to Serve. OUR POSITIONING To experienced business owners, CommunityBank of Texas is the financial partner that delivers a better banking experience. OUR PERSONALITY Resourceful, Trustworthy, Friendly, Responsive, Strong At CommunityBank of Texas, we believe in a powerful and multi - faceted statement, one that drills straight to the heart of our reason for being, while clearly illuminating the mission that our many employees pursue each day: Here to serve. Here to serve is a commitment to building strong and honest relationships, a clarion call to remember that in everything we do, our highest purpose is to transform our extensive financial expertise into success for our clients. Relationships are the bedrock of our business – both internally and externally – and there is a stewardship in the word serve that promises that, in these relationships, we will be caring, humble and precise. That we will keep the needs of our clients at the forefront of our minds at all times and measure our performance by the success we create for each other. The other critical component of our brand vision is the word here , which serves several important roles. Here is a promise that we will be there for our clients and answer the call when they need us the most. We will be Dependable. Honest. Trustworthy. And we will remember that every time is the right time to put our clients’ needs first. Here is also a pledge to be visible and present in the communities we serve. It adds weight to the first and most key component of our name: Community. We are not some faceless financial institution located high above the rank and file, safely sheltered in an ivory tower. We are right here , serving the cities and communities in which we live. Day - in and day - out. We sponsor civic events, donate back to our neighbors in need, and spend the time to really get to know our clients on a personal level. In the face of an increasingly digital and impersonal world, we are proudly present in the lives of our clients and our communities. |
APPENDIX |
18 NON - GAAP RECONCILIATIONS The Company’s management uses certain non - GAAP financial measures to evaluate performance .. We have included in this presentation information related to these non - GAAP financial measures for the applicable periods presented .. The following tables reconcile, as of the dates set forth below : ( 1 ) book value per share to tangible book value per share ; ( 2 ) total shareholders’ equity to total assets to tangible equity to tangible assets ; ( 3 ) return on average shareholders’ equity to return on average tangible equity ; and ( 4 ) net income to pre - provision net revenue .. The most directly comparable GAAP financial measure for tangible book value per share is book value per share and the most directly comparable GAAP financial measure for tangible equity to tangible assets is total shareholders’ equity to total assets .. The most directly comparable GAAP financial measure for return on average tangible equity is return on average shareholders’ equity .. The most directly comparable GAAP financial measure for pre - provision net revenue is net income .. |
19 NON - GAAP RECONCILIATIONS (Continued) Tangible BV Per Share/Tangible Equity to Tangible Assets Total Shareholders' Equity $ 539,723 $ 562,125 $ 564,593 $ 556,227 $ 545,349 Goodwill (80,950) (80,950) (80,950) (80,950) (80,950) Other Intangibles (3,540) (3,658) (3,702) (3,846) (3,991) Tangible Equity $ 455,233 $ 477,517 $ 479,941 $ 471,431 $ 460,408 Total Assets $ 4,445,977 $ 4,486,001 $ 4,209,119 $ 4,066,534 $ 4,028,639 Goodwill (80,950) (80,950) (80,950) (80,950) (80,950) Other Intangibles (3,540) (3,658) (3,702) (3,846) (3,991) Tangible Assets $ 4,361,487 $ 4,401,393 $ 4,124,467 $ 3,981,738 $ 3,943,698 Common Shares Outstanding 24,502 24,488 24,420 24,450 24,442 Book Value Per Share $ 22.03 $ 22.96 $ 23.12 $ 22.75 $ 22.31 Tangible Book Value Per Share $ 18.58 $ 19.50 $ 19.65 $ 19.28 $ 18.84 Total Shareholders' Equity to Total Assets 12.14% 12.53% 13.41% 13.68% 13.54% Tangible Equity to Tangible Assets 10.44% 10.85% 11.64% 11.84% 11.67% Return on Average Tangible Equity/PPNR Average Shareholders' Equity $ 560,315 $ 568,167 $ 563,631 $ 552,807 $ 549,528 Average Goodwill (80,950) (80,950) (80,950) (80,950) (80,950) Average Other Intangibles (3,634) (3,693) (3,803) (3,951) (4,098) Average Tangible Equity $ 475,731 $ 483,524 $ 478,878 $ 467,906 $ 464,480 Annualized Net Income (Loss) $ 42,969 $ (2,162) $ 57,214 $ 46,941 $ 40,633 Return on Average Shareholders' Equity 7.67% (0.38%) 10.15% 8.49% 7.39% Return on Average Tangible Equity 9.03% (0.45%) 11.95% 10.03% 8.75% Net Income (Loss) $ 10,595 $ (545) $ 14,421 $ 11,703 $ 10,019 Provision (Recapture) for Credit Losses 435 (1,207) (4,895) (5,083) 412 Income Tax Expense 2,277 1,830 2,913 2,692 2,485 Pre-Provision Net Revenue $ 13,307 $ 78 $ 12,439 $ 9,312 $ 12,916 Q1 2022 Q1 2021 Q2 2021 Q4 2021 Q2 2021 3/31/2022 6/30/2021 3/31/2021 9/30/2021 12/31/2021 |