8-K - STEL - Equibles

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): January 28, 2022

CBTX, Inc.

(Exact name of registrant as specified in its charter)


Texas	001-38280	20-8339782
(State or other jurisdiction of	(Commission File Number)	(I.R.S. Employer
incorporation or organization)		Identification No.)

9 Greenway Plaza, Suite 110

Houston , Texas **** 77046

(Address of principal executive offices)

( 713 ) 210-7600

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☒ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.01 per share	CBTX	The Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§230.12b-2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Item 7.01 Regulation FD Disclosure

On Friday, January 28, 2022 at 8:00 a.m. Central Time, CBTX, Inc. (the “Company”) will host a conference call to review and discuss fourth quarter 2021 and annual financial results. The Company will use the materials included in Exhibit 99.1 attached to this Current Report on Form 8-K (“Investor Presentation”) in connection with the conference call and webcast. The Investor Presentation is incorporated into this Item 7.01 by reference and will also be made available on the Company’s website at www.communitybankoftx.com.

The information contained in the Investor Presentation is summary information that should be considered in the context of the Company’s filings with the Securities and Exchange Commission and other public announcements the Company may make by press release or otherwise from time to time. The Investor Presentation speaks as of the date of this Current Report. While the Company may elect to update the Investor Presentation in the future to reflect events and circumstances occurring or existing after the date of this Current Report, the Company specifically disclaims any obligation to do so. The Investor Presentation contains forward-looking statements, please see page 2 of the Investor Presentation for a discussion of certain forward-looking statements that are included therein and the risks and uncertainties related thereto.

In accordance with General Instruction B.2 to Form 8-K, the information furnished in this Item 7.01 and Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 8.01 Other Events.

The only information contained in this Form 8-K being filed for the purposes of Rule 425 of the Securities Act of 1933, as amended is the information relating solely to the proposed merger between the Company and Allegiance Bancshares, Inc. furnished herewith as Exhibit 99.1.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.


Exhibit Number	Description of Exhibit
99.1	CBTX Presentation
104	Cover Page Interactive Data File – the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded with the Inline XBRL document.

Forward-Looking Statements

Certain statements in this communication which are not historical in nature are intended to be, and are hereby identified as, “forward-looking statements” for purposes of the safe harbor provided by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

These statements include, but are not limited to, statements about the benefits of the proposed merger of the Company with Allegiance Bancshares, Inc. (“Allegiance”), including future financial and operating results (including the anticipated impact of the transaction on the Company’s and Allegiance’s respective earnings and book value), statements related to the expected timing of the completion of the merger, the combined company’s plans, objectives, expectations and intentions, and other statements that are not historical facts. Forward-looking statements may be identified by terminology such as “may,” “will,” “should,” “scheduled,” “plans,” “intends,” “anticipates,” “expects,” “believes,” “estimates,” “potential,” or “continue” or negatives of such terms or other comparable terminology.

All forward-looking statements are subject to risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company or Allegiance to differ materially from any results expressed or implied

by such forward-looking statements. Such factors include, among others: (1) the risk that the cost savings and any revenue synergies from the merger may not be fully realized or may take longer than anticipated to be realized; (2) disruption to the parties’ businesses as a result of the announcement and pendency of the merger; (3) the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement; (4) 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; (5) the failure to obtain the necessary approvals by the shareholders of Allegiance or the Company; (6) the amount of the costs, fees, expenses and charges related to the merger; (7) 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); (8) reputational risk and the reaction of each company’s customers, suppliers, employees or other business partners to the merger; (9) the failure of the closing conditions in the merger agreement to be satisfied, or any unexpected delay in closing the merger; (10) the possibility that the merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events; (11) the dilution caused by the Company’s issuance of additional shares of its common stock in the merger; (12) general competitive, economic, political and market conditions; (13) 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, of the Company or the ability of the Company to obtain required regulatory approvals; (14) the possible results and amount of civil money penalties related to such FinCEN investigation and the Company’s BSA/AML program; and (15) 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 Office of the Comptroller of the Currency and legislative and regulatory actions and reforms.

Additional factors which could affect future results of the Company can be found in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, in each case filed with the SEC and available on the SEC’s website at https://www.sec.gov.

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 includes a joint proxy statement/prospectus and other relevant materials in connection with the proposed merger, which will be sent to the shareholders of the Company and Allegiance seeking their approval of the proposed merger.

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 SECURITIES AND EXCHANGE COMMISSION IN CONNECTION WITH THE PROPOSED MERGER BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT ALLEGIANCE, THE COMPANY AND THE PROPOSED MERGER.

Investors and security holders may obtain free copies of these documents, once they are filed, 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 will be 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 will be 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 the Company 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, will be included in the joint proxy statement/prospectus regarding the proposed merger when it becomes available. 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 proxy statement for its annual meeting of shareholders, filed with the SEC on April 14, 2021. 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, 2021. These documents can be obtained free of charge from the sources described above.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


		CBTX, Inc.



Date: January 28, 2022	By:		/s/ Robert T. Pigott, Jr.
			Robert T. Pigott, Jr.<br><br>Senior Executive Vice President and
			Chief Financial Officer

Exhibit 99.1

CBTX, Inc.<br>Fourth Quarter 2021<br><br>Investor Presentation<br>NASDAQ: CBTX
2<br>SAFE HARBOR STATEMENT AND NON<br>-<br>GAAP FINANCIAL MEASURES<br>NON<br>-<br>GAAP<br>FINANCIAL<br>MEASURES<br>This<br>presentation<br>contains<br>certain<br>non<br>-<br>GAAP<br>(generally<br>accepted<br>accounting<br>principles)<br>financial<br>measures,<br>including<br>tangible<br>equity,<br>tangible<br>assets,<br>tangible<br>book<br>value<br>per<br>share,<br>tangible<br>equity<br>to<br>tangible<br>assets,<br>return<br>on<br>average<br>tangible<br>equity,<br>and<br>pre<br>-<br>provision<br>net<br>revenue<br>..<br>The<br>non<br>-<br>GAAP<br>financial<br>measures<br>that<br>CBTX,<br>Inc<br>..<br>(the<br>“Company”)<br>discusses<br>in<br>this<br>presentation<br>should<br>not<br>be<br>considered<br>in<br>isolation<br>or<br>as<br>a<br>substitute<br>for<br>the<br>most<br>directly<br>comparable<br>or<br>other<br>financial<br>measures<br>calculated<br>in<br>accordance<br>with<br>GAAP<br>..<br>A<br>reconciliation<br>of<br>the<br>non<br>-<br>GAAP<br>financial<br>measures<br>used<br>in<br>this<br>presentation<br>to<br>the<br>most<br>directly<br>comparable<br>GAAP<br>measures<br>is<br>provided<br>at<br>the<br>end<br>of<br>this<br>presentation<br>..<br>FORWARD<br>-<br>LOOKING<br>STATEMENTS<br>This<br>presentation<br>may<br>contain<br>certain<br>forward<br>-<br>looking<br>statements<br>within<br>the<br>meaning<br>of<br>the<br>securities<br>laws<br>that<br>are<br>based<br>on<br>various<br>facts<br>and<br>derived<br>utilizing<br>important<br>assumptions,<br>current<br>expectations,<br>estimates<br>and<br>projections<br>about<br>the<br>Company<br>and<br>its<br>subsidiary<br>..<br>Forward<br>-<br>looking<br>statements<br>include<br>information<br>regarding<br>the<br>Company’s<br>future<br>financial<br>performance,<br>business<br>and<br>growth<br>strategy,<br>projected<br>plans<br>and<br>objectives,<br>as<br>well<br>as<br>projections<br>of<br>macroeconomic<br>and<br>industry<br>trends,<br>which<br>are<br>inherently<br>unreliable<br>due<br>to<br>the<br>multiple<br>factors<br>that<br>impact<br>economic<br>trends,<br>and<br>any<br>such<br>variations<br>may<br>be<br>material<br>..<br>Statements<br>preceded<br>by,<br>followed<br>by<br>or<br>that<br>otherwise<br>include<br>the<br>words<br>“believes,”<br>“expects,”<br>“anticipates,”<br>“intends,”<br>“projects,”<br>“estimates,”<br>“plans”<br>and<br>similar<br>expressions<br>or<br>future<br>or<br>conditional<br>verbs<br>such<br>as<br>“will,”<br>“should,”<br>“would,”<br>“may”<br>and<br>“could”<br>are<br>generally<br>forward<br>-<br>looking<br>in<br>nature<br>and<br>not<br>historical<br>facts,<br>although<br>not<br>all<br>forward<br>-<br>looking<br>statements<br>include<br>the<br>foregoing<br>..<br>Further,<br>certain<br>factors<br>that<br>could<br>affect<br>our<br>future<br>results<br>and<br>cause<br>actual<br>results<br>to<br>differ<br>materially<br>from<br>those<br>expressed<br>in<br>the<br>forward<br>-<br>looking<br>statements<br>include,<br>but<br>are<br>not<br>limited<br>to<br>:<br>natural<br>disasters<br>and<br>adverse<br>weather<br>on<br>the<br>Company’s<br>market<br>area,<br>acts<br>of<br>terrorism,<br>pandemics,<br>an<br>outbreak<br>of<br>hostilities<br>or<br>other<br>international<br>or<br>domestic<br>calamities<br>and<br>other<br>matters<br>beyond<br>the<br>Company’s<br>control<br>;<br>the<br>Company’s<br>ability<br>to<br>manage<br>the<br>economic<br>risks<br>related<br>to<br>the<br>impact<br>of<br>the<br>COVID<br>-<br>19<br>pandemic<br>(including<br>risks<br>related<br>to<br>its<br>customers’<br>credit<br>quality,<br>deferrals<br>and<br>modifications<br>to<br>loans)<br>;<br>the<br>geographic<br>concentration<br>of<br>the<br>Company’s<br>markets<br>in<br>Houston<br>and<br>Beaumont,<br>Texas<br>;<br>the<br>Company’s<br>ability<br>to<br>manage<br>changes<br>and<br>the<br>continued<br>health<br>or<br>availability<br>of<br>management<br>personnel<br>;<br>the<br>amount<br>of<br>nonperforming<br>and<br>classified<br>assets<br>that<br>the<br>Company<br>holds<br>and<br>the<br>time<br>and<br>effort<br>necessary<br>to<br>resolve<br>nonperforming<br>assets<br>;<br>deterioration<br>of<br>asset<br>quality<br>;<br>interest<br>rate<br>risk<br>associated<br>with<br>the<br>Company’s<br>business<br>;<br>national<br>business<br>and<br>economic<br>conditions<br>in<br>general,<br>in<br>the<br>financial<br>services<br>industry<br>and<br>within<br>the<br>Company’s<br>primary<br>markets<br>;<br>sustained<br>instability<br>of<br>the<br>oil<br>and<br>gas<br>industry<br>in<br>general<br>and<br>within<br>Texas<br>;<br>the<br>composition<br>of<br>the<br>Company’s<br>loan<br>portfolio,<br>including<br>the<br>identity<br>of<br>the<br>Company’s<br>borrowers<br>and<br>the<br>concentration<br>of<br>loans<br>in<br>specialized<br>industries<br>;<br>changes<br>in<br>the<br>value<br>of<br>collateral<br>securing<br>the<br>Company’s<br>loans<br>;<br>the<br>Company’s<br>ability<br>to<br>maintain<br>important<br>deposit<br>customer<br>relationships<br>and<br>its<br>reputation<br>;<br>the<br>Company’s<br>ability<br>to<br>maintain<br>effective<br>internal<br>control<br>over<br>financial<br>reporting<br>;<br>the<br>Company’s<br>ability<br>to<br>pursue<br>available<br>remedies<br>in<br>the<br>event<br>of<br>a<br>loan<br>default<br>for<br>loans<br>under<br>the<br>Paycheck<br>Protection<br>Program,<br>or<br>PPP,<br>and<br>the<br>risk<br>of<br>holding<br>such<br>loans<br>at<br>unfavorable<br>interest<br>rates<br>and<br>on<br>terms<br>that<br>are<br>less<br>favorable<br>than<br>those<br>with<br>customers<br>to<br>whom<br>the<br>Company<br>would<br>have<br>otherwise<br>lent<br>;<br>volatility<br>and<br>direction<br>of<br>market<br>interest<br>rates<br>;<br>liquidity<br>risks<br>associated<br>with<br>the<br>Company’s<br>business<br>;<br>systems<br>failures,<br>interruptions<br>or<br>breaches<br>involving<br>the<br>Company’s<br>information<br>technology<br>and<br>telecommunications<br>systems<br>or<br>third<br>-<br>or<br>fourth<br>-<br>party<br>servicers<br>;<br>the<br>failure<br>of<br>certain<br>third<br>-<br>or<br>fourth<br>-<br>party<br>vendors<br>to<br>perform<br>;<br>the<br>institution<br>and<br>outcome<br>of<br>litigation<br>and<br>other<br>legal<br>proceedings<br>against<br>the<br>Company<br>or<br>to<br>which<br>it<br>may<br>become<br>subject<br>;<br>the<br>operational<br>risks<br>associated<br>with<br>the<br>Company’s<br>business<br>;<br>the<br>costs,<br>effects<br>and<br>results<br>of<br>regulatory<br>examinations,<br>investigations,<br>or<br>reviews<br>or<br>the<br>ability<br>to<br>obtain<br>required<br>regulatory<br>approvals<br>;<br>changes<br>in<br>the<br>laws,<br>rules,<br>regulations,<br>interpretations<br>or<br>policies<br>relating<br>to<br>financial<br>institution,<br>accounting,<br>tax,<br>trade,<br>monetary<br>and<br>fiscal<br>matters<br>;<br>governmental<br>or<br>regulatory<br>responses<br>to<br>the<br>COVID<br>-<br>19<br>pandemic<br>that<br>may<br>impact<br>the<br>Company’s<br>loan<br>portfolio<br>and<br>forbearance<br>practice<br>;<br>further<br>government<br>intervention<br>in<br>the<br>U<br>..<br>S<br>..<br>financial<br>system<br>that<br>may<br>impact<br>how<br>the<br>Company<br>achieves<br>its<br>performance<br>goals<br>;<br>the<br>risk<br>that<br>the<br>cost<br>savings<br>and<br>any<br>revenue<br>synergies<br>from<br>the<br>merger<br>may<br>not<br>be<br>fully<br>realized<br>or<br>may<br>take<br>longer<br>than<br>anticipated<br>to<br>be<br>realized<br>;<br>disruption<br>to<br>the<br>parties’<br>businesses<br>as<br>a<br>result<br>of<br>the<br>announcement<br>and<br>pendency<br>of<br>the<br>merger<br>;<br>the<br>occurrence<br>of<br>any<br>event,<br>change<br>or<br>other<br>circumstances<br>that<br>could<br>give<br>rise<br>to<br>the<br>termination<br>of<br>the<br>merger<br>agreement<br>;<br>the<br>risk<br>that<br>the<br>integration<br>of<br>each<br>party’s<br>operations<br>will<br>be<br>materially<br>delayed<br>or<br>will<br>be<br>more<br>costly<br>or<br>difficult<br>than<br>expected<br>or<br>that<br>the<br>parties<br>are<br>otherwise<br>unable<br>to<br>successfully<br>integrate<br>each<br>party’s<br>businesses<br>into<br>the<br>other’s<br>businesses<br>;<br>the<br>failure<br>to<br>obtain<br>the<br>necessary<br>approvals<br>by<br>the<br>shareholders<br>of<br>Allegiance<br>or<br>the<br>Company<br>;<br>the<br>amount<br>of<br>the<br>costs,<br>fees,<br>expenses<br>and<br>charges<br>related<br>to<br>the<br>merger<br>;<br>the<br>ability<br>by<br>each<br>of<br>Allegiance<br>and<br>the<br>Company<br>to<br>obtain<br>required<br>governmental<br>approvals<br>of<br>the<br>merger<br>(and<br>the<br>risk<br>that<br>such<br>approvals<br>may<br>result<br>in<br>the<br>imposition<br>of<br>conditions<br>that<br>could<br>adversely<br>affect<br>the<br>combined<br>company<br>or<br>the<br>expected<br>benefits<br>of<br>the<br>transaction)<br>;<br>reputational<br>risk<br>and<br>the<br>reaction<br>of<br>each<br>company’s<br>customers,<br>suppliers,<br>employees<br>or<br>other<br>business<br>partners<br>to<br>the<br>merger<br>;<br>the<br>failure<br>of<br>the<br>closing<br>conditions<br>in<br>the<br>merger<br>agreement<br>to<br>be<br>satisfied,<br>or<br>any<br>unexpected<br>delay<br>in<br>closing<br>the<br>merger<br>;<br>the<br>possibility<br>that<br>the<br>merger<br>may<br>be<br>more<br>expensive<br>to<br>complete<br>than<br>anticipated,<br>including<br>as<br>a<br>result<br>of<br>unexpected<br>factors<br>or<br>events<br>;<br>the<br>dilution<br>caused<br>by<br>the<br>Company’s<br>issuance<br>of<br>additional<br>shares<br>of<br>its<br>common<br>stock<br>in<br>the<br>merger<br>;<br>general<br>competitive,<br>economic,<br>political<br>and<br>market<br>conditions<br>;<br>and<br>other<br>factors<br>that<br>may<br>affect<br>future<br>results<br>of<br>the<br>Company<br>and<br>Allegiance<br>including<br>changes<br>in<br>asset<br>quality<br>and<br>credit<br>risk<br>;<br>the<br>inability<br>to<br>sustain<br>revenue<br>and<br>earnings<br>growth<br>;<br>changes<br>in<br>interest<br>rates<br>and<br>capital<br>markets<br>;<br>inflation<br>;<br>customer<br>borrowing,<br>repayment,<br>investment<br>and<br>deposit<br>practices<br>;<br>the<br>impact,<br>extent<br>and<br>timing<br>of<br>technological<br>changes<br>;<br>capital<br>management<br>activities<br>;<br>and<br>other<br>actions<br>of<br>the<br>Board<br>of<br>Governors<br>of<br>the<br>Federal<br>Reserve<br>System,<br>Federal<br>Deposit<br>Insurance<br>Corporation<br>and<br>OCC<br>and<br>legislative<br>and<br>regulatory<br>actions<br>and<br>reforms<br>;<br>and<br>other<br>risks,<br>uncertainties,<br>and<br>factors<br>that<br>are<br>discussed<br>from<br>time<br>to<br>time<br>in<br>the<br>Company’s<br>reports<br>and<br>documents<br>filed<br>with<br>the<br>SEC<br>..<br>Additionally,<br>many<br>of<br>these<br>risks<br>and<br>uncertainties<br>have<br>been<br>elevated<br>by<br>and<br>may<br>continue<br>to<br>be<br>elevated<br>by<br>the<br>COVID<br>-<br>19<br>pandemic<br>..
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3<br>SAFE HARBOR STATEMENT AND NON<br>-<br>GAAP FINANCIAL MEASURES<br>The<br>foregoing<br>factors<br>should<br>not<br>be<br>construed<br>as<br>exhaustive<br>and<br>should<br>be<br>read<br>together<br>with<br>the<br>other<br>cautionary<br>statements<br>included<br>in<br>the<br>Company’s<br>Annual<br>Report<br>on<br>Form<br>10<br>-<br>K,<br>filed<br>with<br>the<br>Securities<br>and<br>Exchange<br>Commission,<br>or<br>SEC,<br>and<br>other<br>reports<br>and<br>statements<br>that<br>the<br>Company<br>has<br>filed<br>with<br>the<br>SEC<br>..<br>If<br>one<br>or<br>more<br>events<br>related<br>to<br>these<br>or<br>other<br>risks<br>or<br>uncertainties<br>materialize,<br>or<br>if<br>the<br>Company’s<br>underlying<br>assumptions<br>prove<br>to<br>be<br>incorrect,<br>actual<br>results<br>may<br>differ<br>materially<br>from<br>what<br>it<br>anticipates<br>..<br>Accordingly,<br>you<br>should<br>not<br>place<br>undue<br>reliance<br>on<br>any<br>such<br>forward<br>-<br>looking<br>statements<br>..<br>Any<br>forward<br>-<br>looking<br>statement<br>speaks<br>only<br>as<br>of<br>the<br>date<br>on<br>which<br>it<br>is<br>made,<br>and<br>the<br>Company<br>does<br>not<br>undertake<br>any<br>obligation<br>to<br>publicly<br>update<br>or<br>review<br>any<br>forward<br>-<br>looking<br>statement,<br>whether<br>as<br>a<br>result<br>of<br>new<br>information,<br>future<br>developments<br>or<br>otherwise<br>..<br>New<br>factors<br>emerge<br>from<br>time<br>to<br>time,<br>and<br>it<br>is<br>not<br>possible<br>for<br>the<br>Company<br>to<br>predict<br>which<br>will<br>arise<br>..<br>In<br>addition,<br>the<br>Company<br>cannot<br>assess<br>the<br>impact<br>of<br>each<br>factor<br>on<br>its<br>business<br>or<br>the<br>extent<br>to<br>which<br>any<br>factor,<br>or<br>combination<br>of<br>factors,<br>may<br>cause<br>actual<br>results<br>to<br>differ<br>materially<br>from<br>those<br>contained<br>in<br>any<br>forward<br>-<br>looking<br>statements<br>..<br>Copies<br>of<br>the<br>SEC<br>filings<br>for<br>the<br>Company<br>are<br>available<br>for<br>download<br>free<br>of<br>charge<br>from<br>www<br>..<br>communitybankoftx<br>..<br>com<br>under<br>the<br>Investor<br>Relations<br>tab<br>..<br>Allegiance<br>and<br>the<br>Company<br>disclaim<br>any<br>obligation<br>and<br>do<br>not<br>intend<br>to<br>update<br>or<br>revise<br>any<br>forward<br>-<br>looking<br>statements<br>contained<br>in<br>this<br>communication,<br>which<br>speak<br>only<br>as<br>of<br>the<br>date<br>hereof,<br>whether<br>as<br>a<br>result<br>of<br>new<br>information,<br>future<br>events<br>or<br>otherwise,<br>except<br>as<br>required<br>by<br>federal<br>securities<br>laws<br>..<br>As<br>forward<br>-<br>looking<br>statements<br>involve<br>significant<br>risks<br>and<br>uncertainties,<br>caution<br>should<br>be<br>exercised<br>against<br>placing<br>undue<br>reliance<br>on<br>such<br>statements<br>..<br>Information<br>about<br>the<br>Merger<br>and<br>Where<br>to<br>Find<br>It<br>This<br>communication<br>does<br>not<br>constitute<br>an<br>offer<br>to<br>sell<br>or<br>the<br>solicitation<br>of<br>an<br>offer<br>to<br>buy<br>any<br>securities<br>or<br>a<br>solicitation<br>of<br>any<br>vote<br>or<br>approval<br>..<br>In<br>connection<br>with<br>the<br>proposed<br>merger,<br>the<br>Company<br>intends<br>to<br>file<br>a<br>registration<br>statement<br>on<br>Form<br>S<br>-<br>4<br>with<br>the<br>SEC<br>to<br>register<br>the<br>shares<br>of<br>the<br>Company’s<br>common<br>stock<br>that<br>will<br>be<br>issued<br>to<br>Allegiance<br>shareholders<br>in<br>connection<br>with<br>the<br>merger<br>..<br>The<br>registration<br>statement<br>will<br>include<br>a<br>joint<br>proxy<br>statement/prospectus<br>and<br>other<br>relevant<br>materials<br>in<br>connection<br>with<br>the<br>proposed<br>merger,<br>which<br>will<br>be<br>sent<br>to<br>the<br>shareholders<br>of<br>the<br>Company<br>and<br>Allegiance<br>seeking<br>their<br>approval<br>of<br>the<br>proposed<br>merger<br>..<br>WE<br>URGE<br>INVESTORS<br>AND<br>SECURITY<br>HOLDERS<br>TO<br>READ<br>THE<br>REGISTRATION<br>STATEMENT<br>ON<br>FORM<br>S<br>-<br>4<br>,<br>THE<br>JOINT<br>PROXY<br>STATEMENT/PROSPECTUS<br>INCLUDED<br>WITHIN<br>THE<br>REGISTRATION<br>STATEMENT<br>ON<br>FORM<br>S<br>-<br>4<br>AND<br>ANY<br>OTHER<br>RELEVANT<br>DOCUMENTS<br>FILED<br>OR<br>TO<br>BE<br>FILED<br>WITH<br>THE<br>SECURITIES<br>AND<br>EXCHANGE<br>COMMISSION<br>IN<br>CONNECTION<br>WITH<br>THE<br>PROPOSED<br>MERGER<br>BECAUSE<br>THEY<br>CONTAIN<br>IMPORTANT<br>INFORMATION<br>ABOUT<br>ALLEGIANCE,<br>THE<br>COMPANY<br>AND<br>THE<br>PROPOSED<br>MERGER<br>..<br>Investors<br>and<br>security<br>holders<br>may<br>obtain<br>free<br>copies<br>of<br>these<br>documents,<br>once<br>they<br>are<br>filed,<br>and<br>other<br>documents<br>filed<br>with<br>the<br>SEC<br>by<br>Allegiance<br>or<br>the<br>Company<br>through<br>the<br>website<br>maintained<br>by<br>the<br>SEC<br>at<br>https<br>:<br>//www<br>..<br>sec<br>..<br>gov<br>..<br>Documents<br>filed<br>with<br>the<br>SEC<br>by<br>the<br>Company<br>will<br>be<br>available<br>free<br>of<br>charge<br>by<br>accessing<br>the<br>Company’s<br>website<br>at<br>www<br>..<br>communitybankoftx<br>..<br>com<br>under<br>the<br>heading<br>“Investor<br>Relations”<br>or,<br>alternatively,<br>by<br>directing<br>a<br>request<br>by<br>mail<br>or<br>telephone<br>to<br>CBTX,<br>Inc<br>..<br>,<br>9<br>Greenway<br>Plaza,<br>Suite<br>110<br>,<br>Houston,<br>Texas<br>77046<br>,<br>Attn<br>:<br>Investor<br>Relations,<br>(<br>713<br>)<br>210<br>-<br>7600<br>,<br>and<br>documents<br>filed<br>with<br>the<br>SEC<br>by<br>Allegiance<br>will<br>be<br>available<br>free<br>of<br>charge<br>by<br>accessing<br>Allegiance’s<br>website<br>at<br>www<br>..<br>allegiancebank<br>..<br>com<br>under<br>the<br>heading<br>“Investor<br>Relations”<br>or,<br>alternatively,<br>by<br>directing<br>a<br>request<br>by<br>mail<br>or<br>telephone<br>to<br>Allegiance<br>Bancshares,<br>Inc<br>..<br>,<br>8847<br>West<br>Sam<br>Houston<br>Parkway,<br>N<br>..<br>,<br>Suite<br>200<br>,<br>Houston,<br>Texas<br>77040<br>,<br>(<br>281<br>)<br>894<br>-<br>3200<br>..<br>Participants<br>in<br>the<br>Solicitation<br>The<br>Company,<br>Allegiance<br>and<br>certain<br>of<br>their<br>respective<br>directors<br>and<br>executive<br>officers<br>may<br>be<br>deemed<br>to<br>be<br>participants<br>in<br>the<br>solicitation<br>of<br>proxies<br>from<br>the<br>shareholders<br>of<br>the<br>Company<br>and<br>Allegiance<br>in<br>connection<br>with<br>the<br>proposed<br>merger<br>..<br>Certain<br>information<br>regarding<br>the<br>interests<br>of<br>these<br>participants<br>and<br>a<br>description<br>of<br>their<br>direct<br>or<br>indirect<br>interests,<br>by<br>security<br>holdings<br>or<br>otherwise,<br>will<br>be<br>included<br>in<br>the<br>joint<br>proxy<br>statement/prospectus<br>regarding<br>the<br>proposed<br>merger<br>when<br>it<br>becomes<br>available<br>..<br>Additional<br>information<br>about<br>the<br>directors<br>and<br>executive<br>officers<br>of<br>the<br>Company<br>and<br>their<br>ownership<br>of<br>the<br>Company’s<br>common<br>stock<br>is<br>set<br>forth<br>in<br>the<br>Company’s<br>proxy<br>statement<br>for<br>its<br>annual<br>meeting<br>of<br>shareholders,<br>filed<br>with<br>the<br>SEC<br>on<br>April<br>14<br>,<br>2021<br>..<br>Additional<br>information<br>about<br>the<br>directors<br>and<br>executive<br>officers<br>of<br>Allegiance<br>and<br>their<br>ownership<br>of<br>Allegiance’s<br>common<br>stock<br>is<br>set<br>forth<br>in<br>Allegiance’s<br>proxy<br>statement<br>for<br>its<br>annual<br>meeting<br>of<br>shareholders,<br>filed<br>with<br>the<br>SEC<br>on<br>March<br>10<br>,<br>2021<br>..<br>These<br>documents<br>can<br>be<br>obtained<br>free<br>of<br>charge<br>from<br>the<br>sources<br>described<br>above<br>..
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4<br>COMPANY SNAPSHOT<br>•<br>Founded in 2007 and completed IPO in<br>November 2017<br>•<br>On 11/5/2021, entered into a definitive<br>merger agreement with Allegiance<br>Bancshares, Inc.<br>•<br>Resolved outstanding regulatory matters<br>associated with BSA/AML program in<br>December 2021<br>•<br>Primarily a business bank with 34 banking<br>centers located across Houston, East Texas<br>and Dallas<br>•<br>Strong credit culture and experienced<br>management team with deep ties in the<br>markets served<br>•<br>Low<br>-<br>cost core funding<br>-<br>total deposits of<br>$3.8 billion as of 12/31/2021<br>•<br>Strong insider ownership of 26% as of<br>12/31/2021<br>•<br>Strong capital levels with total risk<br>-<br>based<br>capital ratio of 16.42%, tier 1 risk<br>-<br>based and<br>common equity tier 1 capital ratios of<br>15.31% of 12/31/2021
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5<br>ANNOUNCED MERGER WITH ABTX, INC.<br>•<br>Creates a premier Texas financial institution<br>by combining two of the largest Houston<br>-<br>focused banks<br>•<br>Generates significant shareholder<br>value through materially enhanced metrics<br>•<br>True merger<br>-<br>of<br>-<br>equals<br>–<br>combined<br>management team and equal board<br>contribution<br>•<br>Complementary branch network, with<br>meaningful overlap to support cost savings<br>•<br>Shared vision, community focus, and<br>commitment to clients and employees
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6<br>FINANCIAL HIGHLIGHTS<br>(1)<br>Loans originated under the Paycheck Protection Program, or PPP, net of related fees are included in Loans, Net above. See pag<br>e 1<br>2.<br>(2)<br>See Appendix for reconciliation of non<br>-<br>GAAP financial measures.<br>(3)<br>Pre<br>-<br>provision net revenue is net income, with the provision for credit losses and income tax expense added back.<br>Financial Highlights<br>Balance Sheet (000)<br>Total Assets<br>$<br>4,486,001<br><br>$<br>4,209,119<br><br>$<br>4,066,534<br><br>$<br>4,028,639<br><br>$<br>3,949,217<br><br>Loans, Net<br>2,836,179<br><br>2,576,194<br><br>2,692,313<br><br>2,850,758<br><br>2,883,480<br><br>PPP Loans<br>54,262<br><br><br>103,721<br><br><br>184,286<br><br><br>274,336<br><br><br>275,396<br><br><br>PPP Deferred Fees / Unearned Discount<br>(1,473)<br><br><br>(2,954)<br><br><br>(5,207)<br><br><br>(5,560)<br><br><br>(4,159)<br><br><br>PPP Loans, Net<br>(1)<br>52,789<br><br><br>100,767<br><br><br>179,079<br><br><br>268,776<br><br><br>271,237<br><br><br>Unfunded Loan Commitments<br>774,960<br><br><br>772,469<br><br><br>692,581<br><br><br>724,042<br><br><br>739,731<br><br><br>Total Deposits<br>3,831,284<br><br>3,531,635<br><br>3,416,786<br><br>3,384,747<br><br>3,301,794<br><br>Book Value per Share<br>22.96<br><br><br>23.12<br><br><br>22.75<br><br><br>22.31<br><br><br>22.20<br><br><br>Tangible Book Value per Share<br>(2)<br>19.50<br><br><br>19.65<br><br><br>19.28<br><br><br>18.84<br><br><br>18.74<br><br><br>Income Statement (000)<br>Net Interest Income<br>$<br>30,810<br><br><br>$<br>31,249<br><br><br>$<br>31,018<br><br><br>$<br>33,090<br><br><br>$<br>32,520<br><br><br>Provision (Recapture) for Credit Losses<br>(1,207)<br><br><br>(4,895)<br><br><br>(5,038)<br><br><br>412<br><br><br>(135)<br><br><br>Noninterest Income<br>4,100<br><br><br>5,562<br><br><br>3,491<br><br><br>3,111<br><br><br>3,522<br><br><br>Noninterest Expense<br>34,832<br><br><br>24,372<br><br><br>25,197<br><br><br>23,285<br><br><br>23,658<br><br><br>Net Income (Loss)<br>(545)<br><br><br>14,421<br><br><br>11,703<br><br><br>10,019<br><br><br>10,236<br><br><br>Pre-Provision Net Revenue<br>(2)(3)<br>78<br><br><br>12,439<br><br><br>9,312<br><br><br>12,916<br><br><br>12,384<br><br><br>Diluted Earnings (Loss) per Share<br>(0.02)<br><br><br>0.59<br><br><br>0.48<br><br><br>0.41<br><br><br>0.41<br><br><br>Capital Ratios<br>Total Shareholders' Equity to Total Assets<br>12.53<br><br><br>%<br>13.41<br><br><br>%<br>13.68<br><br><br>%<br>13.54<br><br><br>%<br>13.84<br><br><br>%<br>Tangible Equity to Tangible Assets<br>(2)<br>10.85<br><br><br>11.64<br><br><br>11.84<br><br><br>11.67<br><br><br>11.94<br><br><br>Common Equity Tier 1 Capital Ratio<br>15.31<br><br><br>16.87<br><br><br>16.46<br><br><br>15.75<br><br><br>15.45<br><br><br>Tier 1 Risk-Based Capital Ratio<br>15.31<br><br><br>16.87<br><br><br>16.46<br><br><br>15.75<br><br><br>15.45<br><br><br>Total Risk-Based Capital Ratio<br>16.42<br><br><br>18.12<br><br><br>17.72<br><br><br>17.00<br><br><br>16.71<br><br><br>Tier 1 Leverage Ratio<br>11.22<br><br><br>11.69<br><br><br>11.63<br><br><br>11.90<br><br><br>12.00<br><br><br>Q4 2021<br>Q3 2021<br>Q2 2021<br>Q4 2020<br>Q1 2021
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7<br>FINANCIAL HIGHLIGHTS<br>(Continued)<br>(1)<br>Annualized.<br>(2)<br>See Appendix for reconciliation of non<br>-<br>GAAP financial measures.<br>(3)<br>Efficiency ratio is calculated by dividing noninterest expense by the sum of the net interest income and noninterest income.<br>(4)<br>Allowance<br>for<br>credit<br>losses,<br>or<br>ACL<br>..<br>(5)<br>Held<br>for<br>sale,<br>or<br>HFS<br>..<br>Financial Highlights<br>Q4 2021<br>Q3<br>2021<br>Q2 2021<br>Q1 2021<br>Q4 2020<br>Financial Highlights<br>Q4 2021<br>Q3 2021<br>Q2 2021<br>Q1 2021<br>Q4 2020<br>Profitability<br>Return on Average Assets<br>(0.05)<br><br><br>%<br>1.37<br><br><br>%<br>1.14<br><br><br>%<br>1.03<br><br><br>%<br>1.05<br><br><br>%<br>Return on Average Shareholders' Equity<br>(1)<br>(0.38)<br><br><br>10.15<br><br><br>8.49<br><br><br>7.39<br><br><br>7.47<br><br><br>Return on Average Tangible Equity<br>(1)(2)<br>(0.45)<br><br><br>11.95<br><br><br>10.03<br><br><br>8.75<br><br><br>8.85<br><br><br>Net Interest Margin - Tax Equivalent<br>(1)<br>3.07<br><br><br>3.22<br><br><br>3.29<br><br><br>3.71<br><br><br>3.62<br><br><br>Cost of Total Deposits<br>(1)<br>0.13<br><br><br>0.14<br><br><br>0.15<br><br><br>0.17<br><br><br>0.19<br><br><br>Efficiency Ratio<br>(3)<br>99.78<br><br><br>66.21<br><br><br>73.02<br><br><br>64.32<br><br><br>65.64<br><br><br>Credit Quality<br>ACL<br>(4)<br> / Loans Excluding Loans HFS<br>(5)<br>1.09<br><br><br>%<br>1.23<br><br><br>%<br>1.36<br><br><br>%<br>1.41<br><br><br>%<br>1.39<br><br><br>%<br>ACL<br>(4)<br> / Loans Excluding Loans HFS<br>(5)<br>and PPP Loans<br>1.11<br><br><br>1.29<br><br><br>1.46<br><br><br>1.56<br><br><br>1.53<br><br><br>Nonperforming Assets / Total Assets<br>0.50<br><br><br>0.49<br><br><br>0.52<br><br><br>0.59<br><br><br>0.61<br><br><br>Nonperforming Loans / Loans Excluding Loans HFS<br>(5)<br>0.79<br><br><br>0.79<br><br><br>0.77<br><br><br>0.81<br><br><br>0.82<br><br><br>Net Charge-offs (Recoveries) / Average Loans<br>(1)<br>(0.01)<br><br><br>(0.01)<br><br><br>(0.07)<br><br><br>0.01<br><br><br>0.49
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8<br>DEPOSITS<br>•<br>Proven ability to generate low<br>-<br>cost core<br>deposits<br>(1)<br>to fund loan growth<br>•<br>Total deposits increased $299.6 million, or<br>8.5%, from 9/30/2021 to 12/31/2021 and the<br>cost of total deposits was 0.13% for Q4 2021<br>•<br>Total deposits increased $529.5 million, or<br>16.0%, from 12/31/2020 to 12/31/2021 and<br>the cost of total deposits was 0.14% for<br>2021<br>•<br>Noninterest<br>-<br>bearing demand deposits<br>were 46.6% of total deposits as of<br>12/31/2021<br>•<br>Core deposits<br>(1)<br>were 97.2% of total<br>deposits with minimal reliance on time<br>deposits as of 12/31/2021<br>•<br>Relationship based ~ 79.9% of loan<br>customers also had a deposit relationship<br>as of 12/31/2021<br>•<br>Loan to deposit ratio was 74.8% as of<br>12/31/2021<br>Stable<br>Core Deposits<br>(1)(2)<br>(1)<br>Core deposits defined as total deposits less time deposits over $100,000.<br>(2)<br>2018<br>–<br>2021 figures as of year end 12/31.<br>42.8%<br>41.5%<br>44.7%<br>46.6%<br>50.4%<br>51.2%<br>50.7%<br>50.6%<br>6.8%<br>7.3%<br>4.6%<br>2.8%<br>2018<br>2019<br>2020<br>2021<br>Noninterest-Bearing Deposits<br>Other Core Deposits<br>Time Deposits > $100K<br>(%)<br>Noninterest-bearing Demand Accounts<br>$<br>1,784,981<br><br>46.6%<br>Interest-bearing Demand Accounts<br>468,361<br><br><br>12.2%<br>Money Market Accounts<br>1,209,659<br><br>31.6%<br>Savings Accounts<br>127,031<br><br><br>3.3%<br>Certificates and Other Time Deposits > $100K<br>106,477<br><br><br>2.8%<br>Certificates and Other Time Deposits < $100K<br>134,775<br><br><br>3.5%<br>Total Deposits<br>$<br>3,831,284<br><br>100.0%<br>Cost of Total Deposits - 2021<br>0.14%<br>(000)<br>Deposits<br>12/31/2021
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9<br>LOAN PORTFOLIO<br>(1)<br>Commercial loans defined as total loans less 1<br>-<br>4 family residential, consumer, agriculture and other loans. See page 10.<br>(2)<br>2018<br>–<br>2021 figures as of year end 12/31.<br>(3)<br>See page 11 for information about how the Company classifies its direct and indirect oil and gas loans.<br>•<br>Loans excluding loans held for sale<br>increased $259.1 million from 9/30/2021 to<br>12/31/2021 primarily due to increased loan<br>originations and a purchase of loans from<br>a third party in Q4 2021 of $81.4 million<br>•<br>Average yield on loans was 4.47% for 2021<br>and 4.60% for 2020 and average yield on<br>loans excluding PPP loans was 4.39% for<br>2021 and 4.75% for 2020<br>•<br>Average yield on loans was 4.39%, 4.52%<br>and 4.42% for Q4 2021, Q3 2021 and Q4<br>2020, respectively, and average yield on<br>loans excluding PPP loans was 4.26%, 4.37%<br>and 4.51% for the same periods<br>•<br>Provided deferral arrangements to<br>customers through the COVID<br>-<br>19<br>pandemic and at 12/31/2021 deferrals<br>were down to 7 loans with principal<br>totaling $18.5 million as of 12/31/2021<br>•<br>As of 12/31/2021, 77.7% of loans were<br>Houston<br>-<br>based and 7.1% of gross loans<br>were related to oil and gas<br>(3)<br>Loan Portfolio Composition<br>(2)<br>83.7%<br>84.4%<br>87.4%<br>86.0%<br>16.3%<br>15.6%<br>12.6%<br>14.0%<br>2018<br>2019<br>2020<br>2021<br>Total 1-4 Family Residential, Consumer, Agriculture and Other Loans<br>Total Commercial Loans(1)<br>(000)<br>(%)<br>Commercial and Industrial<br>$<br>634,384<br>22.0%<br>Real Estate:<br>Commercial Real Estate<br>1,091,969<br>38.0%<br>Construction and Development<br>460,719<br>16.0%<br>1-4 Family Residential<br>277,273<br>9.6%<br>Multi-family Residential<br>286,396<br>10.0%<br>Consumer, Agriculture and Other<br>125,686<br>4.4%<br>Gross Loans<br>$<br>2,876,427<br>100.0%<br>Less deferred fees and unearned discounts<br>(8,739)<br><br><br>Less loans held for sale<br>(164)<br><br><br>Loans excluding loans held for sale<br>$<br>2,867,524<br>Average yield on loans - 2021<br>4.47%<br>Loan Portfolio<br>12/31/2021
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10<br>COMMERCIAL LOANS<br>•<br>Well<br>-<br>diversified commercial loan<br>portfolio totaled 86.0% of gross loans as<br>of 12/31/2021 and 88.0% as of<br>9/30/2021<br>•<br>Multi<br>-<br>family community development<br>loans are Texas<br>-<br>based projects<br>promoting affordable housing and<br>total $358.3 million ($238.9 million<br>permanent and $119.4 million<br>construction) as of 12/31/2021<br>•<br>Non<br>-<br>owner occupied commercial real<br>estate loans are predominantly local<br>investor projects (i.e., industrial, office<br>and retail buildings) with investors or<br>developers with long<br>-<br>term CBTX<br>relationships<br>•<br>Owner<br>-<br>occupied commercial real<br>estate loans are term financing of real<br>estate facilities for businesses and<br>clients<br>(1) Includes 1<br>-<br>4 Family Residential, Consumer, Agriculture and Other Loans. See page 9.<br>Loan Components - 12/31/2021<br>T<br>Commercial and Industrial:<br>PPP Loans<br>$<br>54,262<br>2.2%<br>Oil and Gas<br>135,081<br>5.5%<br>Equipment Rental<br>60,206<br>2.4%<br>Professional/Medical<br>57,365<br>2.3%<br>Industrial Construction<br>67,618<br>2.7%<br>Manufacturing<br>31,120<br>1.3%<br>Other<br>228,732<br>9.2%<br>Total Commercial and Industrial<br>634,384<br>25.6%<br>Commercial Real Estate:<br>Owner Occupied<br>545,740<br>22.1%<br>Non-owner Occupied<br>479,342<br>19.4%<br>Oil and Gas<br>66,887<br>2.7%<br>Total Commercial Real Estate<br>1,091,969<br>44.1%<br>Construction and Development:<br>Land and Development<br>177,506<br>7.2%<br>Commercial<br>107,663<br>4.4%<br>Multi-family Community Development<br>119,363<br>4.8%<br>1-4 Family - Commercial<br>39,345<br>1.6%<br>1-4 Family - Primary<br>14,285<br>0.6%<br>Oil and Gas<br>2,557<br>0.1%<br>Total Construction and Development<br>460,719<br>18.6%<br>Multi-family Residential:<br>Multi-family Community Development<br>238,913<br>9.7%<br>Other<br>47,483<br>1.9%<br>Total Multi-family Residential<br>286,396<br>11.6%<br>Total Commercial Loans<br>2,473,468<br>100.0%<br>Other Loans<br>(1)<br>402,613<br>Other Oil and Gas Loans<br>346<br>Total Gross Loans<br>$<br>2,876,427<br>Balance (000)<br>% Commercial
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11<br>CONSTRUCTION / OIL AND GAS LOANS<br>(1)<br>Total capital of CommunityBank of Texas, N.A., the wholly<br>-<br>owned subsidiary of the Company.<br>(2)<br>Total relationship commitment, which includes the outstanding balance and unfunded commitments.<br>Construction Loans<br>•<br>As of 12/31/2021 and 9/30/2021,<br>construction loans were 95.5% and 81.1% of<br>capital<br>(1)<br>, respectively, and unfunded<br>commitments were $236.7 million and $406.2<br>million, respectively<br>•<br>Oil and gas loans are loans with revenue<br>related to well<br>-<br>head, oil in the ground or<br>extracting oil or gas, including any activity,<br>product or service related to the oil and gas<br>industry, such as exploration and<br>production, drilling, equipment, services,<br>midstream companies, service companies<br>and commercial real estate companies with<br>significant reliance on oil and gas<br>companies<br>•<br>Direct loans oil and gas loans are loans to an<br>entity with more than 50% of its revenue of its<br>revenue from the type of companies<br>defined above and indirect loans are loans<br>to an entity with between 20%<br>-<br>50% of its<br>revenue from the type of companies<br>defined above<br>Oil and Gas Loans<br>Percentage of<br>Capital<br>(1)<br>UnFunded<br>Commitments<br>(000)<br>(2)<br>$<br>177,506<br>36.8%<br>$<br>54,157<br>107,663<br>22.3%<br>74,080<br>119,363<br>24.7%<br>59,148<br>39,345<br>8.2%<br>34,043<br>14,285<br>3.0%<br>13,900<br>2,557<br>0.5%<br>1,419<br>$<br>460,719<br>95.5%<br>$<br>236,747<br>Direct:<br>Exploration and Production<br>$<br>35,631<br><br><br>$<br>36,894<br><br><br>$<br>40,097<br><br><br>Oil Field Services<br>70,147<br><br><br>45,910<br><br><br>49,526<br><br><br>Midstream<br>43,688<br><br><br>44,350<br><br><br>21,979<br><br><br>149,466<br><br><br>127,154<br><br><br>111,602<br><br><br>Indirect:<br>Oil Field Services<br>29,100<br><br><br>27,710<br><br><br>25,116<br><br><br>Midstream<br>26,305<br><br><br>30,559<br><br><br>31,090<br><br><br>55,405<br><br><br>58,269<br><br><br>56,206<br><br><br>Total:<br>Exploration and Production<br>35,631<br><br><br>36,894<br><br><br>40,097<br><br><br>Oil Field Services<br>99,247<br><br><br>73,620<br><br><br>74,642<br><br><br>Midstream<br>69,993<br><br><br>74,909<br><br><br>53,069<br><br><br>$<br>204,871<br><br><br>$<br>185,423<br><br><br>$<br>167,808<br><br><br>Component<br>Lines of Credit<br>$<br>92,629<br><br><br>$<br>67,139<br><br><br>$<br>50,524<br><br><br>Secured by Real Estate and<br>Equipment<br>76,611<br><br><br>81,390<br><br><br>77,187<br><br><br>Production Secured by<br>Mineral Rights<br>35,631<br><br><br>36,894<br><br><br>40,097<br><br><br>$<br>204,871<br><br><br>$<br>185,423<br><br><br>$<br>167,808<br><br><br>Balance (000)<br>12/31/2021<br>9/30/2021<br>12/31/2020<br>Construction Loans - 12/31/2021<br>Oil and Gas Loans (000)<br>Land and Development<br>Commercial<br>Multi-family Community Development<br>1-4 Family - Commercial<br>1-4 Family - Primary<br>Oil and Gas<br>Percentage of<br>Capital<br>(1)<br>UnFunded<br>Commitments<br>(000)<br>(2)<br>$<br>177,506<br>36.8%<br>$<br>54,157<br>107,663<br>22.3%<br>74,080<br>119,363<br>24.7%<br>59,148<br>39,345<br>8.2%<br>34,043<br>14,285<br>3.0%<br>13,900<br>2,557<br>0.5%<br>1,419<br>$<br>460,719<br>95.5%<br>$<br>236,747<br>Direct:<br>Exploration and Production<br>$<br>35,631<br><br><br>$<br>36,894<br><br><br>$<br>40,097<br><br><br>Oil Field Services<br>70,147<br><br><br>45,910<br><br><br>49,526<br><br><br>Midstream<br>43,688<br><br><br>44,350<br><br><br>21,979<br><br><br>149,466<br><br><br>127,154<br><br><br>111,602<br><br><br>Indirect:<br>Oil Field Services<br>29,100<br><br><br>27,710<br><br><br>25,116<br><br><br>Midstream<br>26,305<br><br><br>30,559<br><br><br>31,090<br><br><br>55,405<br><br><br>58,269<br><br><br>56,206<br><br><br>Total:<br>Exploration and Production<br>35,631<br><br><br>36,894<br><br><br>40,097<br><br><br>Oil Field Services<br>99,247<br><br><br>73,620<br><br><br>74,642<br><br><br>Midstream<br>69,993<br><br><br>74,909<br><br><br>53,069<br><br><br>$<br>204,871<br><br><br>$<br>185,423<br><br><br>$<br>167,808<br><br><br>Components:<br>Lines of Credit<br>$<br>92,629<br><br><br>$<br>67,139<br><br><br>$<br>50,524<br><br><br>Secured by Real Estate and<br>Equipment<br>76,611<br><br><br>81,390<br><br><br>77,187<br><br><br>Production Secured by<br>Mineral Rights<br>35,631<br><br><br>36,894<br><br><br>40,097<br><br><br>$<br>204,871<br><br><br>$<br>185,423<br><br><br>$<br>167,808<br><br><br>Balance (000)<br>12/31/2021<br>9/30/2021<br>12/31/2020<br>Construction Loans - 12/31/2021<br>Oil and Gas Loans (000)<br>Land and Development<br>Commercial<br>Multi-family Community Development<br>1-4 Family - Commercial<br>1-4 Family - Primary<br>Oil and Gas
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•<br>PPP program closed to further<br>borrowings and no PPP loans<br>originated since Q2 2021<br>•<br>As of 12/31/2021, the PPP portfolio<br>included 224 loans whose principal<br>balances total $10.0 million which<br>qualified for the simplified forgiveness<br>application<br>•<br>Interest earned on PPP loans for Q4<br>2021 and Q3 2021 included the<br>recognition of $1.5 million and $2.3<br>million, respectively, of net loan fees<br>•<br>Received payments totaling $49.5<br>million and $80.6 million related to<br>forgiveness or payments by customers<br>during Q4 2021 and Q3 2021,<br>respectively<br>12<br>PAYCHECK PROTECTION PROGRAM<br>(1)<br>PPP loans are classified as Commercial and Industrial loans per regulatory guidelines.<br>(2)<br>Annualized.<br>PPP Loans<br>(1)<br> - 12/31/2021<br>Principal<br>Amount (000)<br>Number<br>of PPP<br>Loans<br>Loans $0 - $350,000<br>23,345<br>$<br><br>283<br><br><br>Loans $350,000 - $2 million<br>30,774<br><br><br>46<br><br><br>Loans over $2 million<br>143<br><br><br>1<br><br><br>Gross PPP loans<br>54,262<br><br><br>330<br><br><br>Deferred loan fees and costs<br>(1,473)<br><br><br>Net PPP loan<br>52,789<br>$<br><br>Yield Analysis Q4 2021<br>Average<br>Outstanding<br>Balance<br>Interest<br>Earned (000)<br>Average<br>Yield<br>(2)<br>Total Loans<br>2,701,211<br>$<br><br>29,882<br>$<br><br>4.39%<br>Less PPP Loans<br>(76,897)<br><br><br>(1,677)<br><br><br>8.65%<br>Adjusted Total Loans<br>2,624,314<br>$<br><br>28,205<br>$<br><br>4.26%<br>Yield Analysis 2021<br>Average<br>Outstanding<br>Balance<br>Interest<br>Earned (000)<br>Average<br>Yield<br>Total Loans<br>2,784,663<br>$<br><br>124,605<br>$<br><br>4.47%<br>Less PPP Loans<br>(176,661)<br><br><br>(10,244)<br><br><br>5.80%<br>Adjusted Total Loans<br>2,608,002<br>$<br><br>114,361<br>$<br><br>4.39%
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•<br>Allowance for credit losses, or ACL,<br>decreased $863,000 from 9/30/2021 to<br>12/31/2021 due to an adjustment to<br>qualitative factors associated with the<br>local economy as these factors<br>continued to improve<br>•<br>Decrease in ACL for loans during 2021<br>resulted from continued improvements<br>in the national and local economies<br>and forecast assumptions<br>•<br>Utilized Moody’s baseline scenario<br>forecast model<br>•<br>The Company’s ACL for unfunded<br>commitments (letters of credit and<br>commitments to extend credit)<br>decreased $306,000 from 9/30/2021 to<br>12/31/2021 due to an<br>adjustment to<br>qualitative factors associated with the<br>local economy as these factors<br>continued to improve<br>13<br>ALLOWANCE FOR CREDIT LOSSES<br>ACL - Loans by Classification<br>(000)<br>`<br>Commercial and Industrial<br>$<br>11,214<br><br>$<br>11,401<br><br>$<br>12,260<br><br>$<br>13,812<br><br>$<br>13,035<br><br><br>Real Estate:<br>Commercial Real Estate<br>11,015<br><br>11,744<br><br>13,260<br><br>14,280<br><br>13,798<br><br><br>Construction<br>3,310<br><br><br>3,334<br><br><br>4,453<br><br><br>5,445<br><br><br>6,089<br><br><br>1-4 Family Residential<br>2,105<br><br><br>1,700<br><br><br>2,172<br><br><br>2,458<br><br><br>2,578<br><br><br>Multi-family Residential<br>1,781<br><br><br>2,156<br><br><br>2,382<br><br><br>2,714<br><br><br>2,513<br><br><br>Consumer<br>406<br><br><br>449<br><br><br>494<br><br><br>434<br><br><br>440<br><br><br>Agriculture<br>88<br><br><br>109<br><br><br>115<br><br><br>107<br><br><br>137<br><br><br>Other<br>1,426<br><br><br>1,315<br><br><br>2,047<br><br><br>1,624<br><br><br>2,047<br><br><br>Total ACL - Loans<br>$<br>31,345<br><br>$<br>32,208<br><br>$<br>37,183<br><br>$<br>40,874<br><br>$<br>40,637<br><br><br>ACL / Loans Excluding Loans<br>Held for Sale<br>1.09%<br>1.23%<br>1.36%<br>1.41%<br>1.39%<br>ACL Activity (000)<br>Beginning Balance<br>$<br>32,208<br><br>$<br>37,183<br><br>$<br>40,874<br><br>$<br>40,637<br><br>$<br>44,069<br><br><br>Provision (Recapture)<br>(901)<br><br><br>(5,057)<br><br><br>(4,190)<br><br><br>286<br><br><br>229<br><br><br>Net (Charge-offs) Recoveries<br>38<br><br><br>82<br><br><br>499<br><br><br>(49)<br><br><br>(3,661)<br><br><br>Ending Balance<br>$<br>31,345<br><br>$<br>32,208<br><br>$<br>37,183<br><br>$<br>40,874<br><br>$<br>40,637<br><br><br>Q4 2020<br>12/31/2020<br>12/31/2021<br>Q3 2021<br>Q2 2021<br>9/30/2021<br>6/30/2021<br>3/31/2021<br>Q1 2021<br>Q4 2021
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14<br>NPA AND NET CHARGE<br>-<br>OFFS<br>(1)<br>USA and Texas figures are from SNL Financial aggregates and Q3 2021 is the latest period available for these comparative figu<br>res<br>..<br>Nonperforming Assets<br>•<br>Nonperforming assets, or NPA, remained<br>low relative to total assets at $22.6 million,<br>or 0.50% of total assets, as of 12/31/2021<br>compared to $24.0 million, or 0.61% of<br>total assets as of 12/31/2020<br>•<br>NPA to total assets improved to 0.50% of<br>total assets at 12/31/2021 from 0.61% of<br>total assets at 12/31/2020 due to the<br>$536.8 million increase in total assets and<br>the $1.5 million decrease in NPA between<br>those periods<br>•<br>Q4 2021 recoveries exceeded charge<br>-<br>offs resulting in a net recovery of $38,000,<br>or 0.01% of average loans, on an<br>annualized basis<br>•<br>2021 recoveries exceeded charge<br>-<br>off<br>resulting in a net recovery of $570,000, or<br>0.02% of average loans and 2020 net<br>charge<br>-<br>offs were $3.6 million or 0.13% of<br>average loans<br>Net Charge<br>-<br>Offs<br>Nonperforming Assets / Total Assets<br>(1)<br>Net Charge<br>-<br>Offs /Average Loans<br>(<br>1)<br>0.70%<br>0.59%<br>0.62%<br>0.50%<br>0.50%<br>0.48%<br>0.31%<br>0.23%<br>0.11%<br>0.03%<br>0.61%<br>0.49%<br>2018<br>2019<br>2020<br>Q3 2021<br>USA<br>TX<br>CBTX<br>0.50%<br>0.52%<br>0.49%<br>0.19%<br>0.17%<br>0.17%<br>0.26%<br>0.06%<br>(0.03%)<br>0.03%<br>0.13%<br>(0.01%)<br>2018<br>2019<br>2020<br>Q3 2021<br>USA<br>TX<br>CBTX
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15<br>REVENUE AND EFFICIENCY<br>(1)<br>2018<br>–<br>2021 figures as of year end 12/31.<br>(2)<br>Efficiency ratio is calculated by dividing noninterest expense by the sum of the net interest and noninterest income.<br>Revenue<br>Efficiency<br>•<br>Net interest margin, or NIM, on a tax<br>equivalent basis was 3.07% for Q4 2021,<br>3.22% for Q3 2021 and 3.62% for Q4 2020<br>•<br>Cost of interest<br>-<br>bearing liabilities was<br>0.28% for Q4 2021, down from 0.30% for<br>Q3 2021 and 0.39% for Q4 2020<br>•<br>At 12/31/2021, 51.0% of loans excluding<br>PPP loans were variable rate and 70.0%<br>of these variable rate loans had floors<br>•<br>Efficiency ratio was 99.78% for Q4 2021,<br>66.21% for Q3 2021 and 65.64% for Q4<br>2020<br>•<br>Fluctuations in the efficiency ratio from<br>Q3 2021 to Q4 2021 and 2020 to 2021<br>primarily resulted from higher noninterest<br>expense in Q4 2021 primarily due to the<br>$8.0 million regulatory penalty paid in<br>that quarter<br>Revenue and NIM<br>(1)<br>Efficiency<br>(1)(2)<br>59.0%<br>58.3%<br>64.2%<br>75.6%<br>2.60%<br>2.67%<br>2.45%<br>2.61%<br>2018<br>2019<br>2020<br>1.80%<br>2.00%<br>2.20%<br>2.40%<br>2.60%<br>2.80%<br>0%<br>20%<br>40%<br>60%<br>80%<br>2018<br>2019<br>2020<br>2021<br>Axis Title<br>Axis Title<br>Axis Title<br>Axis Title<br>Efficiency Ratio<br>NI Exp. / Avg. Assets<br>$139<br>$155<br>$143<br>$142<br>4.35%<br>4.42%<br>3.73%<br>3.31%<br>2.00%<br>2.50%<br>3.00%<br>3.50%<br>4.00%<br>4.50%<br>5.00%<br>$0<br>$20<br>$40<br>$60<br>$80<br>$100<br>$120<br>$140<br>$160<br>2018<br>2019<br>2020<br>2021<br>Net Int Inc & Noninterest Income<br>NIM, tax equivalent basis
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16<br>At CommunityBank of Texas, we’re committed to<br>building strong, honest relationships. We strive to<br>keep our clients’ and partners’ needs at the<br>forefront of everything we do. And we measure our<br>success by the success we help create for them.<br>OUR VISION<br>Here to Serve.<br>OUR POSITIONING<br>To experienced business owners,<br>CommunityBank of Texas is the financial partner<br>that delivers a better banking experience.<br>OUR PERSONALITY<br>Resourceful, Trustworthy, Friendly,<br>Responsive, Strong<br>At CommunityBank of Texas, we believe in a powerful and multi<br>-<br>faceted<br>statement, one that drills straight to the heart of our reason for being, while<br>clearly illuminating the mission that our many employees pursue each day:<br>Here to serve.<br>Here to serve<br>is a commitment to building strong and honest relationships, a<br>clarion call to remember that in everything we do, our highest purpose is to<br>transform our extensive financial expertise into success for our clients.<br>Relationships are the bedrock of our business<br>–<br>both internally and externally<br>–<br>and there is a stewardship in the word<br>serve<br>that promises that, in these<br>relationships, we will be caring, humble and precise. That we will keep the<br>needs of our clients at the forefront of our minds at all times and measure<br>our performance by the success we create for each other.<br>The other critical component of our brand vision is the word<br>here<br>, which<br>serves several important roles.<br>Here<br>is a promise that we will be there for our clients and answer the call<br>when they need us the most. We will be Dependable. Honest. Trustworthy.<br>And we will remember that every time is the right time to put our clients’<br>needs first.<br>Here<br>is also a pledge to be visible and present in the communities we serve.<br>It adds weight to the first and most key component of our name:<br>Community.<br>We are not some faceless financial institution located high above the rank<br>and file, safely sheltered in an ivory tower. We are right<br>here<br>, serving the<br>cities and communities in which we live. Day<br>-<br>in and day<br>-<br>out. We sponsor<br>civic events, donate back to our neighbors in need, and spend the time to<br>really get to know our clients on a personal level.<br>In the face of an increasingly digital and impersonal world, we are proudly<br>present in the lives of our clients and our communities.
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APPENDIX
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18<br>NON<br>-<br>GAAP RECONCILIATIONS<br>Our<br>management<br>uses<br>certain<br>non<br>-<br>GAAP<br>financial<br>measures<br>to<br>evaluate<br>performance<br>..<br>We<br>have<br>included<br>in<br>this<br>presentation<br>information<br>related<br>to<br>these<br>non<br>-<br>GAAP<br>financial<br>measures<br>for<br>the<br>applicable<br>periods<br>presented<br>..<br>The<br>following<br>tables<br>reconcile,<br>as<br>of<br>the<br>dates<br>set<br>forth<br>below<br>:<br>(<br>1<br>)<br>book<br>value<br>per<br>share<br>to<br>tangible<br>book<br>value<br>per<br>share<br>;<br>(<br>2<br>)<br>total<br>shareholders’<br>equity<br>to<br>total<br>assets<br>to<br>tangible<br>equity<br>to<br>tangible<br>assets<br>;<br>(<br>3<br>)<br>return<br>on<br>average<br>shareholders’<br>equity<br>to<br>return<br>on<br>average<br>tangible<br>equity<br>;<br>and<br>(<br>4<br>)<br>net<br>income<br>to<br>pre<br>-<br>provision<br>net<br>revenue<br>..<br>The<br>most<br>directly<br>comparable<br>GAAP<br>financial<br>measure<br>for<br>tangible<br>book<br>value<br>per<br>share<br>is<br>book<br>value<br>per<br>share<br>and<br>the<br>most<br>directly<br>comparable<br>GAAP<br>financial<br>measure<br>for<br>tangible<br>equity<br>to<br>tangible<br>assets<br>is<br>total<br>shareholders’<br>equity<br>to<br>total<br>assets<br>..<br>The<br>most<br>directly<br>comparable<br>GAAP<br>financial<br>measure<br>for<br>return<br>on<br>average<br>tangible<br>equity<br>is<br>return<br>on<br>average<br>shareholders’<br>equity<br>..<br>The<br>most<br>directly<br>comparable<br>GAAP<br>financial<br>measure<br>for<br>pre<br>-<br>provision<br>net<br>revenue<br>is<br>net<br>income<br>..
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19<br>NON<br>-<br>GAAP RECONCILIATIONS<br>(Continued)<br>Tangible BV Per Share/Tangible Equity to Tangible Assets<br>Total Shareholders' Equity<br>$<br>562,125<br>$<br>564,593<br>$<br>556,227<br>$<br>545,349<br>$<br>546,451<br>Goodwill<br>(80,950)<br>(80,950)<br>(80,950)<br>(80,950)<br>(80,950)<br>Other Intangibles<br>(3,658)<br>(3,702)<br>(3,846)<br>(3,991)<br>(4,171)<br>Tangible Equity<br>$<br>477,517<br>$<br>479,941<br>$<br>471,431<br>$<br>460,408<br>$<br>461,330<br>Total Assets<br>$<br>4,486,001<br>$<br>4,209,119<br>$<br>4,066,534<br>$<br>4,028,639<br>$<br>3,949,217<br>Goodwill<br>(80,950)<br>(80,950)<br>(80,950)<br>(80,950)<br>(80,950)<br>Other Intangibles<br>(3,658)<br>(3,702)<br>(3,846)<br>(3,991)<br>(4,171)<br>Tangible Assets<br>$<br>4,401,393<br>$<br>4,124,467<br>$<br>3,981,738<br>$<br>3,943,698<br>$<br>3,864,096<br>Common Shares Outstanding<br>24,488<br>24,420<br>24,450<br>24,442<br>24,613<br>Book Value Per Share<br>$<br>22.96<br>$<br>23.12<br>$<br>22.75<br>$<br>22.31<br>$<br>22.20<br>Tangible Book Value Per Share<br>$<br>19.50<br>$<br>19.65<br>$<br>19.28<br>$<br>18.84<br>$<br>18.74<br>Total Shareholders' Equity to Total Assets<br>12.53%<br>13.41%<br>13.68%<br>13.54%<br>13.84%<br>Tangible Equity to Tangible Assets<br>10.85%<br>11.64%<br>11.84%<br>11.67%<br>11.94%<br>Return on Average Tangible Equity/PPNR<br>Average Shareholders' Equity<br>$<br>568,167<br>$<br>563,631<br>$<br>552,807<br>$<br>549,528<br>$<br>545,134<br>Average Goodwill<br>(80,950)<br>(80,950)<br>(80,950)<br>(80,950)<br>(80,950)<br>Average Other Intangibles<br>(3,693)<br>(3,803)<br>(3,951)<br>(4,098)<br>(4,269)<br>Average Tangible Equity<br>$<br>483,524<br>$<br>478,878<br>$<br>467,906<br>$<br>464,480<br>$<br>459,915<br>Annualized Net Income (Loss)<br>$<br>(2,162)<br>$<br>57,214<br>$<br>46,941<br>$<br>40,633<br>$<br>40,721<br>Return on Average Shareholders' Equity<br>(0.38%)<br><br><br>10.15%<br>8.49%<br>7.39%<br>7.47%<br>Return on Average Tangible Equity<br>(0.45%)<br><br><br>11.95%<br>10.03%<br>8.75%<br>8.85%<br>Net Income (Loss)<br>$<br>(545)<br>$<br>14,421<br>$<br>11,703<br>$<br>10,019<br>$<br>10,236<br>Provision (Recapture) for Credit Losses<br>(1,207)<br>(4,895)<br>(5,083)<br>412<br>(135)<br>Income Tax Expense<br>1,830<br>2,913<br>2,692<br>2,485<br>2,283<br>Pre-Provision Net Revenue<br>$<br>78<br>$<br>12,439<br>$<br>9,312<br>$<br>12,916<br>$<br>12,384<br>Q4 2021<br>Q4 2020<br>Q1 2021<br>Q3 2021<br>Q2 2021<br>12/31/2021<br>3/31/2021<br>12/31/2020<br>6/30/2021<br>9/30/2021
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