Equibles

8-K

Stellar Bancorp, Inc. (STEL)

8-K 2022-10-28 For: 2022-10-28
View Original
Added on April 04, 2026

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): October 28, 2022

Stellar Bancorp, Inc.

(Exact Name of Registrant as Specified in Charter)

Texas 001-38280 20-8339782
(State or Other Jurisdiction of Incorporation) (Commission File Number) (I.R.S. Employer Identification Number)

9 Greenway Plaza, Suite 110

Houston, Texas 77046

(Address of Principal Executive Offices) (Zip Code)

(713) 210-7600

(Registrant's telephone number, including area code)

(Former name or former address, if changed since last report)

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<br><br>Symbol(s) Name of each exchange on which registered
Common stock, par value $0.01 per share STEL The Nasdaq Stock Market LLC

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 (§240.12b-2 of this chapter).

Emerging growth company S

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. S

Item 2.02. Results of Operations and Financial Condition.

On October 28, 2022, Stellar Bancorp, Inc., a Texas corporation formerly known as CBTX, Inc. (“CBTX”), issued a press release announcing its financial results for the third quarter 2022. As previously disclosed, the merger of equals between CBTX and Allegiance Bancshares, Inc. (“Allegiance”) became effective as of October 1, 2022, with the combined company renamed Stellar Bancorp, Inc. The press release includes the financial results of stand-alone CBTX and stand-alone Allegiance for the periods presented. A copy of the press release, as well as a copy of the accompanying earnings presentation, are furnished as Exhibit 99.1 and Exhibit 99.2 hereto, respectively, and incorporated herein by reference.

In accordance with General Instruction B.2 to Form 8-K, the information furnished in Item 2.02, Exhibit 99.1 and Exhibit 99.2 of this Current Report on Form 8-K 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, and such information shall not 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 9.01. Financial Statements and Exhibits.

(d)    Exhibits. The following are furnished as exhibits to this Current Report on Form 8-K:

Exhibit Number Description of Exhibit
99.1 Press Release issued byStellarBancorp, Inc. datedOctober28, 2022
99.2 ThirdQuarter 2022 Earnings Presentation datedOctober28, 2022
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURE

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.

STELLAR BANCORP, INC.
Date: October 28, 2022 By: /s/ Paul P. Egge
Paul P. Egge
Chief Financial Officer

Document

Exhibit 99.1

image.jpg

PRESS RELEASE

STELLAR BANCORP, INC. REPORTS

THIRD QUARTER 2022 RESULTS

HOUSTON, October 28, 2022 - (NASDAQ: STEL) The merger of equals between CBTX, Inc. (CBTX) and Allegiance Bancshares, Inc. (Allegiance) became effective as of October 1, 2022, with the combined company renamed Stellar Bancorp, Inc. This press release includes the pre-merger financial results of stand-alone CBTX and stand-alone Allegiance for the periods presented. As such, these financial results do not include the impact of purchase accounting adjustments related to the merger.

Stellar Bancorp, Inc. (Stellar), formerly known as CBTX, reported net income of $12.7 million and diluted earnings per share of $0.52 for the third quarter 2022 compared to net income of $14.4 million and diluted earnings per share of $0.59 for the third quarter 2021. Net income for the nine months ended September 30, 2022 was $35.0 million, or $1.43 per diluted share, compared to $36.1 million, or $1.47 per diluted share, for the nine months ended September 30, 2021.

Allegiance reported net income of $14.3 million and diluted earnings per share of $0.71 for the third quarter 2022 compared to net income of $19.1 million and diluted earnings per share of $0.93 for the third quarter 2021. Net income for the nine months ended September 30, 2022 was $49.4 million, or $2.42 per diluted share, compared to $60.0 million, or $2.95 per diluted share, for the nine months ended September 30, 2021.

Third Quarter 2022 Financial Highlights

•CBTX highlights

◦Loans held for investment grew 12.3% (annualized), or $93.5 million, during the third quarter 2022 to $3.13 billion

◦Net interest income increased 23.3%, or $8.1 million, compared to the second quarter of 2022

◦Tax equivalent net interest margin increased 76 basis points to 4.25% compared to the second quarter of 2022

•Allegiance highlights

◦Loans held for investment grew 22.4% (annualized), or $243.1 million, during the third quarter 2022 to $4.59 billion

◦Net interest income increased 5.6%, or $3.2 million, compared to the second quarter of 2022

◦Tax equivalent net interest margin increased 32 basis points to 3.85% compared to the second quarter of 2022

CBTX, Inc. Allegiance Bancshares, Inc.
3Q 2022 2Q 2022 3Q 2022 2Q 2022
(Dollars in thousands, except per share data)
Net income $ 12,747 $ 11,707 $ 14,286 $ 16,437
Pre-tax, pre-provision income(A) $ 17,140 $ 14,660 $ 19,654 $ 22,282
Earnings per share, diluted $ 0.52 $ 0.48 $ 0.71 $ 0.80
Efficiency ratio(B) 63.11 % 61.84 % 69.18 % 62.96 %
Acquisition and merger-related expenses $ 5,897 $ 1,100 $ 10,551 $ 1,667
Adjusted pre-tax, pre-provision income(A)(C) $ 23,037 $ 15,760 $ 30,205 $ 23,949
Adjusted efficiency ratio(A)(C) 50.42 % 58.98 % 52.61 % 60.19 %

(A)Refer to the calculation of these non-GAAP financial measures and a reconciliation to their most directly comparable GAAP financial measures on pages 11 and 18 of this Earnings Release.

(B)Refer to the calculation of the efficiency ratio on pages 5 and 12 for CBTX and Allegiance, respectively.

(C)Adjusted results exclude the impact of acquisition and merger-related expenses.

“We are proud to have closed the merger between CBTX and Allegiance to become Stellar,” said Stellar’s Chief Executive Officer Robert R. Franklin, Jr. “Both of our organizations entered this merger from tremendous positions of strength and with great momentum, providing Stellar a solid foundation upon which to build.”

“Our teams have worked diligently to ensure a successful integration of these two organizations. Together we are stronger and committed to providing value for our shareholders as we drive purposeful growth, deliver continued personalized service and invest in the communities that we serve,” concluded Franklin.

CBTX, Inc. Third Quarter 2022 Results

CBTX’s net interest income in the third quarter 2022 increased $11.8 million, or 37.6%, to $43.0 million from $31.2 million for the third quarter 2021 and increased $8.1 million, or 23.3%, from $34.9 million for the second quarter 2022. These increases were primarily due to increased interest income on loans and interest-bearing deposits at other financial institutions as a result of changes in market interest rates and increases in average loans and securities. The net interest margin on a tax equivalent basis increased 103 basis points to 4.25% for the third quarter 2022 from 3.22% for the third quarter 2021 and increased 76 basis points from 3.49% for the second quarter 2022.

Noninterest income for the third quarter 2022 was $3.4 million, a decrease of $2.1 million, or 38.0%, compared to $5.6 million for the third quarter 2021 and a decrease of $97 thousand, or 2.7%, compared to $3.5 million for the second quarter 2022. The decrease in noninterest income of $2.1 million during the three months ended September 30, 2022 compared to the three months ended September 30, 2021, was primarily due to the impact of earnings on bank-owned life insurance and related gains of $1.9 million during the third quarter of 2021.

Noninterest expense for the third quarter 2022 increased $4.9 million, or 20.3%, to $29.3 million from $24.4 million for the third quarter 2021 and increased $5.6 million, or 23.4%, compared to the second quarter of 2022. The increase in noninterest expense for the third quarter of 2022 compared to the third quarter of 2021, was primarily due to acquisition and merger-related expenses associated with the merger with Allegiance, partially offset by a decrease in professional and director fees, primarily related to BSA/AML compliance matters and legal fees incurred during the third quarter of 2021. The increase in noninterest expense for the third quarter of 2022 compared to the second quarter of 2022 was primarily due to greater acquisition and merger-related expenses.

CBTX’s efficiency ratio decreased to 63.11% for the third quarter 2022 compared to 66.21% for the third quarter 2021 and increased from 61.84% for the second quarter 2022. Third quarter 2022 annualized returns on average assets, average equity and average tangible equity were 1.16%, 9.40% and 11.15%, respectively, compared to 1.37%, 10.15% and 11.95% for the third quarter 2021. Annualized returns on average assets, average equity and average tangible equity for the second quarter 2022 were 1.08%, 8.75% and 10.38%, respectively. Return on average tangible equity is a non-GAAP measure. Please refer to the non-GAAP reconciliation on page 11.

Financial Condition

CBTX’s total assets at September 30, 2022 increased $62.7 million, or 1.5%, to $4.27 billion compared to $4.21 billion at September 30, 2021 and decreased $50.5 million, or 4.6% (annualized), compared to $4.32 billion at June 30, 2022.

Total gross loans at September 30, 2022 increased $517.7 million, or 19.8%, to $3.13 billion compared to $2.61 billion at September 30, 2021, primarily due to organic loan growth, and increased $93.5 million, or 12.3% (annualized) compared to $3.03 billion at June 30, 2022 due to the increase in organic loans.

Deposits at September 30, 2022 increased $192.1 million, or 5.4%, to $3.72 billion compared to $3.53 billion at September 30, 2021 and decreased $32.9 million, or 3.5% (annualized), compared to $3.76 billion at June 30, 2022.

Asset Quality

CBTX’s nonperforming assets totaled $22.4 million, or 0.52% of total assets, at September 30, 2022 compared to $20.6 million, or 0.49% of total assets, at September 30, 2021 and $28.3 million, or 0.65% of total assets at June 30, 2022. The allowance for credit losses on loans as a percentage of total loans, excluding loans held for sale, was 1.04% at September 30, 2022, 1.23% at September 30, 2021 and 1.06% at June 30, 2022.

The provision for credit losses for the third quarter 2022 was $1.0 million compared to the recapture of provision for credit losses of $4.9 million for the third quarter 2021 and the provision for credit losses of $126 thousand for the second quarter 2022.

Third quarter 2022 net charge-offs were $33 thousand, or 0.00% (annualized) of average loans, compared to net recoveries of $82 thousand, or 0.01% (annualized) of average loans, for the third quarter 2021 and net recoveries of $166 thousand, or 0.02% (annualized) of average loans, for the second quarter 2022.

Allegiance Bancshares, Inc. Third Quarter 2022 Results

Allegiance’s net interest income in the third quarter 2022 increased $2.5 million, or 4.3%, to $60.7 million from $58.2 million for the third quarter 2021 and increased $3.2 million, or 5.6%, from $57.5 million for the second quarter 2022. These increases were primarily due to increased interest income on securities and loans as a result of changes in market interest rates. The net interest margin on a tax equivalent basis decreased 5 basis points to 3.85% for the third quarter 2022 from 3.90% for the third quarter 2021 and increased 32 basis points from 3.53% for the second quarter 2022. The decrease in the margin over the prior year was primarily due to the increase in funding costs. The increase in the margin over the prior quarter was primarily due to changes in market interest rates and the composition of earning assets.

Noninterest income for the third quarter 2022 was $3.0 million, an increase of $896 thousand, or 42.7%, compared to $2.1 million for the third quarter 2021 and an increase of $291 thousand, or 10.8%, compared to $2.7 million for the second quarter 2022. Third quarter 2022 other noninterest income included increased income from Small Business Investment Company investments.

Noninterest expense for the third quarter 2022 increased $9.7 million, or 28.4%, to $44.0 million from $34.3 million for the third quarter 2021 and increased $6.1 million, or 16.2%, compared to the second quarter of 2022. These increases in noninterest expense over the prior periods were primarily due to greater acquisition and merger-related expenses associated with the merger with CBTX.

Allegiance’s efficiency ratio increased to 69.18% for the third quarter 2022 compared to 56.91% for the third quarter 2021 and 62.96% for the second quarter 2022. Third quarter 2022 annualized returns on average assets, average equity and average tangible equity were 0.84%, 7.90% and 11.78%, respectively, compared to 1.14%, 9.45% and 13.49% for the third quarter 2021. Annualized returns on average assets, average equity and average tangible equity for the second quarter 2022 were 0.94%, 8.86% and 13.00%, respectively. Return on average tangible equity is a non-GAAP measure. Please refer to the non-GAAP reconciliation on page 18.

Financial Condition

Allegiance’s total assets at September 30, 2022 decreased $29.4 million, or 0.4%, to $6.73 billion compared to $6.76 billion at September 30, 2021 and decreased $1.4 million, or 0.1% (annualized), compared to $6.73 billion at June 30, 2022.

Total gross loans at September 30, 2022 increased $302.4 million, or 7.1%, to $4.59 billion compared to $4.29 billion at September 30, 2021, primarily due to organic loan growth, and increased $243.1 million, or 22.4% (annualized) compared to $4.35 billion at June 30, 2022, primarily due to the increase in organic loans. Core loans, which exclude Paycheck Protection Program (PPP) loans, increased $574.6 million, or 14.4%, to $4.57 billion at September 30, 2022 from $4.00 billion at September 30, 2021 and increased $257.1 million, or 23.8% (annualized), from $4.32 billion at June 30, 2022.

Deposits at September 30, 2022 decreased $6.2 million, or 0.1%, to $5.66 billion compared to $5.67 billion at September 30, 2021 and decreased $219.9 million, or 15.0% (annualized), compared to $5.88 billion at June 30, 2022.

Asset Quality

Allegiance’s nonperforming assets totaled $21.6 million, or 0.32% of total assets, at September 30, 2022 compared to $29.8 million, or 0.44% of total assets, at September 30, 2021 and $28.2 million, or 0.42% of total assets at June 30, 2022. The allowance for credit losses on loans as a percentage of total loans was 1.14% at September 30, 2022, 1.18% at September 30, 2021 and 1.16% at June 30, 2022.

The provision for credit losses for the third quarter 2022 was $2.0 million compared to the provision for credit losses of $2.3 million for the third quarter 2021 and the provision for credit losses of $2.1 million for the second quarter 2022.

Third quarter 2022 net recoveries were $245 thousand, or 0.02% (annualized) of average loans, compared to net charge-offs of $450 thousand, or 0.04% (annualized) of average loans, for the third quarter 2021 and net charge-offs of $571 thousand, or 0.05% (annualized) of average loans, for the second quarter 2022.

Share Repurchase Authorization

On September 22, 2022, the Board of Directors of CBTX authorized the repurchase of up to $40 million of outstanding CBTX (now Stellar) common stock through September 30, 2023. Repurchases under this program may be made from time to time through open market purchases, privately negotiated transactions or such other manners as will comply with applicable laws and regulations. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, market conditions and other corporate liquidity requirements and priorities. The repurchase program does not obligate Stellar to purchase any particular number of shares and there is no guarantee as to the exact dollar amount or number of shares that will be repurchased by Stellar. Stellar may suspend, modify or terminate the program at any time and for any reason, without prior notice.

GAAP Reconciliation of Non-GAAP Financial Measures

Stellar’s management uses certain non-GAAP financial measures to evaluate its performance. Please refer to the GAAP Reconciliation and Management’s Explanation of Non-GAAP Financial Measures on pages 11 and 18 of this earnings release for a reconciliation of these non-GAAP financial measures.

Conference Call

As previously announced, Stellar’s management team will host a conference call and webcast on Friday, October 28, 2022 at 8:00 a.m. Central Time (9:00 a.m. Eastern Time) to discuss third quarter 2022 results of stand-alone CBTX and stand-alone Allegiance. Individuals and investment professionals may register for the conference call at https://register.vevent.com/register/BId5b581acd6f143fdb46c9666597c0d84 to receive the dial-in numbers and unique PIN to access the call. If you need assistance in obtaining a dial-in number, please contact IR@stellarbancorpinc.com. A simultaneous audio-only webcast may be accessed via the Investor Relations section of Stellar’s website at https://IR.stellarbancorpinc.com/events-and-presentations. If you are unable to participate during the live webcast, the webcast will be accessible via the Investor Relations section of Stellar’s website at IR.stellarbancorpinc.com.

About Stellar Bancorp, Inc.

Stellar Bancorp, Inc. is a bank holding company headquartered in Houston, Texas. Stellar’s principal banking subsidiary, created by the merger of Allegiance Bank and CommunityBank of Texas, N.A. and to be renamed Stellar Bank upon system conversion, provides a diversified range of commercial banking services primarily to small- to medium-sized businesses and individual customers across the Houston, Dallas, Beaumont and surrounding communities in Texas.

Investor relations:

IR@stellarbancorpinc.com

Forward-Looking Statements

Certain statements in this press release 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 merger of CBTX, Inc. (now Stellar Bancorp, Inc.)(the "Company") and Allegiance Bancshares, Inc. ("Allegiance"), including future financial performance and operating results, the combined company’s plans, business and growth strategies, objectives, expectations and intentions, and other statements that are not historical facts, including 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. Forward-looking statements may be identified by terminology such as “may,” “will,” “should,” “could,” “scheduled,” “plans,” “intends,” “projects,” “anticipates,” “expects,” “believes,” “estimates,” “potential,” “would,” or “continue” or negatives of such terms or other comparable terminology.

All forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors that may cause the actual results, performance or achievements of Stellar 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 our business as a result of the merger; (3) the risk that the integration of our operations will be materially delayed or will be more costly or difficult than we expected or that we are otherwise unable to successfully integrate our legacy businesses; (4) the amount of the costs, fees, expenses and charges related to the merger; (5) reputational risk and the reaction of our customers, suppliers, employees or other business partners to the merger; (6) the possibility that the merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events; (7) the dilution caused by Stellar’s issuance of additional shares of its common stock in the merger; (8) general competitive, economic, political and market conditions; and (9) other factors that may affect future results of Stellar 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 Texas Department of Banking and legislative and regulatory actions and reforms.

Additional factors which could affect the Company’s future results 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 and the Joint Proxy Statement/Prospectus regarding the merger that CBTX filed with the SEC on April 7, 2022 pursuant to Rule 424(b)(3) and Allegiance’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. We 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.

CBTX, Inc.

Financial Highlights

(Unaudited)

Three Months Ended Nine Months Ended
2022 2021 2022 2021
September 30 June 30 March 31 December 31 September 30 September 30 September 30
(Dollars and share amounts in thousands, except per share data)
Net income (loss) $ 12,747 $ 11,707 $ 10,595 $ (545) $ 14,421 $ 35,049 $ 36,143
Earnings (loss) per share, basic $ 0.52 $ 0.48 $ 0.43 $ (0.02) $ 0.59 $ 1.43 $ 1.48
Earnings (loss) per share, diluted $ 0.52 $ 0.48 $ 0.43 $ (0.02) $ 0.59 $ 1.43 $ 1.47
Dividends per share $ 0.13 $ 0.13 $ 0.13 $ 0.13 $ 0.13 $ 0.39 $ 0.39
Return on average assets(A) 1.16 % 1.08 % 0.97 % (0.05 %) 1.37 % 1.07 % 1.19 %
Return on average equity(A) 9.40 % 8.75 % 7.67 % (0.38 %) 10.15 % 8.60 % 8.70 %
Return on average tangible<br><br>equity(A)(B) 11.15 % 10.38 % 9.03 % (0.45 %) 11.95 % 10.18 % 10.27 %
Net interest margin<br><br>(tax equivalent)(A)(C) 4.25 % 3.49 % 3.22 % 3.07 % 3.22 % 3.65 % 3.40 %
Efficiency ratio(D) 63.11 % 61.84 % 64.94 % 99.78 % 66.21 % 63.28 % 67.76 %
Capital Ratios
CBTX, Inc.(Consolidated)
Equity to assets 11.74 % 12.19 % 12.14 % 12.53 % 13.41 % 11.74 % 13.41 %
Tangible equity to tangible<br><br>assets(B) 9.96 % 10.44 % 10.44 % 10.85 % 11.64 % 9.96 % 11.64 %
Estimated common equity<br>tier 1 capital 14.05 % 14.49 % 14.97 % 15.31 % 16.87 % 14.05 % 16.87 %
Estimated tier 1 risk-based<br>capital 14.05 % 14.49 % 14.97 % 15.31 % 16.87 % 14.05 % 16.87 %
Estimated total risk-based<br>capital 15.09 % 15.53 % 16.06 % 16.42 % 18.12 % 15.09 % 18.12 %
Estimated tier 1 leverage<br>capital 11.42 % 11.48 % 11.08 % 11.22 % 11.69 % 11.42 % 11.69 %
CommunityBank of Texas
Estimated common equity<br>tier 1 capital 13.81 % 13.77 % 14.13 % 14.43 % 15.88 % 13.81 % 15.88 %
Estimated tier 1 risk-based<br>capital 13.81 % 13.77 % 14.13 % 14.43 % 15.88 % 13.81 % 15.88 %
Estimated total risk-based<br>capital 14.85 % 14.82 % 15.22 % 15.54 % 17.13 % 14.85 % 17.13 %
Estimated tier 1 leverage<br>capital 11.22 % 10.91 % 10.47 % 10.58 % 11.01 % 11.22 % 11.01 %
Other Data
Weighted average shares:
Basic 24,345 24,493 24,497 24,437 24,432 24,445 24,462
Diluted 24,464 24,593 24,605 24,575 24,544 24,552 24,572
Period end shares<br>    outstanding 24,015 24,425 24,502 24,488 24,420 24,015 24,420
Book value per share $ 20.88 $ 21.56 $ 22.03 $ 22.96 $ 23.12 $ 20.88 $ 23.12
Tangible book value per share(B) $ 17.38 $ 18.11 $ 18.58 $ 19.50 $ 19.65 $ 17.38 $ 19.65
Employees - full-time equivalents 487 491 503 506 520 487 520

(A)Interim periods annualized.

(B)Refer to the calculation of these non-GAAP financial measures and a reconciliation to their most directly comparable GAAP financial measures on page 11 of this Earnings Release.

(C)Net interest margin represents net interest income divided by average interest-earning assets.

(D)Represents total noninterest expense divided by the sum of net interest income plus noninterest income.

CBTX, Inc.

Financial Highlights

(Unaudited)

2022 2021
September 30 June 30 March 31 December 31 September 30
(Dollars in thousands)
ASSETS
Cash and due from banks $ 41,219 $ 41,951 $ 47,718 $ 27,689 $ 50,642
Interest-bearing deposits at other financial<br>institutions 329,229 442,015 723,273 922,457 948,143
Total cash and cash equivalents 370,448 483,966 770,991 950,146 998,785
Available for sale securities, at fair value 511,282 550,083 547,979 425,046 359,539
Equity investments 17,835 18,073 17,101 17,727 17,349
Loans held for sale — — 748 164 327
Loans held for investment 3,126,421 3,032,914 2,879,880 2,867,524 2,608,402
Less: allowance for credit losses on loans (32,577) (32,087) (31,442) (31,345) (32,208)
Loans, net 3,093,844 3,000,827 2,848,438 2,836,179 2,576,194
Premises and equipment, net 55,594 56,010 56,665 58,417 59,235
Goodwill 80,950 80,950 80,950 80,950 80,950
Other intangible assets, net 3,188 3,353 3,540 3,658 3,702
Bank owned life insurance 74,274 73,898 73,527 73,156 72,771
Operating lease right-to-use assets 10,992 11,324 10,850 11,191 11,527
Deferred tax assets, net 29,581 22,699 16,724 9,973 9,760
Other assets 23,843 21,120 18,464 19,394 18,980
Total assets $ 4,271,831 $ 4,322,303 $ 4,445,977 $ 4,486,001 $ 4,209,119
LIABILITIES AND SHAREHOLDERS’<br>EQUITY
LIABILITIES:
Deposits:
Noninterest-bearing $ 1,780,473 $ 1,810,275 $ 1,801,323 $ 1,784,981 $ 1,628,144
Interest-bearing
Demand 415,970 445,149 444,571 468,361 386,196
Money market and savings 1,273,855 1,239,978 1,348,300 1,336,690 1,257,961
Certificates and other time 253,476 261,232 227,031 241,252 259,334
Total interest-bearing deposits 1,943,301 1,946,359 2,019,902 2,046,303 1,903,491
Total deposits 3,723,774 3,756,634 3,821,225 3,831,284 3,531,635
Operating lease liabilities 13,748 14,169 13,752 14,142 14,556
Federal Home Loan Bank advances — — 50,000 50,000 50,000
Other liabilities 32,884 24,821 21,277 28,450 48,335
Total liabilities 3,770,406 3,795,624 3,906,254 3,923,876 3,644,526
SHAREHOLDERS’ EQUITY:
Common stock 240 253 253 253 253
Capital surplus 308,197 334,104 336,214 335,846 335,226
Retained earnings 262,804 253,180 244,672 237,165 241,012
Treasury stock — (14,046) (14,196) (14,196) (14,334)
Accumulated other comprehensive (loss) income (69,816) (46,812) (27,220) 3,057 2,436
Total shareholders’ equity 501,425 526,679 539,723 562,125 564,593
TOTAL LIABILITIES AND<br>SHAREHOLDERS’ EQUITY $ 4,271,831 $ 4,322,303 $ 4,445,977 $ 4,486,001 $ 4,209,119

CBTX, Inc.

Financial Highlights

(Unaudited)

Three Months Ended Nine Months Ended
2022 2021 2022 2021
September 30 June 30 March 31 December 31 September 30 September 30 September 30
(Dollars in thousands, except per share data)
INTEREST INCOME:
Interest and fees on loans $ 39,058 $ 31,768 $ 31,221 $ 29,882 $ 30,765 $ 102,047 $ 94,723
Securities 3,046 2,937 2,292 1,796 1,435 8,275 3,940
Interest-bearing deposits at other financial institutions 2,408 1,238 348 383 340 3,994 740
Equity investments 161 158 154 168 157 473 461
Total interest income 44,673 36,101 34,015 32,229 32,697 114,789 99,864
INTEREST EXPENSE:
Deposits 1,661 1,178 1,164 1,180 1,227 4,003 3,844
Federal Home Loan Bank advances — 51 221 222 221 272 663
Other interest-bearing liabilities — — — 17 — — —
Total interest expense 1,661 1,229 1,385 1,419 1,448 4,275 4,507
NET INTEREST INCOME 43,012 34,872 32,630 30,810 31,249 110,514 95,357
Provision (recapture) for credit losses for loans 523 479 20 (901) (5,057) 1,022 (8,961)
Provision (recapture) for credit losses for unfunded commitments 489 (353) 415 (306) 162 551 (605)
Total provision (recapture) for credit losses 1,012 126 435 (1,207) (4,895) 1,573 (9,566)
Net interest income after provision (recapture) for credit losses 42,000 34,746 32,195 32,017 36,144 108,941 104,923
NONINTEREST INCOME:
Deposit account service charges 1,320 1,386 1,370 1,370 1,352 4,076 3,712
Card interchange fees 1,056 1,135 1,037 1,081 1,048 3,228 3,119
Earnings on bank-owned life insurance 376 371 371 385 2,323 1,118 3,103
Net gain on sales of assets 85 58 530 910 360 673 918
Other 612 596 2,021 354 479 3,229 1,312
Total noninterest income 3,449 3,546 5,329 4,100 5,562 12,324 12,164
NONINTEREST EXPENSE:
Salaries and employee benefits 14,706 14,698 15,254 16,609 15,000 44,658 43,922
Occupancy expense 2,595 2,386 2,371 2,606 2,660 7,352 7,778
Professional and director fees 836 1,140 879 756 1,167 2,855 5,271
Data processing and software 1,502 1,210 1,763 1,716 1,629 4,475 4,866
Regulatory fees 599 803 614 8,366 478 2,016 1,535
Advertising, marketing and business development 350 366 249 263 493 965 1,288
Telephone and communications 348 349 454 471 516 1,151 1,529
Security and protection expense 386 170 324 439 425 880 1,352
Amortization of intangibles 165 172 181 179 182 518 559
Acquisition and merger-related<br>      expenses 5,897 1,100 784 1,293 400 7,781 1,689
Other expenses 1,937 1,364 1,779 2,134 1,422 5,080 3,065
Total noninterest expense 29,321 23,758 24,652 34,832 24,372 77,731 72,854
INCOME BEFORE INCOME TAXES 16,128 14,534 12,872 1,285 17,334 43,534 44,233
Provision for income taxes 3,381 2,827 2,277 1,830 2,913 8,485 8,090
NET INCOME (LOSS) $ 12,747 $ 11,707 $ 10,595 $ (545) $ 14,421 $ 35,049 $ 36,143
EARNINGS PER SHARE
Basic $ 0.52 $ 0.48 $ 0.43 $ (0.02) $ 0.59 $ 1.43 $ 1.48
Diluted $ 0.52 $ 0.48 $ 0.43 $ (0.02) $ 0.59 $ 1.43 $ 1.47

CBTX, Inc.

Financial Highlights

(Unaudited)

Three Months Ended
September 30, 2022 June 30, 2022 September 30, 2021
Average Outstanding Balance Interest Earned/ <br>Interest Paid Average Yield/ Rate(A) Average Outstanding Balance Interest Earned/ <br>Interest Paid Average Yield/ Rate(A) Average Outstanding Balance Interest Earned/<br>Interest Paid Average Yield/ Rate(A)
(Dollars in thousands)
Assets
Interest-Earning Assets:
Total loans(B) $ 3,074,655 $ 39,058 5.04 % $ 2,897,335 $ 31,768 4.40 % $ 2,702,248 $ 30,765 4.52 %
Securities 552,901 3,046 2.19 % 562,518 2,937 2.09 % 327,968 1,435 1.74 %
Interest-bearing deposits at other financial institutions 428,196 2,408 2.23 % 593,255 1,238 0.84 % 854,406 340 0.16 %
Equity investments 13,393 161 4.77 % 13,386 158 4.73 % 13,367 157 4.66 %
Total interest-earning assets 4,069,145 $ 44,673 4.36 % 4,066,494 $ 36,101 3.56 % 3,897,989 $ 32,697 3.33 %
Allowance for credit losses on loans (32,106) (31,081) (36,945)
Noninterest-earning assets 318,761 315,133 313,901
Total assets $ 4,355,800 $ 4,350,546 $ 4,174,945
Liabilities and<br>Shareholders' Equity
Interest-Bearing Liabilities:
Interest-bearing deposits $ 1,954,854 $ 1,661 0.34 % $ 1,939,990 $ 1,178 0.24 % $ 1,895,617 $ 1,227 0.26 %
Federal Home Loan Bank advances — — 0.00 % 5,495 51 3.72 % 50,000 221 1.75 %
Total interest-bearing<br>liabilities 1,954,854 $ 1,661 0.34 % 1,945,485 $ 1,229 0.25 % 1,945,617 $ 1,448 0.30 %
Noninterest-Bearing<br>Liabilities:
Noninterest-bearing demand<br>deposits 1,822,323 1,825,400 1,612,985
Other liabilities 40,684 42,861 52,712
Total noninterest-bearing liabilities 1,863,007 1,868,261 1,665,697
Shareholders' equity 537,939 536,800 563,631
Total liabilities and<br>shareholders' equity $ 4,355,800 $ 4,350,546 $ 4,174,945
Net interest income $ 43,012 $ 34,872 $ 31,249
Net interest spread(C) 4.02 % 3.31 % 3.03 %
Net interest margin(D) 4.19 % 3.44 % 3.18 %
Net interest margin - tax equivalent(E) 4.25 % 3.49 % 3.22 %

(A)Annualized.

(B)Includes average outstanding balances related to loans held for sale.

(C)Net interest spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.

(D)Net interest margin is equal to net interest income divided by average interest-earning assets.

(E)Tax equivalent adjustments of $578 thousand, $478 thousand and $369 thousand for the three months ended September 30, 2022, June 30, 2022 and September 30, 2021, respectively, were computed using a federal income tax rate of 21%.

CBTX, Inc.

Financial Highlights

(Unaudited)

Nine Months Ended September 30,
2022 2021
Average Outstanding Balance Interest Earned/ <br>Interest Paid Average Yield/ Rate(A) Average Outstanding Balance Interest Earned/ <br>Interest Paid Average Yield/ Rate(A)
(Dollars in thousands)
Assets
Interest-Earning Assets:
Total loans(B) $ 2,953,607 $ 102,047 4.62 % $ 2,812,449 $ 94,723 4.50 %
Securities 537,889 8,275 2.06 % 296,958 3,940 1.77 %
Interest-bearing deposits at other financial institutions 595,458 3,994 0.90 % 668,119 740 0.15 %
Equity investments 13,386 473 4.72 % 14,679 461 4.20 %
Total interest-earning assets 4,100,340 $ 114,789 3.74 % 3,792,205 $ 99,864 3.52 %
Allowance for credit losses on loans (31,599) (39,594)
Noninterest-earning assets 313,938 318,009
Total assets $ 4,382,679 $ 4,070,620
Liabilities and Shareholders' Equity
Interest-Bearing Liabilities:
Interest-bearing deposits $ 1,971,247 $ 4,003 0.27 % $ 1,846,211 $ 3,844 0.28 %
Federal Home Loan Bank advances 18,315 272 1.99 % 50,000 663 1.77 %
Total interest-bearing<br>liabilities 1,989,562 $ 4,275 0.29 % 1,896,211 4,507 0.32 %
Noninterest-Bearing Liabilities:
Noninterest-bearing demand deposits 1,803,702 1,568,071
Other liabilities 44,479 50,966
Total noninterest-bearing liabilities 1,848,181 1,619,037
Shareholders' equity 544,936 555,372
Total liabilities and shareholders' equity $ 4,382,679 $ 4,070,620
Net interest income $ 110,514 $ 95,357
Net interest spread(C) 3.45 % 3.20 %
Net interest margin(D) 3.60 % 3.36 %
Net interest margin - tax equivalent(E) 3.65 % 3.40 %

(A)Annualized.

(B)Includes average outstanding balances related to loans held for sale.

(C)Net interest spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.

(D)Net interest margin is equal to net interest income divided by average interest-earning assets.

(E)Tax equivalent adjustments of $1.5 million and $989 thousand for the nine months ended September 30, 2022 and 2021, respectively, were computed using a federal income tax rate of 21%.

CBTX, Inc.

Financial Highlights

(Unaudited)

Three Months Ended
2022 2021
September 30 June 30 March 31 December 31 September 30
(Dollars in thousands)
Loan Portfolio:
Commercial and industrial $ 568,071 $ 581,443 $ 600,990 $ 634,384 $ 596,251
Real estate:
Commercial real estate 1,242,118 1,181,620 1,142,646 1,091,969 1,029,137
Construction and development 507,570 560,903 473,326 460,719 393,541
1-4 family residential 288,456 264,428 263,213 277,273 204,151
Multi-family residential 370,391 300,582 279,099 286,396 285,852
Consumer 24,509 26,810 28,230 28,090 27,930
Agriculture 11,185 8,036 6,287 7,941 8,780
Other 123,591 118,153 95,187 89,655 71,915
Gross loans 3,135,891 3,041,975 2,888,978 2,876,427 2,617,557
Less allowance for credit losses (32,577) (32,087) (31,442) (31,345) (32,208)
Less deferred fees and unearned discount (9,470) (9,061) (8,350) (8,739) (8,828)
Less loans held for sale — — (748) (164) (327)
Loans, net $ 3,093,844 $ 3,000,827 $ 2,848,438 $ 2,836,179 $ 2,576,194
Deposits:
Interest-bearing demand accounts $ 415,970 $ 445,149 $ 444,571 $ 468,361 $ 386,196
Money market accounts 1,144,969 1,109,265 1,218,082 1,209,659 1,139,167
Savings accounts 128,886 130,713 130,218 127,031 118,794
Certificates and other time deposits, $100,000 or greater 161,975 169,616 127,798 134,775 140,740
Certificates and other time deposits, less than $100,000 91,501 91,616 99,233 106,477 118,594
Total interest-bearing deposits 1,943,301 1,946,359 2,019,902 2,046,303 1,903,491
Noninterest-bearing deposits 1,780,473 1,810,275 1,801,323 1,784,981 1,628,144
Total deposits $ 3,723,774 $ 3,756,634 $ 3,821,225 $ 3,831,284 $ 3,531,635
Asset Quality:
Nonaccrual loans $ 22,410 $ 28,273 $ 22,083 $ 22,568 $ 20,585
Accruing loans 90 or more days past due — — — — —
Total nonperforming loans 22,410 28,273 22,083 22,568 20,585
Other real estate — — — — —
Total nonperforming assets $ 22,410 $ 28,273 $ 22,083 $ 22,568 $ 20,585
Net charge-offs (recoveries) $ 33 $ (166) $ (77) $ (38) $ (82)
Nonaccrual loans:
Commercial and industrial $ 7,985 $ 8,312 $ 8,765 $ 9,090 $ 9,773
Real estate:
Commercial real estate 11,076 16,481 11,363 11,512 10,419
Construction and development 139 143 140 142 —
1-4 family residential 3,176 3,302 1,777 1,784 351
Multi-family residential — — — — —
Consumer — — — — —
Agriculture — — — — —
Other 34 35 38 40 42
Total nonaccrual loans $ 22,410 $ 28,273 $ 22,083 $ 22,568 $ 20,585
Asset Quality Ratios:
Nonperforming assets to total assets 0.52 % 0.65 % 0.50 % 0.50 % 0.49 %
Nonperforming loans to loans excluding loans held for sale 0.72 % 0.93 % 0.77 % 0.79 % 0.79 %
Allowance for credit losses on loans to<br>nonperforming loans 145.37 % 113.49 % 142.38 % 138.89 % 156.46 %
Allowance for credit losses on loans to loans excluding loans held for sale 1.04 % 1.06 % 1.09 % 1.09 % 1.23 %
Net charge-offs (recoveries) to average loans (annualized) 0.00 % (0.02 %) (0.01 %) (0.01 %) (0.01 %)

CBTX, Inc.

GAAP Reconciliation and Management’s Explanation of Non-GAAP Financial Measures

(Unaudited)

CBTX’s management uses certain non-GAAP (generally accepted accounting principles) financial measures to evaluate its performance. CBTX believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and that management and investors benefit from referring to these non-GAAP financial measures in assessing CBTX’s performance and when planning, forecasting, analyzing and comparing past, present and future periods. Specifically, CBTX reviews pre-tax, pre-provision income, adjusted pre-tax, pre-provision income, adjusted efficiency ratio, tangible book value per share, return on average tangible equity and the ratio of tangible equity to tangible assets for internal planning and forecasting purposes. CBTX has included in this earnings release information relating to these non-GAAP financial measures for the applicable periods presented.  These non-GAAP measures should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which CBTX calculates the non-GAAP financial measures may differ from that of other companies reporting measures with similar names.

Three Months Ended Nine Months Ended
2022 2021 2022 2021
September 30 June 30 March 31 December 31 September 30 September 30 September 30
(Dollars and share amounts in thousands, except per share data)
Net income $ 12,747 $ 11,707 $ 10,595 $ (545) $ 14,421 $ 35,049 $ 36,143
Add: Provision for credit losses 1,012 126 435 (1,207) (4,895) 1,573 (9,566)
Add: Provision for income taxes 3,381 2,827 2,277 1,830 2,913 8,485 8,090
Pre-tax, pre-provision income $ 17,140 $ 14,660 $ 13,307 $ 78 $ 12,439 $ 45,107 $ 34,667
Pre-tax, pre-provision income $ 17,140 $ 14,660 $ 13,307 $ 78 $ 12,439 $ 45,107 $ 34,667
Add: Acquisition and merger-related expenses 5,897 1,100 784 1,293 400 7,781 1,689
Adjusted pre-tax, pre-provision income $ 23,037 $ 15,760 $ 14,091 $ 1,371 $ 12,839 $ 52,888 $ 36,356
Total noninterest expense $ 29,321 $ 23,758 $ 24,652 $ 34,832 $ 24,372 $ 77,731 $ 72,854
Acquisition and merger-related expenses 5,897 1,100 784 1,293 400 7,781 1,689
Net interest income 43,012 34,872 32,630 30,810 31,249 110,514 95,357
Total noninterest income 3,449 3,546 5,329 4,100 5,562 12,324 12,164
Adjusted efficiency ratio(A) 50.42% 58.98% 62.88% 96.07% 65.12% 56.94% 66.19%
Total shareholders' equity $ 501,425 $ 526,679 $ 539,723 $ 562,125 $ 564,593 $ 501,425 $ 564,593
Less:  Goodwill and other intangible assets, net 84,138 84,303 84,490 84,608 84,652 84,138 84,652
Tangible shareholders’ equity $ 417,287 $ 442,376 $ 455,233 $ 477,517 $ 479,941 $ 417,287 $ 479,941
Shares outstanding at end of period 24,015 24,425 24,502 24,488 24,420 24,015 24,420
Tangible book value per share $ 17.38 $ 18.11 $ 18.58 $ 19.50 $ 19.65 $ 17.38 $ 19.65
Net income $ 12,747 $ 11,707 $ 10,595 $ (545) $ 14,421 $ 35,049 $ 36,143
Average shareholders' equity $ 537,939 $ 536,800 $ 560,315 $ 568,167 $ 563,631 $ 544,936 $ 555,372
Less:  Average goodwill and other intangible assets, net 84,242 84,413 84,584 84,643 84,753 84,413 84,901
Average tangible shareholders’ equity $ 453,697 $ 452,387 $ 475,731 $ 483,524 $ 478,878 $ 460,523 $ 470,471
Return on average tangible equity(B) 11.15 % 10.38 % 9.03 % (0.45 %) 11.95 % 10.18 % 10.27 %
Total assets $ 4,271,831 $ 4,322,303 $ 4,445,977 $ 4,486,001 $ 4,209,119 $ 4,271,831 $ 4,209,119
Less:  Goodwill and other intangible assets, net 84,138 84,303 84,490 84,608 84,652 84,138 84,652
Tangible assets $ 4,187,693 $ 4,238,000 $ 4,361,487 $ 4,401,393 $ 4,124,467 $ 4,187,693 $ 4,124,467
Tangible equity to tangible assets 9.96 % 10.44 % 10.44 % 10.85 % 11.64 % 9.96 % 11.64 %

(A)Represents total noninterest expense, excluding acquisition and merger-related expenses, divided by the sum of net interest income plus noninterest income. Additionally, taxes and provision for credit losses are not part of this calculation.

(B)Interim periods annualized.

Allegiance Bancshares, Inc.

Financial Highlights

(Unaudited)

Three Months Ended Nine Months Ended
2022 2021 2022 2021
September 30 June 30 March 31 December 31 September 30 September 30 September 30
(Dollars and share amounts in thousands, except per share data)
Net income $ 14,286 $ 16,437 $ 18,657 $ 21,558 $ 19,060 $ 49,380 $ 59,995
Earnings per share, basic $ 0.72 $ 0.81 $ 0.92 $ 1.06 $ 0.94 $ 2.44 $ 2.97
Earnings per share, diluted $ 0.71 $ 0.80 $ 0.91 $ 1.06 $ 0.93 $ 2.42 $ 2.95
Dividends per share $ 0.14 $ 0.14 $ 0.14 $ 0.12 $ 0.12 $ 0.42 $ 0.36
Return on average assets(A) 0.84 % 0.94 % 1.04 % 1.23 % 1.14 % 0.94 % 1.25 %
Return on average equity(A) 7.90 % 8.86 % 9.40 % 10.60 % 9.45 % 8.74 % 10.30 %
Return on average tangible<br><br>equity(A)(B) 11.78 % 13.00 % 13.35 % 15.05 % 13.49 % 12.75 % 14.89 %
Net interest margin<br><br>(tax equivalent)(A)(C) 3.85 % 3.53 % 3.30 % 3.57 % 3.90 % 3.55 % 4.03 %
Efficiency ratio(D) 69.18 % 62.96 % 58.32 % 60.68 % 56.91 % 63.62 % 58.24 %
Capital Ratios
Allegiance Bancshares, Inc.(Consolidated)
Equity to assets 9.75 % 10.48 % 10.52 % 11.49 % 11.81 % 9.75 % 11.81 %
Tangible equity to tangible<br><br>assets(B) 6.47 % 7.21 % 7.44 % 8.42 % 8.58 % 6.47 % 8.58 %
Estimated common equity<br>tier 1 capital 11.39 % 12.06 % 12.28 % 12.47 % 12.37 % 11.39 % 12.37 %
Estimated tier 1 risk-based<br>capital 11.58 % 12.26 % 12.49 % 12.69 % 12.60 % 11.58 % 12.60 %
Estimated total risk-based<br>capital 14.66 % 15.47 % 15.76 % 16.08 % 16.13 % 14.66 % 16.13 %
Estimated tier 1 leverage<br>capital 9.00 % 8.65 % 8.37 % 8.53 % 8.76 % 9.00 % 8.76 %
Allegiance Bank
Estimated common equity<br>tier 1 capital 12.20 % 12.51 % 12.48 % 12.63 % 12.81 % 12.20 % 12.81 %
Estimated tier 1 risk-based<br>capital 12.20 % 12.51 % 12.48 % 12.63 % 12.81 % 12.20 % 12.81 %
Estimated total risk-based<br>capital 14.12 % 14.50 % 14.50 % 14.71 % 14.98 % 14.12 % 14.98 %
Estimated tier 1 leverage<br>capital 9.49 % 8.83 % 8.37 % 8.49 % 8.91 % 9.49 % 8.91 %
Other Data
Weighted average shares:
Basic 19,942 20,357 20,363 20,260 20,221 20,219 20,188
Diluted 20,114 20,530 20,526 20,423 20,411 20,376 20,369
Period end shares outstanding 19,837 20,154 20,378 20,337 20,218 19,837 20,218
Book value per share $ 33.08 $ 35.00 $ 36.90 $ 40.15 $ 39.50 $ 33.08 $ 39.50
Tangible book value per share(B) $ 21.19 $ 23.25 $ 25.24 $ 28.43 $ 27.67 $ 21.19 $ 27.67
Employees - full-time equivalents 562 578 586 594 603 562 603

(A)Interim periods annualized.

(B)Refer to the calculation of these non-GAAP financial measures and a reconciliation to their most directly comparable GAAP financial measures on page 18 of this Earnings Release.

(C)Net interest margin represents net interest income divided by average interest-earning assets.

(D)Represents total noninterest expense divided by the sum of net interest income plus noninterest income, excluding net gains and losses on the sale of loans, securities and assets. Additionally, taxes and provision for credit losses are not part of this calculation.

Allegiance Bancshares, Inc.

Financial Highlights

(Unaudited)

2022 2021
September 30 June 30 March 31 December 31 September 30
(Dollars in thousands)
ASSETS
Cash and due from banks $ 16,449 $ 17,547 $ 26,629 $ 23,961 $ 23,903
Interest-bearing deposits at other financial<br>institutions 102,118 275,290 672,755 733,548 879,858
Total cash and cash equivalents 118,567 292,837 699,384 757,509 903,761
Available for sale securities, at fair value 1,618,995 1,709,321 1,790,707 1,773,765 1,211,476
Loans held for investment 4,591,912 4,348,833 4,283,514 4,220,486 4,289,469
Less: allowance for credit losses on loans (52,147) (50,242) (49,215) (47,940) (50,491)
Loans, net 4,539,765 4,298,591 4,234,299 4,172,546 4,238,978
Accrued interest receivable 29,697 29,882 31,505 33,392 33,523
Premises and equipment, net 57,837 58,482 62,168 63,708 65,140
Other real estate owned — — — — 1,397
Federal Home Loan Bank stock 16,843 4,078 9,376 9,358 8,326
Bank owned life insurance 28,305 28,170 28,374 28,240 28,101
Goodwill 223,642 223,642 223,642 223,642 223,642
Core deposit intangibles, net 12,406 13,156 13,907 14,658 15,482
Other assets 84,285 73,605 56,001 28,136 29,935
Total assets $ 6,730,342 $ 6,731,764 $ 7,149,363 $ 7,104,954 $ 6,759,761
LIABILITIES AND SHAREHOLDERS’<br>EQUITY
LIABILITIES:
Deposits:
Noninterest-bearing $ 2,465,839 $ 2,394,719 $ 2,353,604 $ 2,243,085 $ 2,086,683
Interest-bearing
Demand 956,920 1,016,381 1,070,855 869,984 594,959
Money market and savings 1,471,690 1,510,008 1,552,853 1,643,745 1,604,222
Certificates and other time 766,270 959,524 1,185,015 1,290,825 1,381,014
Total interest-bearing deposits 3,194,880 3,485,913 3,808,723 3,804,554 3,580,195
Total deposits 5,660,719 5,880,632 6,162,327 6,047,639 5,666,878
Accrued interest payable 2,673 1,500 3,086 1,753 3,296
Borrowed funds 257,000 — 89,959 89,956 139,954
Subordinated debt 109,241 109,109 108,978 108,847 108,715
Other liabilities 44,407 35,194 33,073 40,291 42,326
Total liabilities 6,074,040 6,026,435 6,397,423 6,288,486 5,961,169
SHAREHOLDERS’ EQUITY:
Common stock 19,837 20,154 20,378 20,337 20,218
Capital surplus 491,878 504,165 512,284 510,797 507,948
Retained earnings 307,975 296,477 282,896 267,092 247,966
Accumulated other comprehensive (loss) income (163,388) (115,467) (63,618) 18,242 22,460
Total shareholders’ equity 656,302 705,329 751,940 816,468 798,592
TOTAL LIABILITIES AND<br>SHAREHOLDERS’ EQUITY $ 6,730,342 $ 6,731,764 $ 7,149,363 $ 7,104,954 $ 6,759,761

Allegiance Bancshares, Inc.

Financial Highlights

(Unaudited)

Three Months Ended Nine Months Ended
2022 2021 2022 2021
September 30 June 30 March 31 December 31 September 30 September 30 September 30
(Dollars in thousands, except per share data)
INTEREST INCOME:
Loans, including fees $ 58,025 $ 53,835 $ 52,370 $ 56,855 $ 58,176 $ 164,230 $ 173,858
Securities:
Taxable 6,655 5,571 5,068 3,933 2,998 17,294 7,956
Tax-exempt 2,594 2,557 2,525 2,526 2,498 7,676 7,383
Deposits in other financial<br>institutions 608 877 340 317 221 1,825 356
Total interest income 67,882 62,840 60,303 63,631 63,893 191,025 189,553
INTEREST EXPENSE:
Demand, money market and<br>savings deposits 3,527 1,859 1,347 1,277 1,267 6,733 4,088
Certificates and other time<br>deposits 1,664 1,922 2,156 2,391 2,583 5,742 9,237
Borrowed funds 499 114 186 434 436 799 1,444
Subordinated debt 1,502 1,463 1,442 1,425 1,441 4,407 4,324
Total interest expense 7,192 5,358 5,131 5,527 5,727 17,681 19,093
NET INTEREST INCOME 60,690 57,482 55,172 58,104 58,166 173,344 170,460
Provision for credit losses 1,962 2,143 1,814 (2,577) 2,295 5,919 255
Net interest income after provision<br>for credit losses 58,728 55,339 53,358 60,681 55,871 167,425 170,205
NONINTEREST INCOME:
Nonsufficient funds fees 145 126 116 156 131 387 308
Service charges on deposit<br>accounts 527 560 527 476 425 1,614 1,195
Gain (loss) on sale of securities 42 (17) — — — 25 49
Loss on sale of other real<br>estate and repossessed assets — — — (89) — — (176)
Bank owned life insurance 135 342 133 139 125 610 415
Debit card and ATM card income 869 880 819 834 771 2,568 2,162
Other 1,277 813 2,423 938 647 4,513 2,155
Total noninterest income 2,995 2,704 4,018 2,454 2,099 9,717 6,108
NONINTEREST EXPENSE:
Salaries and employee benefits 22,013 21,864 22,728 22,918 22,335 66,605 67,259
Net occupancy and equipment 2,129 2,220 2,205 2,194 2,335 6,554 6,950
Depreciation 1,003 1,012 1,033 1,103 1,060 3,048 3,151
Data processing and software<br>amortization 2,541 2,522 2,498 2,264 2,222 7,561 6,598
Professional fees 485 662 138 1,008 620 1,285 2,017
Regulatory assessments and<br>FDIC insurance 1,134 1,256 1,261 949 883 3,651 2,458
Core deposit intangibles<br>amortization 750 751 751 824 824 2,252 2,472
Communications 359 363 341 395 358 1,063 1,011
Advertising 385 483 462 481 481 1,330 1,211
Other real estate expense 93 65 59 69 137 217 479
Acquisition and merger-related<br>      expenses 10,551 1,667 451 1,408 603 12,669 603
Other 2,588 5,039 2,590 3,131 2,438 10,217 8,601
Total noninterest expense 44,031 37,904 34,517 36,744 34,296 116,452 102,810
INCOME BEFORE INCOME<br>TAXES 17,692 20,139 22,859 26,391 23,674 60,690 73,503
Provision for income taxes 3,406 3,702 4,202 4,833 4,614 11,310 13,508
NET INCOME $ 14,286 $ 16,437 $ 18,657 $ 21,558 $ 19,060 $ 49,380 $ 59,995
EARNINGS PER SHARE
Basic $ 0.72 $ 0.81 $ 0.92 $ 1.06 $ 0.94 $ 2.44 $ 2.97
Diluted $ 0.71 $ 0.80 $ 0.91 $ 1.06 $ 0.93 $ 2.42 $ 2.95

Allegiance Bancshares, Inc.

Financial Highlights

(Unaudited)

Three Months Ended
September 30, 2022 June 30, 2022 September 30, 2021
Average Balance Interest Earned/ <br>Interest Paid Average Yield/ Rate Average Balance Interest Earned/ <br>Interest Paid Average Yield/ Rate Average Balance Interest Earned/<br>Interest Paid Average Yield/ Rate
(Dollars in thousands)
Assets
Interest-Earning Assets:
Loans $ 4,456,174 $ 58,025 5.17 % $ 4,303,714 $ 53,835 5.02 % $ 4,336,443 $ 58,176 5.32 %
Securities 1,709,470 9,249 2.15 % 1,778,745 8,128 1.83 % 1,070,851 5,496 2.04 %
Deposits in other financial institutions 160,340 608 1.50 % 535,546 877 0.66 % 588,859 221 0.15 %
Total interest-earning assets 6,325,984 $ 67,882 4.26 % 6,618,005 $ 62,840 3.81 % 5,996,153 $ 63,893 4.23 %
Allowance for credit losses on loans (50,609) (49,290) (49,381)
Noninterest-earning assets 442,511 450,584 680,682
Total assets $ 6,717,886 $ 7,019,299 $ 6,627,454
Liabilities and<br>Shareholders' Equity
Interest-Bearing Liabilities:
Interest-bearing demand<br>deposits $ 978,531 $ 2,380 0.96 % $ 1,044,493 $ 927 0.36 % $ 576,144 $ 324 0.22 %
Money market and savings<br>deposits 1,500,083 1,147 0.30 % 1,566,376 932 0.24 % 1,565,965 943 0.24 %
Certificates and other time<br>deposits 877,231 1,664 0.75 % 1,088,664 1,922 0.71 % 1,363,121 2,583 0.75 %
Borrowed funds 68,752 499 2.88 % 50,116 114 0.91 % 139,844 436 1.24 %
Subordinated debt 109,177 1,502 5.46 % 109,045 1,463 5.38 % 108,652 1,441 5.26 %
Total interest-bearing<br>liabilities 3,533,774 $ 7,192 0.81 % 3,858,694 $ 5,358 0.56 % 3,753,726 $ 5,727 0.61 %
Noninterest-Bearing<br>Liabilities:
Noninterest-bearing demand<br>deposits 2,424,884 2,382,230 2,031,399
Other liabilities 41,792 34,249 42,183
Total liabilities 6,000,450 6,275,173 5,827,308
Shareholders' equity 717,436 744,126 800,146
Total liabilities and<br>shareholders' equity $ 6,717,886 $ 7,019,299 $ 6,627,454
Net interest rate spread 3.45 % 3.25 % 3.62 %
Net interest income and margin $ 60,690 3.81 % $ 57,482 3.48 % $ 58,166 3.85 %
Net interest income and net<br>interest margin (tax equivalent) $ 61,418 3.85 % $ 58,238 3.53 % $ 58,873 3.90 %

Allegiance Bancshares, Inc.

Financial Highlights

(Unaudited)

Nine Months Ended September 30,
2022 2021
Average Balance Interest Earned/ <br>Interest Paid Average Yield/ <br>Rate Average Balance Interest Earned/ <br>Interest Paid Average Yield/Rate
(Dollars in thousands)
Assets
Interest-Earning Assets:
Loans $ 4,331,288 $ 164,230 5.07 % $ 4,482,684 $ 173,858 5.19 %
Securities 1,774,149 24,970 1.88 % 913,078 15,339 2.25 %
Deposits in other financial institutions 498,456 1,825 0.49 % 328,238 356 0.15 %
Total interest-earning assets 6,603,893 $ 191,025 3.87 % 5,724,000 $ 189,553 4.43 %
Allowance for credit losses<br>    on loans (49,422) (51,802)
Noninterest-earning assets 441,767 758,774
Total assets $ 6,996,238 $ 6,430,972
Liabilities and Shareholders' Equity
Interest-Bearing Liabilities:
Interest-bearing demand deposits $ 1,031,006 $ 3,856 0.50 % $ 523,272 $ 1,021 0.26 %
Money market and savings deposits 1,549,969 2,877 0.25 % 1,555,791 3,067 0.26 %
Certificates and other time deposits 1,069,011 5,742 0.72 % 1,354,000 9,237 0.91 %
Borrowed funds 69,492 799 1.54 % 146,244 1,444 1.32 %
Subordinated debt 109,046 4,407 5.40 % 108,522 4,324 5.33 %
Total interest-bearing liabilities 3,828,524 $ 17,681 0.62 % 3,687,829 19,093 0.69 %
Noninterest-Bearing Liabilities:
Noninterest-bearing demand deposits 2,373,489 1,923,584
Other liabilities 39,123 40,568
Total liabilities 6,241,136 5,651,981
Shareholders' equity 755,102 778,991
Total liabilities and shareholders' equity $ 6,996,238 $ 6,430,972
Net interest rate spread 3.25 % 3.74 %
Net interest income and margin $ 173,344 3.51 % $ 170,460 3.98 %
Net interest income and net interest<br>margin (tax equivalent) $ 175,578 3.55 % $ 172,477 4.03 %

Allegiance Bancshares, Inc.

Financial Highlights

(Unaudited)

Three Months Ended
2022 2021
September 30 June 30 March 31 December 31 September 30
(Dollars in thousands)
Period-end Loan Portfolio:
Commercial and industrial $ 732,636 $ 727,068 $ 714,450 $ 693,559 $ 728,897
Paycheck Protection Program (PPP) 17,827 31,855 78,624 145,942 290,028
Real estate:
Commercial real estate (including<br>multi-family residential) 2,407,039 2,265,155 2,197,502 2,104,621 2,073,521
Commercial real estate construction and<br>land development 513,248 450,694 453,473 439,125 382,610
1-4 family residential (including home equity) 699,636 682,066 669,306 685,071 683,919
Residential construction 183,563 155,017 136,760 117,901 104,638
Consumer and other 37,963 36,978 33,399 34,267 25,856
Total loans $ 4,591,912 $ 4,348,833 $ 4,283,514 $ 4,220,486 $ 4,289,469
Deposits:
Interest-bearing demand accounts $ 956,920 $ 1,016,381 $ 1,070,855 $ 869,984 $ 594,959
Money market and savings 1,471,690 1,510,008 1,552,853 1,643,745 1,604,222
Certificates and other time 766,270 959,524 1,185,015 1,290,825 1,381,014
Total interest-bearing deposits 3,194,880 3,485,913 3,808,723 3,804,554 3,580,195
Noninterest-bearing deposits 2,465,839 2,394,719 2,353,604 2,243,085 2,086,683
Total deposits $ 5,660,719 $ 5,880,632 $ 6,162,327 $ 6,047,639 $ 5,666,878
Asset Quality:
Nonaccrual loans $ 21,551 $ 28,225 $ 26,275 $ 24,127 $ 28,369
Accruing loans 90 or more days past due — — — — —
Total nonperforming loans 21,551 28,225 26,275 24,127 28,369
Other real estate — — — — 1,397
Total nonperforming assets $ 21,551 $ 28,225 $ 26,275 $ 24,127 $ 29,766
Net (recoveries) charge-offs $ (245) $ 571 $ 317 $ 1,353 $ 450
Nonaccrual loans:
Commercial and industrial $ 6,916 $ 9,145 $ 7,809 $ 8,358 $ 10,247
Real estate:
Commercial real estate (including<br>multi-family residential) 10,392 14,409 15,259 12,639 14,629
Commercial real estate construction and<br>land development 241 1,511 — 63 53
1-4 family residential (including home equity) 3,854 3,040 3,065 2,875 3,224
Residential construction — — — — —
Consumer and other 148 120 142 192 216
Total nonaccrual loans $ 21,551 $ 28,225 $ 26,275 $ 24,127 $ 28,369
Asset Quality Ratios:
Nonperforming assets to total assets 0.32 % 0.42 % 0.37 % 0.34 % 0.44 %
Nonperforming loans to total loans 0.47 % 0.65 % 0.61 % 0.57 % 0.66 %
Allowance for credit losses on loans to<br>nonperforming loans 241.97 % 178.01 % 187.31 % 198.70 % 177.98 %
Allowance for credit losses on loans to total loans 1.14 % 1.16 % 1.15 % 1.14 % 1.18 %
Net (recoveries) charge-offs to average loans (annualized) (0.02 %) 0.05 % 0.03 % 0.13 % 0.04 %

Allegiance Bancshares, Inc.

GAAP Reconciliation and Management’s Explanation of Non-GAAP Financial Measures

(Unaudited)

Allegiance’s management uses certain non-GAAP (generally accepted accounting principles) financial measures to evaluate its performance. Allegiance believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and that management and investors benefit from referring to these non-GAAP financial measures in assessing Allegiance’s performance and when planning, forecasting, analyzing and comparing past, present and future periods. Specifically, Allegiance reviews pre-tax, pre-provision income, adjusted pre-tax, pre-provision income, adjusted efficiency ratio, tangible book value per share, return on average tangible equity and the ratio of tangible equity to tangible assets for internal planning and forecasting purposes. Allegiance has included in this Earnings Release information relating to these non-GAAP financial measures for the applicable periods presented.  These non-GAAP measures should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which Allegiance calculates the non-GAAP financial measures may differ from that of other companies reporting measures with similar names.

Three Months Ended Nine Months Ended
2022 2021 2022 2021
September 30 June 30 March 31 December 31 September 30 September 30 September 30
(Dollars and share amounts in thousands, except per share data)
Net income $ 14,286 $ 16,437 $ 18,657 $ 21,558 $ 19,060 $ 49,380 $ 59,995
Add: Provision for credit losses 1,962 2,143 1,814 (2,577) 2,295 5,919 255
Add: Provision for income taxes 3,406 3,702 4,202 4,833 4,614 11,310 13,508
Pre-tax, pre-provision income $ 19,654 $ 22,282 $ 24,673 $ 23,814 $ 25,969 $ 66,609 $ 73,758
Pre-tax, pre-provision income $ 19,654 $ 22,282 $ 24,673 $ 23,814 $ 25,969 $ 66,609 $ 73,758
Add: Acquisition and merger-related expenses 10,551 1,667 451 1,408 603 12,669 603
Adjusted pre-tax, pre-provision income $ 30,205 $ 23,949 $ 25,124 $ 25,222 $ 26,572 $ 79,278 $ 74,361
Total noninterest expense $ 44,031 $ 37,904 $ 34,517 $ 36,744 $ 34,296 $ 116,452 $ 102,810
Acquisition and merger-related expenses 10,551 1,667 451 1,408 603 12,669 603
Net interest income 60,690 57,482 55,172 58,104 58,166 173,344 170,460
Total noninterest income 2,995 2,704 4,018 2,454 2,099 9,717 6,108
Gain on sale of securities 42 (17) — — — 25 49
Adjusted efficiency ratio(A) 52.61% 60.19% 57.55% 58.35% 55.91% 56.69% 57.87%
Total shareholders' equity $ 656,302 $ 705,329 $ 751,940 $ 816,468 $ 798,592 $ 656,302 $ 798,592
Less:  Goodwill and core deposit intangibles, net 236,048 236,798 237,549 238,300 239,124 236,048 239,124
Tangible shareholders’ equity $ 420,254 $ 468,531 $ 514,391 $ 578,168 $ 559,468 $ 420,254 $ 559,468
Shares outstanding at end of period 19,837 20,154 20,378 20,337 20,218 19,837 20,218
Tangible book value per share $ 21.19 $ 23.25 $ 25.24 $ 28.43 $ 27.67 $ 21.19 $ 27.67
Net income $ 14,286 $ 16,437 $ 18,657 $ 21,558 $ 19,060 $ 49,380 $ 59,995
Average shareholders' equity $ 717,436 $ 744,126 $ 804,704 $ 806,941 $ 800,146 $ 755,102 $ 778,991
Less:  Average goodwill and core deposit intangibles, net 236,399 237,153 237,925 238,700 239,497 237,153 240,325
Average tangible shareholders’ equity $ 481,037 $ 506,973 $ 566,779 $ 568,241 $ 560,649 $ 517,949 $ 538,666
Return on average tangible equity(B) 11.78 % 13.00 % 13.35 % 15.05 % 13.49 % 12.75 % 14.89 %
Total assets $ 6,730,342 $ 6,731,764 $ 7,149,363 $ 7,104,954 $ 6,759,761 $ 6,730,342 $ 6,759,761
Less: Goodwill and core deposit intangibles, net 236,048 236,798 237,549 238,300 239,124 236,048 239,124
Tangible assets $ 6,494,294 $ 6,494,966 $ 6,911,814 $ 6,866,654 $ 6,520,637 $ 6,494,294 $ 6,520,637
Tangible equity to tangible assets 6.47 % 7.21 % 7.44 % 8.42 % 8.58 % 6.47 % 8.58 %

(A)Represents total noninterest expense, excluding acquisition and merger-related expenses, divided by the sum of net interest income plus noninterest income, excluding net gains and losses on the sale of loans, securities and assets. Additionally, taxes and provision for credit losses are not part of this calculation.

(B)Interim periods annualized.

18

a992earningspresentation

Third Quarter 2022 Earnings Presentation Exhibit 99.2

Forward-Looking Statements and Non-GAAP Financial Measures 2 Certain statements in this press release 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 merger of CBTX, Inc. (now Stellar Bancorp, Inc.)(the “Company”) and Allegiance Bancshares, Inc. (“Allegiance”), including future financial performance and operating results, the combined company’s plans, business and growth strategies, objectives, expectations and intentions, and other statements that are not historical facts, including 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. Forward-looking statements may be identified by terminology such as “may,” “will,” “should,” “could,” “scheduled,” “plans,” “intends,” “projects,” “anticipates,” “expects,” “believes,” “estimates,” “potential,” “would,” or “continue” or negatives of such terms or other comparable terminology. All forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors that may cause the actual results, performance or achievements of Stellar 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 our business as a result of the merger; (3) the risk that the integration of our operations will be materially delayed or will be more costly or difficult than we expected or that we are otherwise unable to successfully integrate our legacy businesses; (4) the amount of the costs, fees, expenses and charges related to the merger; (5) reputational risk and the reaction of our customers, suppliers, employees or other business partners to the merger; (6) the possibility that the merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events; (7) the dilution caused by Stellar’s issuance of additional shares of its common stock in the merger; (8) general competitive, economic, political and market conditions; and (9) other factors that may affect future results of Stellar 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 Texas Department of Banking and legislative and regulatory actions and reforms. Additional factors which could affect the Company’s future results 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 and the Joint Proxy Statement/Prospectus regarding the merger that CBTX filed with the SEC on April 7, 2022 pursuant to Rule 424(b)(3) and Allegiance’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. We 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. GAAP Reconciliation of Non-GAAP Financial Measures The Company’s management uses certain non-GAAP (generally accepted accounting principles) financial measures to evaluate its performance. The Company believes that these non- GAAP financial measures provide meaningful supplemental information regarding its performance and that management and investors benefit from referring to these non-GAAP financial measures in assessing the Company’s performance and when planning, forecasting, analyzing and comparing past, present and future periods. Specifically, the Company reviews pre-tax, pre-provision income, adjusted pre-tax, pre-provision income, adjusted pre-tax, pre-provision earnings per share, diluted, adjusted efficiency ratio, adjusted noninterest expense / average assets and adjusted pre-tax, pre-provision return on average assets for internal planning and forecasting purposes. The Company has included in this presentation information relating to these non-GAAP financial measures for the applicable periods presented. These non-GAAP measures should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which the Company calculates the non-GAAP financial measures may differ from that of other companies reporting measures with similar names.

Stellar Bancorp, Inc. - A Premier Texas Franchise 3  Combination delivers scale, growth opportunities and talent depth  Significant scarcity value in one of the best markets in the U.S  Merger-of-equals between of CBTX, Inc. and Allegiance Bancshares, Inc. became effective October 1, 2022, with the combined company renamed Stellar Bancorp, Inc. (NASDAQ: STEL) − Principal banking subsidiary to be renamed Stellar Bank upon system conversion Source: S&P Capital IQ Pro.  Positioned to drive significant value creation Combination of the Houston region’s two largest regionally-focused banks

Unparalleled Market Focus 4 Houston Region Deposit Market Share(1) Deposits ($B) $34.3 $29.7 $14.1 $11.9 $9.5 $8.4 $8.0 $7.6 $6.8 $5.9 $5.9 $3.9 $3.6 $2.9 $2.9 JPMorgan Wells Fargo BofA Zions PNC Stellar Frost Capital One Cadence Prosperity Allegiance Woodforest Comerica CBTX Texas Capital Truist $188.0 Total Assets Houston Region(1) Percent of Company Name ($B) Deposits ($B) Deposits (%) JPMorgan $3,841 $188.0 8.8% Wells Fargo 1,881 34.3 2.3% BofA 3,112 29.7 1.5% Zions 87.8 14.1 17.8% PNC 541 11.9 2.7% Stellar 11.1 9.5 98.1% Frost 51.8 8.4 18.2% Capital One 440 8.0 2.0% Cadence 47.7 7.6 18.9% Prosperity 37.4 6.8 22.6% Allegiance 6.7 5.9 100.0% Woodforest 9.6 5.9 70.2% Comerica 86.9 3.9 5.0% CBTX 4.3 3.6 95.1% Texas Capital 32.3 2.9 11.1% Truist 545 2.9 0.7% Stell r Allegianc CBT Note: Deposit market share based on FDIC data as of June 30, 2022; Stellar deposits in the Houston Region are combined deposits as of June 30, 2022. (1) Houston Region defined as the Houston-The Woodlands-Sugar Land and Beaumont-Port Arthur MSAs. Source: S&P Capital IQ Pro; Excludes non-retail branches.

Headquartered in 4th Largest City in the US 5-Year Historical Population Growth (2017-2022) STRONG AND DIVERSIFIED HOUSTON REGION Houston has the second highest concentration of Fortune 1000 companies in the U.S. The Port of Houston ranked #1 in the U.S. in 2021 foreign waterborne tonnage Houston is the #1 most diverse city in the U.S. based on socioeconomic factors The Woodlands, a Houston suburb, is #1 on the list of America’s 50 Best Places to Live Houston is home to the Texas Medical Center, which has 10 million patient encounters each year During the pandemic, Houston saw the second highest growth in jobs available for software and IT workers 5 Median Home Price ($000s) Median Household Income Source: S&P Capital IQ Pro as of June 30, 2022; Texas Medical Center; Houston.org; Wallet Hub; ABC News; Axios. (1.6%) (2.2%) (0.3%) 7.3% 5.9% 5.8% 2.8% New York MSA Los Angeles MSA Chicago MSA Dallas MSA Houston MSA Texas USA $597.6 $825.7 $370.1 $408.2 $357.2 $344.9 $440.3 New York MSA Los Angeles MSA Chicago MSA Dallas MSA Houston MSA Texas USA $92,717 $86,804 $83,335 $81,205 $74,859 $70,957 $72,465 New York MSA Los Angeles MSA Chicago MSA Dallas MSA Houston MSA Texas USA

440 bps 400 bps 386 bps 245 bps 128 bps 8 bps (31 bps) (33 bps) (49 bps) (76 bps) (135 bps) (137 bps) (193 bps) (343 bps) (354 bps) (500 bps) (400 bps) (300 bps) (200 bps) (100 bps) - 100 bps 200 bps 300 bps 400 bps 500 bps JPMorgan Cullen/Frost Bankers Bank of America Independent Bank Group Veritex Holdings Texas Capital Comerica Zions Prosperity Hilltop Holdings First Financial Bankshares Cadence Bank Wells Fargo PNC Financial Strong Combined Market Share Growth In Competitive Texas Markets 6 Pure Play Texas Banks Money Center Banks Other Significant Texas Banks 2022 Deposit-Weighted Market Share 11.1% 5-Year Change In Deposit-Weighted Market Share by County (‘17 - ‘22 Change in bps) Source: S&P Capital IQ Pro. Note: Deposit data as of June 30, combined for M&A completed over or pending in last 5 years. 41.4% 17.1% 29.1% 7.7% 1.6% 5.1% 1.9% 3.8% 14.8% 7.8% 37.9% 8.1% 11.8% 4.4% Stellar

Financial Highlights – Third Quarter 2022 7 (1) Refer to the calculation of these non-GAAP financial measures and a reconciliation to their most directly comparable GAAP financial measures in the appendix. (2) Adjusted results exclude the impact of acquisition and merger-related expenses for the periods presented. (3) Represents total noninterest expense divided by the sum of net interest income plus noninterest income, excluding net gains and losses on the sale of loans, securities and assets. Additionally, taxes and provision for credit losses are not part of this calculation.. (4) Represents total noninterest expense divided by the sum of net interest income plus noninterest income. Allegiance Bancshares, Inc. CBTX, Inc. • Loans held for investment grew 22.4% (annualized), or $243.1 million, during the third quarter 2022 to $4.59 billion • Net interest income increased 5.6%, or $3.2 million, compared to the second quarter of 2022 • Tax equivalent net interest margin increased 32 basis points to 3.85% compared to the second quarter of 2022 • Loans held for investment grew 12.3% (annualized), or $93.5 million, during the third quarter 2022 to $3.13 billion • Net interest income increased 23.3%, or $8.1 million, compared to the second quarter of 2022 • Tax equivalent net interest margin increased 76 basis points to 4.25% compared to the second quarter of 2022 (dollars in thousands, except per share) 3Q 2022 2Q 2022 Net income 14,286$ 16,437$ Pre-tax, pre provision income (PTPP)(1) 19,654$ 22,282$ Earnings per share, diluted 0.71$ 0.80$ Efficiency ratio(3) 69.18% 62.96% Acquisition and merger-related expenses 10,551$ 1,667$ Adjusted pre-tax, pre provision income(1)(2) 30,205$ 23,949$ Adjusted eff iciency ratio(1)(2) 52.61% 60.19% Loan / Deposit 81.12% 73.95% (dollars in thousands, except per share) 3Q 2022 2Q 2022 Net income 12,747$ 11,707$ Pre-tax, pre provision income (PTPP)(1) 17,140$ 14,660$ Earnings per share, diluted 0.52$ 0.48$ Efficiency ratio(4) 63.11% 61.84% Acquisition and merger-related expenses 5,897$ 1,100$ Adjusted pre-tax, pre provision income(1)(2) 23,037$ 15,760$ Adjusted eff iciency ratio(1)(2) 50.42% 58.98% Loan / Deposit 83.96% 80.73%

$39.6 $49.5 $72.3 $83.3 $97.6 $26.0 $19.7 $30.2 $2.94 $3.14 $3.38 $4.06 $4.79 $1.27 $0.98 $1.50 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $0 $15 $30 $45 $60 $75 $90 $105 2017 2018 2019 2020 2021 Q3-21 Q3-22 PTPP Earnings per Share PT PP In co m e ($ M ) $43.7 $56.9 $64.5 $51.3 $34.7 $12.4 $17.1 $23.0 $1.94 $2.27 $2.57 $2.07 $1.41 $0.51 $0.70 $0.94 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $0 $15 $30 $45 $60 $75 2017 2018 2019 2020 2021 Q3-21 Q3-22 PTPP Earnings per Share PT PP In co m e ($ M ) $107.8 $124.7 $136.0 $128.6 $126.2 $31.2 $43.0 4.06% 4.35% 4.42% 3.73% 3.31% 3.22% 4.25% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% $0 $25 $50 $75 $100 $125 $150 $175 2017 2018 2019 2020 2021 Q3-21 Q3-22 N et Interest M argin N et In te re st In co m e ($ M ) $103.7 $128.6 $179.5 $202.7 $228.6 $58.2 $60.7 4.34% 4.27% 4.22% 4.08% 3.90% 3.90% 3.85% 3.00% 3.50% 4.00% 4.50% 5.00% $0 $50 $100 $150 $200 $250 2017 2018 2019 2020 2021 Q3-21 Q3-22 N et Interest M argin N et In te re st In co m e ($ M ) Historical Standalone Profitability 8 Allegiance Bancshares, Inc. CBTX, Inc. Net Interest Income ($M) and Net Interest Margin (tax equivalent) Net Interest Income ($M) and Net Interest Margin (tax equivalent) PTPP Income ($M) and PTPP Earnings per Share(1) PTPP Income ($M) and PTPP Earnings per Share(1) (1) Refer to the calculation of these non-GAAP financial measures and a reconciliation to their most directly comparable GAAP financial measures in the appendix. (2) Adjusted results exclude the impact of acquisition and merger-related expenses for the periods presented. (3) Includes payments of $8.0 million in civil money penalties to resolve BSA/AML compliance matters. (4) Annualized. (5) Allegiance Bancshares, Inc. net interest margin excluding Paycheck Protection Program (PPP) loans was 3.57%. (6) CBTX, Inc. net interest margin excluding PPP was 3.07%. Adjusted PTPP Income(1)(2) Adjusted PTPP EPS(1)(2) Adjusted PTPP Income(1)(2) Adjusted PTPP EPS(1)(2) (5)(4) (4)(4) (6) (4) (3)

2.63% 2.60% 2.67% 2.45% 2.61% 2.32% 2.67% 2017 2018 2019 2020 2021 Q3-21 Q3-22 2.59% 2.58% 2.50% 2.26% 2.13% 2.05% 2.60% 2017 2018 2019 2020 2021 Q3-21 Q3-22 63.9% 63.7% 63.0% 60.6% 58.9% 56.9% 69.2% 2017 2018 2019 2020 2021 Q3-21 Q3-22 64.2% 59.0% 58.3% 64.2% 75.6% 66.2% 63.1% 2017 2018 2019 2020 2021 Q3-21 Q3-22 Historical Standalone Profitability (Continued) 9 Efficiency Ratio Efficiency Ratio Noninterest Expense / Average Assets Noninterest Expense / Average Assets 52.6% 50.4% Allegiance Bancshares, Inc. CBTX, Inc. (3) (3) Adjusted(1)(2)Adjusted(1)(2) 1.98% 2.13% Adjusted(1)(2)Adjusted(1)(2) (4) (4) (4) (4) (1) Refer to the calculation of these non-GAAP financial measures and a reconciliation to their most directly comparable GAAP financial measures in the appendix. (2) Adjusted results exclude the impact of acquisition and merger-related expenses for the periods presented. (3) Includes payments of $8.0 million in civil money penalties to resolve BSA/AML compliance matters. (4) Annualized.

1.47% 1.80% 1.91% 1.36% 0.84% 1.19% 1.56% 2.10% 2017 2018 2019 2020 2021 Q3-21 Q3-22 0.93% 1.50% 1.50% 0.70% 0.86% 1.37% 1.16% 2017 2018 2019 2020 2021 Q3-21 Q3-22 0.65% 1.11% 1.10% 0.81% 1.24% 1.14% 0.84% 2017 2018 2019 2020 2021 Q3-21 Q3-22 Historical Standalone Profitability (Continued) 10 (1) Refer to the calculation of these non-GAAP financial measures and a reconciliation to their most directly comparable GAAP financial measures in the appendix. (2) Adjusted results exclude the impact of acquisition and merger-related expenses for the periods presented. (3) Includes payments of $8.0 million in civil money penalties to resolve BSA/AML compliance matters. (4) Annualized. Allegiance Bancshares, Inc. CBTX, Inc. Return on Average Assets Return on Average Assets Pre-tax, pre-provision ROAA(1) Pre-tax, pre-provision ROAA(1) (3) (3) Adjusted(1)(2)Adjusted(1)(2) 1.47% 1.47% 1.50% 1.48% 1.49% 1.55% 1.16% 1.78% 2017 2018 2019 2020 2021 Q3-21 Q3-22 (4) (4) (4) (4) (4) (4) (4) (4)

5.09% 5.32% 5.32% 5.02% 5.02% 5.17% 5.07% 5.00% 4.95% 4.87% 4.93% 5.15% 4.02% 3.90% 3.57% 3.30% 3.53% 3.85% Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 4.36% 4.52% 4.39% 4.39% 4.40% 5.04% 4.43% 4.37% 4.26% 4.29% 4.38% 5.02% 3.29% 3.22% 3.07% 3.22% 3.49% 4.25% Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 0.32% 0.28% 0.25% 0.23% 0.25% 0.36% 0.44% 0.39% 0.36% 0.32% 0.34% 0.48% Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 0.15% 0.14% 0.13% 0.12% 0.13% 0.17% 0.17% 0.16% 0.15% 0.15% 0.13% 0.17% Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 Yield and Cost Analysis 11 Allegiance Bancshares, Inc. CBTX, Inc. Yield and Net Interest Margin(1) Yield and Net Interest Margin(1) Cost of Funds Cost of Funds Yield on Loans Net Interest Margin (Tax Equivalent) Yield on Loans Net Interest Margin (Tax Equivalent) Cost of Deposits Cost of Funds Cost of Deposits Cost of Funds Yield on Loans Ex. PPP Yield on Loans Ex. PPP (1) Annualized.

0.59% 0.89% 0.72% 0.64% 0.57% 0.47% 2017 2018 2019 2020 2021 Q3-22 0.33% 0.14% 0.04% 0.82% 0.79% 0.72% 2017 2018 2019 2020 2021 Q3-22 0.36% 0.06% 0.07% 0.18% 0.05% (0.02%) 2017 2018 2019 2020 2021 Q3-22 0.00% (0.03%) 0.03% 0.13% (0.02%) 0.00% 2017 2018 2019 2020 2021 Q3-22 Strong Asset Quality 12 Net Charge Offs (Recoveries) / Average Loans (1) Excludes loans held for sale. (2) Annualized. Allegiance Bancshares, Inc. CBTX, Inc. Nonperforming Loans / Loans Nonperforming Loans / Loans(1) Net Charge Offs (Recoveries) / Average Loans (2) (2)

324.1% 678.9% 2,587.5% 169.2% 138.9% 145.4% 2017 2018 2019 2020 2021 Q3-22 1.04% 0.71% 0.75% 1.18% 1.14% 1.14% 2017 2018 2019 2020 2021 Q3-22 1.07% 0.97% 0.96% 1.39% 1.09% 1.04% 2017 2018 2019 2020 2021 Q3-22 177.4% 79.9% 103.8% 184.0% 198.7% 242.0% 2017 2018 2019 2020 2021 Q3-22 Strong Asset Quality (Continued) 13 Allowance / Nonperforming Loans (1) Excludes loans held for sale. (2) Not to scale. Allegiance Bancshares, Inc. CBTX, Inc. Allowance / Loans Allowance / Loans(1) Allowance / Nonperforming Loans(1) (2)

Loan Portfolio Composition 14 (1) For illustrative purposes only, based on balances as of September 30, 2022. Excludes the impact of acquisition related adjustments and purchase accounting. (2) Commercial RE includes multifamily commercial real estate and other real estate. Allegiance Bancshares, Inc. CBTX, Inc. Stellar Bancorp, Inc. – Combined(1) ($M) (%) 1-4 Family Residential RE 700$ 15.2 Construction & Dev. 697 15.2 Commercial RE(2) 1,118 24.3 Owner-Occupied CRE 1,289 28.1 Commercial & Industrial 750 16.4 Consumer & Other 38 0.8 Total 4,592$ 100.0 Yield on Loans (%) 5.17 ($M) (%) 1-4 Family Residential RE 288$ 9.2 Construction & Dev. 508 16.2 Commercial RE(2) 1,074 34.2 Owner-Occupied CRE 539 17.2 Commercial & Industrial 568 18.1 Consumer & Other 159 5.1 Total 3,136$ 100.0 Yield on Loans (%) 5.04 ($M) (%) 1-4 Family Residential RE 988$ 12.8 Construction & Dev. 1,205 15.6 Commercial RE(2) 2,192 28.4 Owner-Occupied CRE 1,828 23.7 Commercial & Industrial 1,318 17.0 Consumer & Other 197 2.5 Total 7,728$ 100.0 Yield on Loans (%) 5.11 1-4 Fam. 15.2% C&D 15.2% CRE 24.3% OO CRE 28.1% C&I 16.4% Cons. & Other 0.8% 1-4 Fam. 9.2% C&D 16.2% CRE 34.2% OO CRE 17.2% C&I 18.1% Cons. & Other 5.1% 1-4 Fam. 12.8% C&D 15.6% CRE 28.4% OO CRE 23.7% C&I 17.0% Cons. & Other 2.5%

Deposit Mix 15 Allegiance Bancshares, Inc. CBTX, Inc. Stellar Bancorp, Inc. – Combined(1) NIB 43.6% IB Dem. 16.9% Sav. & MMDA 26.0% CDs 13.5% NIB 47.8% IB Dem. 11.2% Sav. & MMDA 34.2% CDs 6.8% NIB 45.2% IB Dem. 14.6% Sav. & MMDA 29.3% CDs 10.9% ($M) (%) Noninterest-Bearing 2,466$ 43.6 Interest-Bearing Demand 957 16.9 Savings and MMDA 1,472 26.0 Total CDs 766 13.5 Total 5,661$ 100.0 Loans / Deposits (%) 81.1 Cost of Deposits (%) 0.36 ($M) (%) Noninterest-Bearing 1,780$ 47.8 Interest-Bearing Demand 416 11.2 Savings and MMDA 1,274 34.2 Total CDs 254 6.8 Total 3,724$ 100.0 Loans / Deposits (%) 84.0 Cost of Deposits (%) 0.17 ($M) (%) Noninterest-Bearing 4,246$ 45.2 Interest-Bearing Demand 1,373 14.6 Savings and MMDA 2,746 29.3 Total CDs 1,020 10.9 Total 9,385$ 100.0 Loans / Deposits (%) 82.2 Cost of Deposits (%) 0.28 (1) For illustrative purposes only based on balances as of September 30, 2022. Excludes the impact of acquisition related adjustments and purchase accounting.

Appendix: Non-GAAP Reconciliation 16 Allegiance Bancshares, Inc. CBTX, Inc. Three Months Ended Three Months Ended 9/30/2022 6/30/2022 9/30/2022 6/30/2022 Net income 14,286$ 16,437$ 12,747$ 11,707$ (+) Provision for credit losses 1,962 2,143 1,012 126 (+) Provision for income taxes 3,406 3,702 3,381 2,827 Pre-tax, pre-provision income 19,654$ 22,282$ 17,140$ 14,660$ Pre-tax, pre-provision income 19,654$ 22,282$ 17,140$ 14,660$ (+) Acquisition and merger-related expenses 10,551 1,667 5,897 1,100 Adjusted pre-tax, pre-provision income 30,205$ 23,949$ 23,037$ 15,760$ Weighted average shares, diluted 20,114 20,530 24,464 24,593 Adjusted pre-tax, pre-provision earnings per share, diluted 1.50$ 1.17$ 0.94$ 0.64$ Total noninterest expense 44,031$ 37,904$ 29,321$ 23,758$ Acquisition and merger-related expenses 10,551 1,667 5,897 1,100 Net interest income 60,690 57,482 43,012 34,872 Total noninterest income 2,995 2,704 3,449 3,546 Gain on sale of securities 42 (17) - - Adjusted efficiency ratio 52.61% 60.19% 50.42% 58.98% Noninterest expense 44,031$ 37,904$ 29,321$ 23,758$ (-) Acquisition and merger-related expenses 10,551 1,667 5,897 1,100 Adjusted noninterest expense 33,480$ 36,237$ 23,424$ 22,658$ Average assets 6,717,886$ 7,019,299$ 4,355,800$ 4,350,546$ Adjusted noninterest expense / average assets 1.98% 2.07% 2.13% 2.09% Adjusted pre-tax, pre-provision income 30,205$ 23,949$ 23,037$ 15,760$ Average assets 6,717,886$ 7,019,299$ 4,355,800$ 4,350,546$ Adjusted pre-tax, pre-provision return on average assets 1.78% 1.37% 2.10% 1.45% (Dollars and shares amounts in thousands, except per share data)

Appendix: Non-GAAP Reconciliation (Continued) 17 Allegiance Bancshares, Inc. Years Ended Three Months Ended 2017 2018 2019 2020 2021 9/30/2021 9/30/2022 Net income 17,632$ 37,309$ 52,959$ 45,534$ 81,553$ 19,060$ 14,286$ (+) Provision for credit losses 13,188 4,248 5,939 27,374 (2,322) 2,295 1,962 (+) Provision for income taxes 8,747 7,948 13,427 10,437 18,341 4,614 3,406 Pre-tax, pre-provision income 39,567$ 49,505$ 72,325$ 83,345$ 97,572$ 25,969$ 19,654$ Weighted average shares, diluted 13,458 15,773 21,424 20,546 20,355 20,411 20,114 Pre-tax, pre-provision earnings per share, diluted 2.94$ 3.14$ 3.38$ 4.06$ 4.79$ 1.27$ 0.98$ Pre-tax, pre-provision income 39,567$ 49,505$ 72,325$ 83,345$ 97,572$ 25,969$ 19,654$ Average assets 2,699,226$ 3,365,160$ 4,828,634$ 5,637,659$ 6,559,711$ 6,627,454$ 6,717,886$ Pre-tax, pre-provision return on average assets 1.47% 1.47% 1.50% 1.48% 1.49% 1.55% 1.16% Three Months Ended 2017 2018 2019 2020 2021 9/30/2021 9/30/2022 Net income 27,571$ 47,289$ 50,517$ 26,361$ 35,598$ 14,421$ 12,747$ (+) Provision for credit losses (338) (1,756) 2,385 18,892 (10,773) (4,895) 1,012 (+) Provision for income taxes 16,453 11,364 11,571 6,034 9,920 2,913 3,381 Pre-tax, pre-provision income 43,686$ 56,897$ 64,473$ 51,287$ 34,745$ 12,439$ 17,140$ Weighted average shares, diluted 22,573 25,018 25,053 24,803 24,572 24,544 24,464 Pre-tax, pre-provision earnings per share, diluted 1.94$ 2.27$ 2.57$ 2.07$ 1.41$ 0.51$ 0.70$ Pre-tax, pre-provision income 43,686$ 56,897$ 64,473$ 51,287$ 34,745$ 12,439$ 17,140$ Average assets 2,973,747$ 3,156,142$ 3,374,665$ 3,758,262$ 4,133,644$ 4,174,945$ 4,355,800$ Pre-tax, pre-provision return on average assets 1.47% 1.80% 1.91% 1.36% 0.84% 1.19% 1.56% Years Ended CBTX, Inc. (Dollars and shares amounts in thousands, except per share data)

NASDAQ: STEL 18

Report a Problem

Category
Description
Email (optional, for follow-up)